Typical metro Phoenix homebuyers need $186,000 down payment, Zillow says

A metro Phoenix household earning the median income needs a 40% down payment to afford a home purchase, according to Zillow.

That's because higher home prices and interest rates have outpaced income gains. Zillow's median household income for Phoenix was about $91,300.

Zillow, like most housing experts and organizations, considers a home affordable if its monthly costs are no more than 30% of the household's income.

Phoenix-area homebuyers earning the median income need to put as much as $186,012 down to afford monthly payments on a $461,352 house, according to the real estate firm . That's the median home price for the Phoenix area using Zillow's Zestimate home valuations.

But there are hacks to help homebuyers , including getting money gifts from family or friends and mortgage rate buydowns offered by sellers.

"Down payments have always been important, but even more so today," said Skylar Olsen, chief economist at Zillow. "Saving enough is a tall task without outside help — a gift from family or perhaps a stock windfall."

Metro Phoenix homebuyers receive an average of $21,000 in down payment assistance, reports Zillow.

Other homebuying hacks include assuming the seller's mortgage or buying with a friend.

Hundreds of Valley homeowners have assumed home loans from sellers with low interest rates in the past year, said Rachel Roberts, president of UMe Assumption Specialists.

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Buyers can legally assume certain sellers' government-backed mortgages and then pay them the difference in what the house is worth with a home equity or other type of loan. It does take longer to close on an assumption deal, but it's a more affordable option for many, she said.

Mortgage rate buydowns became a popular seller concession in the Valley as mortgage rates climbed from about 3% in late 2021 to almost 8% last year. Thirty-year mortgage rates are now hovering around 7%.

A buydown gives a buyer a lower mortgage interest rate, typically 2% lower, for a few years. Sellers, including homebuilders , began offering buydowns to close deals as the market slowed with higher rates. Each percentage point typically costs 1% of the loan.

Based on the U.S. median home valuation of $360,000, homebuyers in a median-income household need a 35.4% down payment of $127,750 for the purchase to be affordable. Zillow's median household income for the U.S. was just over $82,000.

Mortgage rates could tick down a bit this year if inflation rates decline.

Reach the reporter at catherine.reagor@arizonarepublic.com or 602-444-8040. Follow her on X, formerly Twitter: @CatherineReagor .

This article originally appeared on Arizona Republic: Typical metro Phoenix homebuyers need $186,000 down payment, Zillow says