Here’s what it comes down to: Those with big bank accounts are obliterating the competition by winning bidding wars with all-cash offers. Meanwhile, the other 99% of Americans—the ones who need a mortgage to finance the largest purchase most will ever make—are struggling to save up the recommended 20% of a purchase price, an amount that just keeps shooting up. And up.
In this competitive seller’s market, those putting their properties up for sale usually have their pick of buyers. Many will consider only buyers who can kick in at least 20% of the offer price in a down payment—or more. Sellers want the most financially secure of the bunch to ensure their deals go through. In some cases, they figure these more well-off buyers can make up the difference if their homes don’t appraise for the offer price.
This is hitting first-time buyers hard. While there are plenty of low down payment mortgage programs available, it can be hard to find sellers who will accept those loans. And despite historically low mortgage interest rates, accelerating rental prices and high inflation on the cost of everything from gas to a gallon of milk are making it harder than ever to save up these large down payments.
However, there are still real estate markets where homebuyers can put down significantly less. And the trusty data team at Realtor.com® found these places where buyers can score a home without emptying their savings accounts—as well as the ones where they’re going to have to shell out the most in order to have a shot at winning bidding wars.
“In competitive markets, having a high down payment can help your offer stand out. Sellers like them because they’re more likely to go through to closing,” says Realtor.com Chief Economist Danielle Hale. “That doesn’t mean that everyone can do so. Generally, you see them among older homebuyers who have more equity from a previous home they can use.”
A general rule of thumb: the fiercer the real estate market, the higher the down payments. These tend to be more expensive places, including vacation and retirement meccas. Meanwhile, lower down payments are more common in markets with more affordably priced homes where local salaries are below U.S. averages. Not a single place on our list of where buyers put down the lowest down payments has a median list price that’s even close to the national median of $380,000 in September, according to the most recent Realtor.com data.
To figure out the places with the highest and lowest median down payments, Realtor.com analyzed average down payment sizes in the 300 largest metropolitan areas from Optimal Blue, a real estate analytics firm. The data was from August, the most recent month available. And metros include the main city and surrounding towns, suburbs, and smaller urban areas.
We included only one metro per state per list to ensure geographic diversity.
Got it? OK, first let’s check out the markets where buyers may need to cash in a few bitcoins, or maybe tap the Bank of Mom & Dad in order to snag their dream home.
