Median down payment rises to $27,100 in the second quarter, but it is still lower than a year ago

The typical U.S. homebuyer put down 13.7% of the purchase price in the second quarter, up from 12.9% in the first, according to a Realtor.com report released Thursday. The median down payment in dollars was $27,100.

The quarter-on-quarter jump is getting the headlines, but the year-on-year numbers go the other way. A year earlier the typical share was 14.3%, and the dollar median has fallen 9.2%. Realtor.com said that is the lowest second-quarter share since 2021. The second quarter is normally the seasonal peak, and Realtor.com senior economist Hannah Jones tied this year's unusually sharp rebound to the climb in mortgage rates since March.

Why the rebound happened

The report's explanation is about who dropped out, not who saved more. As rates rose, marginal buyers with thin savings stepped back, which left a pool weighted toward buyers with cash or home equity to put in. July's figures suggest the pattern is carrying into the third quarter: the median reached $28,800, or 14.0%, still below a year earlier on both measures.

That fits the rest of Realtor.com's data. Its August housing report found active listings up from a year earlier for a 32nd straight month and list prices down year on year for a 10th month. Buyers in a well-supplied market have less reason to make an outsized down payment to win a house.

The regional split

The share put down was highest in the Northeast at 18.1%, then the West at 15.2%, the Midwest at 14.2% and the South at 11.9%, Realtor.com News reported. All four regions were down from a year earlier. In dollars, the Northeast median was $67,400 and the South's $22,600.

At the metro level, bigger down payments have cushioned rising rates in Hartford, Boston, New York and Seattle, where shares rose 4 to 9 points over five years. In Austin, San Antonio, Houston, Phoenix, Tucson and Dallas, shares fell 1.6 to 2.8 points, adding $35 to $85 a month to a typical payment compared with 2021 down-payment levels. In Austin, list prices are down 18% over five years but the estimated monthly payment is up 33%.

What the gap to 20% is worth

Freddie Mac's weekly survey put the average 30-year fixed rate at 6.95% in the week of Sept. 17. On a $400,000 home at that rate, our arithmetic runs like this:

• 13.7% down ($54,800): a $345,200 loan and about $2,285 a month in principal and interest.
• 20% down ($80,000): a $320,000 loan and about $2,118 a month.

The extra $25,200 upfront saves about $167 a month, before counting mortgage insurance, which most conventional loans require below 20% down. For comparison, a quarter-point rise in the rate on the $345,200 loan adds about $58 a month. Realtor.com estimates that if rates reach 7%, the typical payment rises about $60 a month from today's level.

Rates are moving quickly. The 10-year Treasury yield, which mortgage rates follow most closely, hit its highest since 2007 on Thursday, and Freddie Mac publishes this week's average later today. Track it on our 10-year chart.

Sources: Realtor.com down payment report; Realtor.com News; Freddie Mac PMMS. Payment examples are our calculations and exclude taxes, insurance and mortgage insurance. This is market information, not investment advice.