Homebuyers need more than $127K for a down payment: Zillow

The story at a glance

• Currently, a homebuyer with a median income needs to put down 35% to buy a typical U.S. home, according to a Zillow analysis.

• That’s more than $127,000 for a $360,000 home.

• The analysis found that in some markets, particularly California, homebuyers will be required to make a down payment of more than 80%.

(News Nation) — 20% down payments are no longer the norm: In today’s market, home buyers should put down 35%. Take your time That’s the typical American household, according to a new analysis.

Recent Zillow research They found that a moderate-income household would currently need to put down about $127,750, or 35.4 percent, to cover the monthly payments on a $360,000 home.

Assuming a household saves 10% of their income each month and earns a 4% annual return, they would need to save for 12 years just to cover the down payment.

5 years ago, Mortgage interest rates If home prices had stayed just above 4 percent higher, the typical home would have been affordable with no down payment, according to the report.

“Mortgage rates remain high, keeping buyers and sellers on the sidelines. With fewer homes for sale, competition is fierce among the remaining buyers,” Zillow said.

Zillow defines “affordable” as a mortgage payment that is 30% or less of the area’s median income. The analysis included the nation’s 50 largest metropolitan areas.

In some markets, particularly California, homebuyers are required to make more than 80% down payment to cover the monthly payments on a typical household income.

In San Jose, a median-income household would need a down payment of $1.32 million to purchase a typical home in the area. In Los Angeles, the average down payment would be $780,203 per household. Based on the area median income, it would take more than 36 years to save up for this down payment.

San Diego, New York City and San Francisco were also among the most expensive markets.

But affordable housing still remains scattered across the country: In 10 major metropolitan areas, most of which are in the Midwest, a household earning the median income can buy a home with less than a 20% down payment, according to Zillow.

Pittsburgh has one of the most affordable housing markets, allowing moderate-income families to purchase a typical home with no down payment, and major markets like St. Louis (4.5%), Detroit (9.5%), and Indianapolis (9.8%) also require lower down payments than the national average.

The median household income in the United States was $74,580 in 2022. According to census data.

10 cities where the average buyer needs the highest down payment (percentage) to purchase a typical home, according to Zillow:

1. Los Angeles: 81.1%
2. San Jose, California: 80.9%
3. San Diego: 75.5%
4. New York: 75.3%
5. San Francisco: 75.0%
6. Miami: 64.5%
7. Boston: 61.7%
8. Riverside, California: 61.4%
9. Seattle: 61.3%
10. Sacramento, California: 57.6%

According to Zillow, these are the 10 cities where the average buyer needs the lowest down payment (percentage) to purchase a typical home.:

1. Pittsburgh: 0%
2. St. Louis: 4.2%
3. Birmingham, Alabama: 7.6%
4. Detroit: 9.5%
5. Indianapolis: 9.8%
6. Memphis, Tennessee: 12.7%
7. Oklahoma City: 13.3%
8. Cleveland: 13.7%
9. Louisville, Kentucky: 18.1%
10. New Orleans: 19.1%