High down payments driven by high home prices and mortgage rates, despite potential shift for buyers.

From Yahoo Finance: 2025-04-19 12:02:00

In 2024, the highest down payments ever were made, with an average of 14.4% of the home’s purchase price and a median down payment of $29,900, up from 2023. Median home sale price in December 2024 rose 6.3% annually to about $428,000.

Research shows high personal savings rates helped with larger down payments, as Americans saved more money. Despite a drop in personal savings to 4.6% in January 2025, Americans had a decent nest egg, especially for entering the real estate market.

With increasing equity from recent property sales, homeowners have more funds for their next purchase, possibly leading them to invest in a larger property to upgrade their space. Despite slower sales and longer days on the market, sellers haven’t been slashing prices, requiring buyers to bring serious cash to the table.

High mortgage rates are pushing buyers to put more money down to lower monthly payments. A larger down payment can mean a better interest rate or avoiding private mortgage insurance. Higher interest rates lead to elevated monthly payments, prompting buyers to invest more in real estate.

As housing prices and rates remain high, down payments are also staying on the high side. When mortgage rates ease up, a more diverse group of buyers may enter the housing market. However, until prices drop, potential homeowners will have to make larger down payments to increase their odds of getting approved for a mortgage.

Read more: 5 Reasons House Down Payments Are Still High (Even as the Market Shifts Toward Buyers)