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Down Payments on the Rise
In a positive signs for the market, the residential real estate market continues to heat up, and the average down payment is growing. The percentage of first-time homebuyers is also on the rise, according to a new report from online loan marketplace LendingTree.com.
The average down payment amount – when compared to the total home price for conventional 30-year fixed rate mortgages – rose slightly to 17.13 percent in the second quarter of 2016, an increase from 16.64 percent in the previous quarter. While the dollar amount of the average down payment fell quarter-over-quarter, from $51,721 to $49,839, it is up year-over-year from $44,007 this time last year.
When accounting for all purchase mortgages (meaning FHA, VA, non-prime and jumbo mortgages) the average down payment increased slightly quarter over quarter from 12.18 percent and $44,058 to 12.33 percent and $44,080.85.
“The housing marketing is experiencing growth with sales of new and existing homes climbing year-over-year,” says Doug Lebda, founder and CEO of LendingTree. “Low mortgage rates, steady job growth and more options for affordable and entry-level are attracting home buyers to the market.”
The report also notes a 43.2 percent increase in loan requests from first-time homebuyers year over year. “With competition in many markets heating up, down payment percentages are trending upwards, making a transaction more attractive to sellers and giving buyers a head start in building equity in their new home,” Lebda says.
LendingTree also ranked each state according to the average down payment percentage as seen by customers on their website. The ten states with the highest down payment percentage for a 30-year fixed rate conventional loan were New Jersey, California, New York, Alaska, Connecticut, Hawaii, Colorado, Massachusetts, Montana and Vermont. New Jersey saw the highest average down payment at 20.46 percent.
On the other end of the spectrum, Missouri, Minnesota, Tennessee, Iowa, Alabama, Louisiana, Arkansas, Kentucky, Mississippi and West Virginia saw the lowest down payment percentage. West Virginia was the lowest overall with an average down payment of 13.57 percent.
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