Why Your Down Payment Matters More Than You Think

Marc Winter
5 days ago
3 min read

According to a recent report from the NAR, down payments remain one of the biggest hurdles for prospective homeowners. That’s why, as you map out your path to homeownership, it’s worth understanding exactly how the size of your down payment shapes your mortgage experience and even how it reflects broader trends across the country.

a couple taking the key for the house they bought

Geographic Gaps: Where People Put Down More and Less

NAR analyzed 216 major U.S. metropolitan areas using 2024 data, and found a huge variation in down payment behavior:

On the high end, the metro area with the largest typical down payment was San Jose–Sunnyvale–Santa Clara, CA: nearly 24% (about US$365,611). Other metros with high down payments include parts of California, Massachusetts, and Florida.
On the low end, some areas had down payments close to zero: for example, Killeen–Temple, TX had a median down payment of just 0.7% (≈ US$2,073), followed by other metros in Texas and Alabama.

These stark differences reflect not only disparities in income or housing prices but also which kinds of loan programs buyers use, and whether they’re first-time or repeat buyers.

Age & Experience: Who’s Putting Down What

Median Down payment by Age Group graph from NAR

Overall, the typical American buyer in 2024 averaged about 10.8% down (~ US$41,214). In other words: the more time (and wealth) you build, the easier and larger your down payment can be.

Financing Types & Payment Sources

Not all mortgages are created equal —and the kind of loan you choose heavily impacts how much cash you need upfront. According to NAR:

For conventional loans: ~ 29% of borrowers put down 0–10%, and ~ 39% put down 10–25%.
Government-insured loans can significantly reduce the burden: for example, many borrowers using FHA, VA, or other programs put down very little or nothing at all.

As for where down payments come from, among first-time buyers:

~70% use savings.
~25% rely on gifts from family or relatives (though this has declined over time).
An increasing number now use financial assets (stocks, retirement funds, etc.).

This shift in payment sources reflects demographic changes: first-time buyers are generally older now than in decades past, and may have built up investment or retirement savings that help them start their homeownership journey.

What It All Means for Today’s Homebuyers (and What to Watch Out For)

Down payments remain a major barrier. Even though many mortgage products allow for low or no down payment, many buyers still struggle to save enough — especially younger and first-time buyers.
Your age and financial history matter. Buyers later in life tend to have larger down payments — which reduces monthly payments and interest over the life of the loan.
Loan type matters. Conventional loans vs. FHA/VA/other government-backed loans significantly change how much cash you need up-front.
Saving early and planning ahead helps. Because many first-time buyers use savings or assets, starting a disciplined savings or investment plan early can make homeownership more feasible.

Final Thoughts

Buying a home is more than just finding the right location, it’s about timing, finances, and thoughtful planning. The data from the NAR shows clearly that down payments still play a “gatekeeper” role in homeownership: they influence who can buy now, who needs to wait, and how much monthly burden you’ll carry long-term.

If you’re considering buying (whether in the U.S. or elsewhere), treat the down payment not as a burden — but as a strategic move. Understand your loan options. And consider how waiting a few years to save more might benefit you down the road.

Landmark Management Services, Inc.