Podcast Center
Video Center
Webcasts
Resource Center
Events
By 
December 19, 2018 at 11:03 AM
The size of a homebuyer’s down payment can make the difference between an affordable monthly mortgage payment and one that squeezes a household’s budget, Zillow, a real estate and rental marketplace, reported Friday.
A 20% down payment on a home’s purchase price is a longstanding benchmark, Zillow said. This keeps monthly payments lower, saves on interest and negates the need for costly mortgage insurance.
Forty-three percent of buyers — of whom 42% are millennials, the largest contingent — put down 20% or more, according to Zillow’s analysis of homebuyers nationally and in five major metropolitan areas: Atlanta, Chicago, Washington, D.C., Phoenix and San Francisco.
The survey revealed that just as U.S. housing markets vary greatly by region, so do down payment trends.
In Atlanta and Phoenix, slightly less than a third of homebuyers put down 20%. Zillow found that buyers in Phoenix were just as likely to put down 5% or less as they were to put down 20% or more.
Even more concerning were buyers in Atlanta, who put down less than 5% more often than they put down at least 20%, opening low payers to greater risk of becoming underwater on their mortgages, Zillow said.
In contrast, buyers in Chicago, San Francisco and Washington, D.C., were at least as likely as the typical national buyer to put down at least 20%.
Seven-Year Itch
Saving for a down payment is the chief hurdle to homeownership, Zillow research showed.
It takes a typical American homebuyer more than seven years to save a 20% down payment on the typical-valued home. Zillow defined today’s “typical American homebuyer” as a 41-year-old, college-educated couple with an annual median household income of $72,500 and aspirations for single-family living.
