Down Payments Fall to Three Year Low

The median downpayment made by all homebuyers in 2012 was 9 percent, ranging from 4 percent for first-time buyers to 13 percent for repeat buyers. The median down payment was the lowest since 2009 but still far above the levels during the housing boom, when nearly half of first-time buyers made no downpayment at all.

First-time buyers who financed their purchase used a variety of resources for the down payment: 76 percent tapped into savings; 24 percent received a gift from a friend or relative, typically from their parents; and 6 percent received a loan from a relative or friend. Eleven percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds. Ninety-three percent of entry-level buyers chose a fixed-rate mortgage, reported the National Association of Realtors.

Forty-six percent of first-time buyers financed with a low-downpayment FHA mortgage, and 10 percent used the VA loan program with no downpayment requirements. Forty-two percent cut spending on luxury items to buy their first home, 35 percent cut spending on entertainment and 27 percent cut spending on clothes.

In 2005, the median first-time home buyer scraped together a down payment of only 2 percent to buy a $150,000 home . Two years later, in 2007, the median downpayment by first-time buyers was still only 2 percent and 45 percent purchased with no money down - the same as in 2006. That year 43 percent of first-time home buyers purchased their homes with no-money-down loans.

After lenders tightened standards in the wake of the housing crash, the median down payment soared , reaching 11 percent in 2010-2011. First time buyers put about 5 percent down in 2011. Repeat buyers, pooling equity with savings, typically put down about 15 percent. Investment and vacation-home buyers have been paying higher down payments than those buying a primary residence. The median down payment for both was 27 percent, according to NAR’s 2011 Profile of Investment and Vacation Buyers.

“First-time buyers historically make small down payments, but repeat buyers like to put down 20 percent if they can to avoid paying mortgage insurance,” NAR’s Paul Bishop said. “The general loss in home value since the peak of the housing boom means many repeat buyers in recent years had to make smaller downpayments. Fortunately, prices have turned up this year and are showing sustained increases, so we’re on the road to a recovery in home equity.”


1 Comments For This Post

  1. Darwis Says:

    It is essential to unreastdnd that the loan limits were lowered which seems counter-cultural. These limits might not impact real estate sales in Northern Virginia, but it certainly will in markets like Prince George’s County (Maryland) where the upper end market isn’t as robust, and that’s where prices are sure to drop even further.

3 Trackbacks For This Post

  1. When You’re Turned Down for a College Loan « Home Equity Debt Consolidation Says:

    [...] Add new tag Appraisals case-shiller CoreLogic credit unions defaults delinquencies deliquencies Fannie Mae fha Fitch Ratings Forecasts foreclosure foreclosures Freddie Mac geithner HAMP homebuyer tax credit Homeownership homeownership rate home prices home values Housing recovery HUD HVCC loan modifications LPS luxury homes macromarkets mortgage delinquencies mortgages nar negative equity price reductions RealtyTrac Rentals REO REOs robo-signing shadow inventory Shiller TransUnion wells fargo zillowSource: [...]

  2. Downpayments Fall to Three Year Low - Real Estate Economy Watch | Mortgage Loans For Low Credit Scores Says:

    [...] the rest here: Downpayments Fall to Three Year Low - Real Estate Economy Watch ← Eduardo Chronicles: Home Mortgage [...]

  3. Downpayments Fall to Three Year Low - Real Estate Economy Watch | Mortgage Loans Says:

    [...] the rest here: Downpayments Fall to Three Year Low - Real Estate Economy Watch ← M.A.A.C Dive » Fast Loans Online Australia Reader Mailbag: New Phone | the Simple [...]

Leave a Reply