Home Buyers Make Less of a Down Payment
The average down payment for single-family homes, condos, and townhomes purchased in the first quarter was 14.8 percent of the purchase price, the lowest since the first quarter of 2012, according to RealtyTrac's First Quarter 2015 U.S. Home Purchase Down Payment Report. Down payments were down from 15.5 percent a year earlier. The average down payment in dollars was $57,710 in the first quarter.
Read more: What's an Average Down Payment?
Broken out, the average down payment for Federal Housing Administration purchase loans was 2.9 percent of the purchase price (or in dollars, $7,609) while down payments for conventional loans were 18.4 percent of the purchase price (or $72,590), the report showed.
The share of FHA loans rose throughout the first quarter, making up 25 percent of loan originations in March.
"Down payment trends in the first quarter indicate that first time home buyers are finally starting to come out of the woodwork, albeit it gradually," said Daren Blomquist, vice president at RealtyTrac. "New low down payment loan programs recently introduced by Fannie Mae and Freddie Mac, along with the lower insurance premiums for FHA loans that took effect at the end of January are helping, given that first time home buyers typically aren't able to pony up large down payments. Also helping tilt the balances toward first time home buyers in the first quarter is less competition from the large institutional investors that have been buying up starter home inventory as rentals."
The share of low down payment loans is at a nearly two-year high. Low down payment loans -- defined as down payments of 3 percent or lower -- comprised 27 percent purchase loans in the first quarter, up from 26 percent a year ago. The bulk of low down payments – 83 percent -- were made through FHA purchase loans originated in the first quarter while 11 percent of conventional loans were low down payment loans.
The RealtyTrac report showed that among the nation’s 20 largest counties with down payment data available, the following counties had the lowest average down payment percentage in the first quarter:
- Wayne County, Mich., in Detroit: 12%
- Philadelphia County: 12.6%
- Clark County, Nev., in Las Vegas: 13.3%
- Riverside County, Calif., in Inland Southern California: 13.7%
- Maricopa County, Ariz., in Phoenix: 14.2%
On the other hand, the counties with the highest average down payment percent in the first quarter were:
- New York, N.Y./Manhattan: 37.2%
- Kings County, New York/Brooklyn: 29.3%
- Queens County, N.Y.: 27.3%
- Santa Clara County, Calif., in the San Jose metro area: 25.4%
- Orange County, Calif., in the Los Angeles metro area: 22.9%
- Miami-Dade in the Miami metro area: 19%