In the past year, down payment amounts in relation to home prices have seen a decline nationwide, but homebuyers in certain U.S. markets, particularly California, are still putting down significant sums exceeding $100,000 on homes, as reported by Realtor.com. According to their analysis of the 150 largest real estate markets, the average down payment made by homebuyers in 2023 was 13.8% of the home price, slightly lower than the 14.7% recorded during the same period in 2022.

This trend suggests that fewer people are able to afford an upfront down payment of 20%, which is often considered a benchmark to avoid private mortgage insurance (PMI) payments. PMI typically costs between $30 and $70 per month for every $100,000 borrowed, according to Freddie Mac.

Realtor.com's analysis also reveals the 15 most expensive real estate markets based on the median cost of a typical down payment. Topping the list is the San Jose-Sunnyvale-Santa Clara area in California, with an average down payment of $235,183. It is followed by the San Francisco-Oakland-Berkeley area, where the average down payment is $202,575. Other California cities making the list include Santa Maria-Santa Barbara, Los Angeles-Long Beach-Anaheim, Santa Rosa-Petaluma, and Oxnard-Thousand Oaks-Ventura.

The dominance of California in these rankings can be attributed to the state's reputation for having desirable yet expensive properties. California also faces a persistent housing shortage, which contributes to the upward pressure on prices.

In contrast to these high-cost markets, there are areas where down payments are relatively small, typically a few thousand dollars. Killeen, Texas, for example, has a median down payment of only $2,182. Similar patterns are observed in regions near military bases, such as Fayetteville, North Carolina; Shreveport, Louisiana; and El Paso, Texas, where median down payments are $5,000 or less. The availability of 0% down mortgages offered through the U.S. Department of Veterans Affairs and U.S. Department of Agriculture loans, which require no down payment, contribute to these lower down payment averages in these areas.

The data for this analysis was collected using Optimal Blue, a mortgage technology company, and showcases the variations in down payment amounts across different real estate markets in the United States. This information provides valuable insights for homebuyers and industry professionals looking to understand regional differences in down payment trends.

While the decline in down payment amounts relative to home prices may reflect challenges for some individuals in affording larger upfront payments, it also demonstrates the diversity in homeownership options available throughout the country. As the housing market continues to evolve, it is crucial for potential buyers to explore the options and financial resources that best suit their individual circumstances.