Bigger Down Payments, But Do Buyers Need Them?

Homebuyers are putting more money down on homes, with the typical down payment reaching 16.3% in December, up from 15% earlier in 2024. In dollar terms, that’s a median of $63,188—a 7.5% increase from the previous year and the biggest jump in five months. Rising home prices are a major factor, as the median home price climbed to $428,000 in December, up 6.3% year-over-year.

Despite the increase, experts say bigger down payments aren’t always necessary. With the market shifting in buyers’ favor for the first time in six years, some may benefit from keeping extra cash for renovations or investments instead. In wealthier areas like San Francisco, down payments average over 26%, while in more affordable metros like Virginia Beach, they can be as low as 3%.

All-cash purchases, once common when mortgage rates peaked near 8%, have also declined. While nearly 31% of homes were bought with cash at the end of 2024, that's down from nearly 34% in 2023. With mortgage rates now between 6% and 7%, more buyers are opting for financing instead.Bigger Down Payments, But Do Buyers Need Them?