Homebuyers are putting almost twice as much down to buy a house than two years ago

Soaring home prices and low inventory are making this spring home buying season rough for homebuyers, who are digging even deeper into their pockets for a down payment.

Down payments increased from 10.9% of the purchase price in 2020 to 12.3% in 2021 and up to 13.1% in the first quarter of 2022. In dollar terms, that median down payment almost doubled to $28,000 in the first quarter of 2022 from $15,000 two years before. In 2021, the median down payment was $22,000.

The reasons for the increase are manifold: more savings, staying competitive, relocating to cheaper markets, and equity from their own home sale. But with mortgage rates hitting 13-year highs, the math for larger down payments gets harder to pencil out.

“Now that interest rates are double January 2021's low, buyers will have tough choices to make,” Hannah Jones, economic data analyst at, told Yahoo Money. “Do they aim for a larger down payment which will help reduce monthly costs even as it gets harder to save amid rising prices?”

CHICAGO, ILLINOIS - APRIL 26: A home is offered for sale on April 26, 2022 in Chicago, Illinois. According to the S&P CoreLogic Case-Shiller national home price index, home prices in the U.S. increased 19.8% in February year over year.  (Photo by Scott Olson/Getty Images)
Credit: Getty Images (Scott Olson via Getty Images)

The size of down payments drastically changes depending on state and metro area.


“As buyers settled into remote work arrangements, many chose to leave high-priced city centers for less expensive locales and were able to pay more as a down payment in these relatively inexpensive markets as a result,” Jones said.

Additionally, “many buyers took advantage of their hot-housing-market-fueled home appreciation to cash in on their increased home equity and buy a new home, enabling them to utilize the additional cash from their home sale as a larger down payment,” Jones added.

Down payment almost doubled to $28,000 in the first quarter of 2022

Vermont, New Hampshire, South Dakota, Idaho, and Utah saw the early increases in down payments due to this migration. Montana saw the biggest increases with the typical down payment increasing from $80,000 in 2021 to $115,000 in the first quarter of 2022. noted that “during the pandemic, Montana became a hot spot for relocation and vacationing alike due to its affordability and scenery.”

That didn’t stop metro areas from seeing an increase. Affordable metro areas like El Paso, Texas; Augusta, Georgia; and Columbus, Ohio saw down payments as a share of the purchase price increase by 59.5%, 45.9%, and 42.2% from 2021 to 2022.

The cities with the priciest down payments were San Jose and San Francisco. In San Jose, the median down payment went from $209,000 in 2020 to $290,000 in the first quarter, while it increased to $218,000 from $160,000 in San Francisco.

“These high-priced locales tend to have wealthier, high-earning residents who have the funds to put more down on a home [and] attract international buyers who are more likely to use cash, which presents a stronger offer in highly competitive markets,” according to the report. survey shows down payments for home nearly doubled from 2020 to 2022.

Going forward, repeat buyers may be able to keep up with their sizable down payments after unlocking a record amount of home equity after selling their house. Those who relocate to more affordable housing markets may also remain insulated.

But it’s first-time buyers who may fall behind on the down payment race.

“Buyers are feeling the impact of rising home prices, increasing interest rates, and inflation, all of which are challenging their confidence in the current market,” Jones said. “For first-time buyers in particular, if home prices continue to rise at a rate faster than wages and savings can keep pace with, down payments will likely begin to decline.”

Ronda is a personal finance senior reporter for Yahoo Money and attorney with experience in law, insurance, education, and government. Follow her on Twitter @writesronda

Read the latest personal finance trends and news from Yahoo Money.

Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard, and LinkedIn