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Skyrocketing home prices, mortgage rates and inflation have put many prospective homebuyers — especially first-timers — at a disadvantage.
A big misconception among housing consumers is the price of the typical down payment and what amount is needed to enter homeownership.
According to the National Association of Realtors blog, “Tackling Home Financing and Down Payment Misconceptions,” in January, when surveyed, 35 percent of consumers think they need 16 percent to 20 percent for a down payment and 10 percent of consumers think they need more than 20 percent for a down payment.
However, the typical down payment for first-time homebuyers has been between 6 to 7 percent since 2018, the blog reads. Historically, the typical down payment was as high as 10 percent, when NAR first began collecting the data in 1989. For repeat buyers, the typical down payment was 17 percent last year and more recently, the down payments for repeat buyers have increased as housing equity for owners has grown, according to the report.
Now, while the industry standard sits at 20 percent sellers in some markets are beginning to expect even more, according to a report released Wednesday by Realtor.com outlining where home sellers are and aren’t expected to cough up a big down payment in the current market.
The report found homebuyers are making the biggest down payments in The Villages, Florida, where the average down payment is 30.2 percent and the median home purchase price was $375,000.
Couer d’Alene, Idaho follows with an average down payment of 27.9 percent and a median home purchase price of $530,000, while Santa Barbara took third place with an average down payment of 26.4 percent and a median purchase price of $800,000.
Yet, some parts of the country exist where homebuyers can get away with much smaller down payments, the report found, especially in the South and Rust Belt, where home prices have long been lower than the rest of the nation.
But comparatively, small down payments are growing in affordable areas thanks to the surge in demand for housing over the past two years combined with a national shortage of inventory. That trend is best illustrated by the Rust Belt cities of Johnstown, Pennsylvania; Springfield, Ohio; and Saginaw, Michigan, where down payments previously averaged around 4 percent and have more recently doubled to around 8 percent.
Below are the top 10 metros where buyers can expect to find the lowest down payments, according to Realtor.com.
1. Fayetteville, North Carolina
Average down payment: 4.3 percent
Fayetteville, North Carolina boasts the lowest average down payment in the nation at just 4.3 percent, with a median home purchase price of $239,000, according to Realtor.com.
The sixth largest city in North Carolina, it is best known for its proximity to the U.S. Army Base Fort Bragg.
2. Monroe, Louisiana
Average down payment: 4.7 percent
With an average down payment of 4.7 percent and a median home purchase price of only $192,000, Monroe has the second-lowest down payment in the nation.
The northern Louisiana city is known for its many museums including the Biedenharn Museum and Gardens, which explores the history of Coca-Cola, and the Chennault Aviation and Military Museum, which has historic crafts on display.
3. Topeka, Kansas
Average down payment: 7.1 percent
The Kansas capital has an average down payment of only 7.1 percent and a median home purchase price of $159,777, the report reads.
The median listing home price is $175,000, according to Realtor.com, with housing prices trending up 9.4 percent year over year.
4. Hattiesburg, Mississippi
Average down payment: 7.3 percent
The average down payment in Hattiesburg is 7.3 percent, while the median home purchase price is at $220,000, according to the report.
The city is best known as the home of the University of Southern Mississippi.
5. Mobile, Alabama
Average down payment: 7.6 percent
The gulf coast city of Mobile has an average down payment of 7.6 percent, with a median home sale price of $249,000, Realtor.com found.
The median listing price was $215,000 in October, trending up 12 percent year over year, according to Realtor.com data.
6. Florence, South Carolina
Average down payment: 8.0 percent
Florence has an average down payment of 8 percent, with a median home purchase price of $237,000, according to Realtor.com data.
The city is located along the South Carolina Pecan Trail and is well known for its pecan-infused cuisine.
7. Odessa, Texas
Average down payment: 8.1 percent
The city of Odessa has an average down payment of 8.1 percent, while its median home price sits at $275,000.
The city of 162,100 is primarily supported by the oil industry and is also home to The University of Texas of the Permian Basin and the Texas Tech University Health Sciences Center.
8. Springfield, Ohio
Average down payment: 8.4 percent
Springfield, Ohio boasts an average down payment of 8.4 percent, with a median home purchase price of $157,000.
Home to Bluecreek State Park, Frank Lloyd Wright’s Westcott House, and the Springfield Museum of Art, the city of about 28,000 is a historical, cultural and recreational attraction.
9. Johnstown, Pennsylvania
Average down payment: 8.6 percent
The Pennsylvania town of 22,000 has an average down payment of 8.6 percent, with a median home purchase price of $145,000, according to Realtor.com.
The town is within driving distance of Pittsburgh and has a history as a bustling steel town. It is known for the Johnstown Flood of 1889 which left 2,200 dead. The Johnstown Heritage Pass is a ticket to the town’s well-preserved and documented history showcased through museums, cultural centers and other important discoveries.
10. Saginaw, Michigan
Average down payment: 8.7%
Saginaw has an average down payment of 8.7 percent and a median home purchase price of $160,000, data shows.
The city is part of the greater Three Cities region of mid-Michigan which includes Flint and Lansing. Water recreation is popular in the riverfront city, and it boasts multiple art museums, including the Castle Museum.