Skip to main content

Down Payments Are Still Out Of Reach For Homebuyers

Navi Persaud
Oct 29, 2020
Person putting a gold U.S. dollar coin into a piggy bank.

While low mortgage rates have made purchasing a home more affordable, prospective homebuyers are still finding it difficult when it comes to coming up with a down payment. Additionally, price growth has pushed prices above incomes at a rate that hasn't been seen in several years, according to Zillow.

The Zillow report stated that while monthly payments have become more affordable, the statistics obscure the fact that the role that home prices are playing as they outpace incomes by an alarming level. Saving up for a down payment has become a financial barrier for potential buyers and more so first-time buyers. According to Zillow, more than 25% of first-time buyers reported difficulties in saving for a down payment. Furthermore, 40% of all buyers said they relied on a gift or a loan from family or friends to at least a portion of their down payment.

Home values are up 38.3% since September 2014 but incomes have grown less than 18.8% for the same period, according to the report. As a result, the typical U.S. home is now worth more than three times the medial annual homeowner income, according to Zillow's analysis.

"The path to homeownership, and the savings and wealth-creation benefits that come with it, has gotten harder for many buyers," said Zillow senior economist Chris Glynn. "Saving for a down payment is the single biggest challenge many potential homebuyers face, and it is especially difficult when incomes fail to keep pace with home values. Even still, many buyers sense that prices will slip further out of reach in coming years and desperately want to lock in low mortgage rates while they can, which is likely contributing to the urgency we're seeing in the market. The current environment is a double win for longtime homeowners who have enjoyed big equity gains and are now able to refinance their mortgage to lower their monthly payments."

Oct 29, 2020
CFPB Issues Guidance On AI In Credit Underwriting

Creditors must provide specific and accurate reasons for credit denials, even with complex AI models.

Sep 19, 2023
Intercontinental Exchange Completes Black Knight Acquisition; Births Dark Matter Technologies Under Constellation Software

Rich Gagliano takes the helm at Dark Matter Technologies, poised to lead the future of Empower LOS with a 1,300-strong team, blending startup agility with decades of industry experience.

Sep 18, 2023
FHFA Invites Public Engagement On Modernized Credit Score Transition

Stakeholder forums and listening sessions planned to ensure seamless rollout; extended timeline for bi-merge credit report requirement in play.

Sep 11, 2023
Desperation Drives Difficulty in Closing Mortgages in California

Analysis reveals California among top 20 toughest states for mortgage closures.

Sep 11, 2023
If You Build It, They Will Come

Ratings will go a long way toward growing the market for home equity-backed securities

Sep 07, 2023
Investors May Be Losing Interest In The Single-Family Rental Market

Rise in interest rates, drop in values have them pulling back in certain regions

Sep 07, 2023