Today’s home buyers are coming up with larger downpayments, the most in more than a dozen years, according to a new report from the National Association of Realtors (NAR).
The median downpayment among all buyers was 19%, with first-time buyers putting down just 10% of the purchase price and repeat buyers putting up 23% of the purchase price, NAR’s Annual Profile of Buyers and Sellers reported. For rookie buyers, it was the largest amount down since 1989, and the largest for move-up buyers since 2003.
Seventy-four percent of all buyers financed their houses, but first-timers were more likely to do so than second or third-time buyers. NAR found that 92% of first-timers took out a mortgage, while just 70% of repeat buyers did the same, according to the report. But 26% of all buyers paid cash, an all-time high matching last year’s figure.
Nearly half of all buyers used their savings to make their downpayments, but 26% of first-timers also used other financial assets, including their 401(k)s, stocks, IRAs and cryptocurrency.
Still, rookies most often used their savings, but some also used a gift or loans from a relative or friend for their downpayments.
Two-thirds of the buyers polled told NAR they did not need to make any sacrifices to purchase their homes. But when they did, they most often trimmed their spending on luxury or non-essential items, entertainment, and clothing.
Only a handful, 10% or less, found the lending process more difficult than they thought it would be. For most buyers, lining up a loan was no more difficult than they expected, though a third of all first-timers said it was harder.
Just 4% had their loan applications denied, some more than once, the main reasons being their debt-to-income ratios were too high or their credit scores were too low. On the median, 16% carried student debt, with the figure rising to 33% for first-time buyers. The median amount of school loans was $30,000.
Buyers were overwhelmingly satisfied with their real agents. Instead, 7% said the most difficult step in the buying process was obtaining financing. Four percent said the appraisal was the toughest part.
Only 7% contacted a lender as the first step in the process, but just 3% said their agents helped them arrange their financing. At the same time, 19% said they wished their agents had provided “a better list” of potential lenders.
