While all-cash deals make headlines, most buyers still finance their home purchase. In fact, 74% of primary residence buyers use financing, and that jumps to 91% for first-time buyers.
How much do buyers really put down?
Many buyers think they need a hefty down payment, but that’s often not the case.
- First-time buyers typically put down 6% to 9%, a trend that’s held steady since 2018.
- Looking back even further to 1989, the average down payment for first-timers has rarely topped 10%.
- Repeat buyers, however, put down more, 23% on average last year, up from 13% in 2014, reflecting their growing home equity.
What financing options are available?
Most buyers rely on conventional loans, but there are other choices:
- 29% of first-time buyers use FHA loans, which require just 3.5% down.
- 9% go with VA loans, which often need no down payment at all.
- And when facing loan qualification issues, homebuyers can turn to private money home loans that are more flexible and forgiving.
Talking to a mortgage broker or housing counselor can help buyers explore the best options. Tools like Down Payment Resource can also match buyers with local programs that assist with down payments, student debt, taxes, or even renovations.
Where does the down payment money come from?
- Nearly 70% of first-time buyers use personal savings.
- 25% receive gifts from family or friends, though that’s down from 36% in 2010, when tax credits spurred more first-time purchases.
- As buyers get older (the average first-time buyer is now 38), fewer lean on family help.
Interestingly, more buyers are tapping financial assets, 21% use stocks, retirement accounts, or even crypto, up from just 8%-11% in the late 90s and early 2000s. And while still under 10%, a record share of first-time buyers now use inheritances to fund their purchase.
Bottom line
Knowing the facts helps buyers plan how much to save and how long it may take. Unfortunately, many still rely on outdated advice: 97% of agents say clients turn to family members for guidance, even if those family members won’t be living in the home. Getting the right information is key to making smart decisions on the path to homeownership.
At Pacific Direct Mortgage in Santa Rosa, we help California buyers, homeowners, and real estate investors secure the Hard Money financing they need, fast. Whether you’re buying, refinancing, or tackling a project that traditional banks won’t touch, we’re here to get you to the finish line with speed and confidence.
If you’re exploring your options or need a lender you can rely on, reach out. Let’s discuss how we can help make your next home purchase or investment a success.
