Median-income households need to put 35% down to afford payments

Compare that to five years ago, when the typical home needed no money down to be affordable

According to new data from Zillow, a median-income household would need to put more than 35% down to comfortably afford the payments on the typical American home.

A typical U.S. home is currently valued at approximately $360,000. For a household making the U.S. median income, a downpayment would have to be roughly $127,750, or about 35.4%, for the monthly mortgage payments on the typical home to take up no more than 30% of monthly earnings.

To save up that downpayment, it would take a median income household about 12 years, assuming its members save 10% of their earnings each month with an annual return of 4%.

Compare that to five years ago, when mortgage rates were hovering just over 4% and the typical home was worth roughly 50% less. Under those conditions, the typical home would have been affordable with no money down.

“Downpayments have always been important, but even more so today,” said Skylar Olsen, chief economist at Zillow. “With so few available, buyers may have to wait even longer for the right home to hit the market, especially now that buyers can afford less. Mortgage rate movements during that time could make the difference between affording that home and not.

Forty-three percent of homebuyers in 2023 used a gift from family or friends as at least part of their downpayment, largest since at least 2018.

“Saving enough is a tall task without outside help — a gift from family or perhaps a stock windfall,” Olsen said. “To make the finances work, some folks are making a big move across the country, co-buying or buying a home with an extra room to rent out. Downpayment assistance is another great resource that is too often overlooked.”

There are just 10 major metros where a typical home is affordable to a median-income household with less than 20% down. That includes Pittsburgh, where a median-income household can still purchase a typical home with no money down. At the other end of the spectrum are many large California metros, including San Jose, where a median-income household would have to put 80.9%  down — more than $1.3 million — for the monthly payments to be affordable.


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