Four consecutive quarters of declining downpayments reversed in the second quarter of 2026 amid a sharp rise in the mortgage rate environment, underscoring a troubling momentum shift for homebuyer affordability.

While median downpayments of $27,100 between April and June — a five-year low in second-quarter downpayment amounts — reflected a 9.2% drop from last year, that represented a nearly 16% jump from typical downpayments of $23,400 in the first quarter.

Mortgage rates that started marching higher after the Iran War began in late February were a key contributor to that shift, according to Realtor.com, which published the updated quarterly figures on Thursday.

Advertisement

“Increasing the amount you put down is one of the few levers buyers have to offset higher rates,” explained Hannah Jones, senior economist at Realtor.com, “as a smaller loan means a smaller monthly housing payment.”

Home prices fluctuate seasonally and tend to hit their highest levels each year during the second quarter. Downpayments, which are typically measured as a percentage of home prices, also fluctuate seasonally and tend to hit their highest levels in the second quarter as a result.

But even as seasonal factors played a role, a fundamental shift in market dynamics triggered by a reversal in the mortgage rate environment amplified the rise in downpayments, said Jones.

Many prospective buyers are unable to afford larger downpayments to offset higher rates. Thus, as higher mortgage rates sideline marginal buyers with tighter budgets, buying power shifts in favor of shoppers with more cash available to purchase in the higher-rate environment.

While typical second-quarter downpayments were about 0.6 percentage points lower than a year ago as a share of purchase prices, downpayments were 0.8 percentage points higher than the first quarter, signaling shifting momentum when it comes to broader homebuying affordability.

On overall terms, typical downpayments were about 13.7% of the median sales price in the second quarter compared to 12.9% in the first quarter and 14.3% in the second quarter of 2025. Cooling home prices during the second quarter and sluggish demand managed to help offset some dynamics pushing downpayments higher.

“Relaxing downpayments are consistent with a cooler, better-supplied, less competitive housing market overall,” added Jones.

The rebound in downpayments is expected to persist through the third quarter, however, as borrowing costs have continued to rise amid growing inflation concerns and surging government bond yields. Average mortgage rates for 30-year fixed-rate loans now sit above 7%, according to Freddie Mac data published Thursday.