H
omebuyers may find relief in the decline of down payment requirements, which have dropped from historic highs. According to a recent report by Realtor.com, the median down payment from July to September 2024 was 14.5% or $30,300, a decrease of $2,400 from last quarter's peak.

    The drop is attributed to fewer homebuyers in the market, giving those who do brave the current market more leverage. "Easing demand and increasing inventory gave buyers more flexibility last quarter, leading to slightly lower down payments," says Realtor.com senior economic research analyst Hannah Jones.

    Down payment dollar amounts fell in 21 states in the third quarter of 2024, with Florida and Texas experiencing significant declines. The five states with the biggest down payment drops were Florida (down 24% year over year), Texas (down 23.2%), Wyoming (down 22.3%), the District of Columbia (down 17.7%), and South Dakota (down 16.4%).

    In contrast, some Northeast and Midwest markets saw significant increases in down payments, with Rhode Island experiencing a 33.8% spike to $60,400 year over year.

    The metros with the smallest down payments tend to be relatively affordable and have abundant inventory, according to Jones. San Antonio, TX, and Virginia Beach, VA, top this list, with average down payments of 7.4% and 9.1%, respectively.

    California markets dominate the list of metros with the largest down payments, driven by high interest rates and expensive housing prices. The median down payment in San Jose, CA, was $312,000 or 27.7% of the purchase price, a nearly $76,000 increase from last year.

    While down payments have started to trend lower, they remain historically high. As mortgage rates ease and more buyers enter the market, the incentive to minimize home loans may soften, potentially leading to higher down payments if inventory fails to keep up with demand.