Welcome!




Expand Your Education with These Courses from
Effective Presentation Skills for Sales Professionals: Skills for Sales Success: Part Five.
At Home with Diversity.
Negotiating Skills: Skills for Sales Success: Part Six.
Bundle 3: CIPS Institute (US Version).
A Consumer Advocate Approach to Real Estate: Course 1.

Downpayments Fall to Three-Year Low

Have a comment on this article? Share on Facebook!

By Steve Cook

The median downpayment made by all homebuyers in 2012 was 9 percent, ranging from 4 percent for first-time buyers to 13 percent for repeat buyers. The median down payment was the lowest since 2009 but still far above the levels during the housing boom, when nearly half of first-time buyers made no downpayment at all.

First-time buyers who financed their purchase used a variety of resources for the downpayment: 76 percent tapped into savings; 24 percent received a gift from a friend or relative, typically from their parents; and 6 percent received a loan from a relative or friend. Eleven percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds. Ninety-three percent of entry-level buyers chose a fixed-rate mortgage, reported the National Association of Realtors.

Forty-six percent of first-time buyers financed with a low-downpayment FHA mortgage, and 10 percent used the VA loan program with no downpayment requirements. Forty-two percent cut spending on luxury items to buy their first home, 35 percent cut spending on entertainment and 27 percent cut spending on clothes.

In 2005, the median first-time home buyer scraped together a down payment of only 2 percent to buy a $150,000 home. Two years later, in 2007, the median downpayment by first-time buyers was still only 2 percent and 45 percent purchased with no money down – the same as in 2006. That year 43 percent of first-time home buyers purchased their homes with no-money-down loans.

After lenders tightened standards in the wake of the housing crash, the median downpayment soared, reaching 11 percent in 2010-2011. First time buyers put about 5 percent down in 2011. Repeat buyers, pooling equity with savings, typically put down about 15 percent. Investment and vacation-home buyers have been paying higher down payments than those buying a primary residence. The median down payment for both was 27 percent, according to NAR’s 2011 Profile of Investment and Vacation Buyers.

“First-time buyers historically make small downpayments, but repeat buyers like to put down 20 percent if they can to avoid paying mortgage insurance,” NAR’s Paul Bishop says. “The general loss in home value since the peak of the housing boom means many repeat buyers in recent years had to make smaller downpayments. Fortunately, prices have turned up this year and are showing sustained increases, so we’re on the road to a recovery in home equity.”

For more information, visit www.realestateeconomywatch.com.

Want instant access to great articles like this for your blog or newsletter? Check out our 30-day FREE trial of REsource Licensed Real Estate Content Solutions. Need easy stay-in-touch e-Marketing solutions too? Try Pop-a-Note for 99 cents!
Join RISMedia on Twitter and Facebook to connect with us and share your thoughts on this and other topics.




Copyright© 2014 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Content on this website is copyrighted and may not be redistributed without express written permission from RISMedia. Access to RISMedia archives and thousands of articles like this, as well as consumer real estate videos, are available through RISMedia's REsource Licensed Content Solutions. Offering the industry’s most comprehensive and affordable content packages. Click here to learn more! http://resource.rismedia.com