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Homebuyers have to spend more than two-thirds of the average annual income to afford a 20 percent down payment—or, arguably, more favorable mortgage loan terms. According to Zillow, a 20 percent down payment on a median-priced home ($192,500) is $38,500; the median income is $57,397.

The ratio rises in the nation’s hottest housing markets. In Los Angeles, Calif., for instance, a 20 percent down payment on a median-priced home ($590,000) is $118,000, higher than the market’s $64,806 median income.

“Saving enough cash for a down payment is a major barrier to homeownership, especially in expensive markets, where a 20 percent down payment can cost nearly $200,000,” says Jeremy Wacksman, Zillow’s chief marketing officer. “While it’s possible to buy a house with a smaller down payment, 20 percent ensures the best rates. As important as it is to find a monthly payment you can afford, some buyers’ budgets will come down to the amount of cash they can bring to the table.”

Indianapolis, Ind., Kansas City, Mo. and Pittsburgh, Pa. have the lowest ratio of income to down payment of the markets analyzed, at 48 percent.

One in five homebuyers say the down payment is their top concern, with the majority saving for it gradually, according to Zillow. Some, still, are putting gifts or loans from family and friends towards the payment.

Though it is not a requirement, a 20 percent down payment can result in significant long-term savings. Homebuyers with more down generally receive better mortgage loan terms—lowering the interest rate by half on a $200,000 loan saves $20,000, for instance.

For more information, please visit www.zillow.com.

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