NAR revealed that first-time buyers typically put down between 6% and 9% since 2018, while repeat buyers had a higher average of 23% last year due to increasing home equity.
In contrast, repeat buyers made a 13% down payment in 2014, according to Lautz.
Throughout NAR’s data collection since 1989, the median down payment for first-time buyers has not exceeded 10%.
“This essential information guides potential buyers on how much to save and how long the process might take,” said Lautz.
Financing options, misplaced guidance
Although conventional loans are common for homeownership, many first-time buyers also utilize government financing.
Approximately 29% of first-time buyers opted for Federal Housing Administration (FHA) loans with a minimum 3.5% down payment, while 9% chose U.S. Department of Veterans Affairs (VA) loans that require no down payment.
Lautz highlighted the importance of seeking accurate information.
“Unfortunately, 97% of NAR members surveyed reported that their clients sought advice from family members rather than real estate agents, even if the family member would not be living in the home,” she said.
She recommended that prospective buyers seek professional assistance from mortgage brokers, housing counselors, or platforms like the Down Payment Resource website to access local and state assistance programs.
Where the money comes from
Almost 70% of first-time buyers used personal savings for their down payment, while 25% received gifts from family or friends, down from a peak of 36% in 2010 during a federal first-time homebuyer tax credit period.
With the median age of first-time buyers at a record 38, fewer individuals are seeking financial aid from family members.
“Asking family for help in buying their first home can be awkward,” Lautz noted.
There is a rising trend of first-time buyers using financial assets like stocks, retirement accounts, or even cryptocurrency for down payments, with 21% utilizing these resources in 2024 compared to 8-11% between 1997 and 2002.
Inheritances are also playing a slightly larger role, with 7% of first-time buyers using inherited funds, although still below 10%.
Understanding realistic down payment expectations and available loan options is crucial as prospective buyers navigate the complex housing market, according to Lautz.
“Relying on the right sources is better than outdated or misinformation,” she emphasized.