Average Down Payment Drops to Three-Year Low

According to a report by Realtytrac, the average down payment on U.S. homes has dropped to 14.8 percent of the purchase price, down from 15.2 percent in the previous quarter, resulting in the lowest level seen since first quarter 2012.

Courtesy of Realtytrac.com

Courtesy of Realtytrac.com

“Down payment trends in the first quarter indicate that first time homebuyers are finally starting to come out of the woodwork, albeit it gradually,” said Daren Blomquist, vice president at RealtyTrac. “New low down payment loan programs recently introduced by Fannie Mae and Freddie Mac, along with the lower insurance premiums for FHA loans that took effect at the end of January are helping, given that first time homebuyers typically aren’t able to pony up large down payments.”

The percentage of low down payment loans — defined as a down payment of 3 percent or lower — made up 27 percent of all purchase loans in the first quarter, up from 26 percent in the fourth quarter, the report said.