U.S. homebuyers faced estimated monthly mortgage payments 74% higher in August than five years earlier despite putting more money down, underscoring how higher borrowing costs have overwhelmed the affordability benefit from larger down payments, according to Realtor.com’s latest Down Payment Report.
The estimated monthly principal-and-interest payment reached $2,376, compared with August 2021. A 1.4-percentage-point increase in the typical down payment share over that period reduced the monthly bill by only about $39 compared with what buyers would have paid using 2021 down-payment patterns.
The payment was also $80, or 3.5%, higher than a year earlier. At a 7% mortgage rate, Realtor.com estimated it would increase another $58 to $2,434.
“For many households, the monthly payment, rather than just the cash needed upfront, will determine how much home they can afford,” Realtor.com Senior Economist Hannah Jones said.
Buyers put down a median $27,100, or an average 13.7% of the purchase price, during the second quarter. That was up from $25,000 and 12.9% during the first quarter but below the $29,900 and 14.3% recorded a year earlier.
The $27,100 median was the lowest second-quarter level since 2021 and represented a 9.2% year-over-year decline. Down payment share fell 0.6 percentage points.
Down payments continued their seasonal recovery in July, reaching an annual high of $28,800, or 14% of the purchase price. The dollar amount remained 7.5% below the previous year, while the share was 0.5 percentage points lower.
The decline comes as buyers gain leverage from increased housing supply and softer asking prices. Realtor.com reported that active listings increased 3.6% in August from a year earlier while median list prices declined 1.3%, marking a 10th consecutive month of decreases.
The effect of changing down payments varies considerably by market. Larger down payments in high-cost, competitive metropolitan areas reduced estimated monthly costs by $205 to $269, while smaller down payments in softer markets added between $37 and $82.
Austin illustrates the pressure from financing costs. The typical listing price there has declined 18% over five years, yet the estimated monthly payment has increased 33% as higher mortgage rates offset lower prices and smaller down payments added to borrowing costs.
The Northeast continued to lead the country in down payments during the second quarter, with buyers putting down an average 18.1% of the purchase price. The West followed at 15.2%, the Midwest at 14.2% and the South at 11.9%.
All four regions recorded year-over-year declines in down payment share. The Northeast also had the highest median down payment, which was 238.7% above its second-quarter 2019 level, compared with a 141% increase in the Midwest.
Realtor.com found that 70% of the nation’s largest housing markets either favored buyers or were moving in a more buyer-friendly direction during the second quarter.
“Mortgage rates will remain the biggest swing factor for buyers,” Jones said. “A sustained decline would do more to improve affordability and bring buyers back into the market, helping keep homeownership within reach for more households.”
Realtor.com based its national down-payment analysis on Optimal Blue data through August. Payment estimates assume a 30-year fixed-rate mortgage on the average purchase price after the median down payment and use Freddie Mac’s average 30-year fixed mortgage rate.
The estimates cover principal and interest only and exclude property taxes, homeowners insurance, mortgage insurance, homeowners association fees and other ownership costs.
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