Zillow: Middle-Class Americans Must Put Down More Than $127,000 to Afford Monthly Mortgage

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A new Zillow analysis shows that to comfortably afford a typical U.S. home, a median-income homebuyer needs to put down nearly $127,750, or 35.4%.

In 2019, when mortgage rates hovered near 4% and the typical home was worth about 50% less than now, that home would’ve been affordable with no money down, Zillow said.

The $127,750 down payment needed today is what a household making the median income would have to put down to afford a U.S. home valued at about $360,000 to avoid monthly mortgage payments that consume more than 30% of that household’s monthly income, Zillow reported.

“Down payments have always been important, but even more so today,” said Skylar Olsen, chief economist at Zillow. “With so few available, buyers may have to wait even longer for the right home to hit the market, especially now that buyers can afford less.”

Olsen noted mortgage rate movements can make the difference between affording that home or not. “Saving enough is a tall task without outside help — a gift from family or perhaps a stock windfall,” she said. “To make the finances work, some folks are making a big move across the country, co-buying or buying a home with an extra room to rent out.”

Down payment assistance is a resource that is too often overlooked, Olsen said.

For those who qualify, down payment assistance can supplement savings and help a buyer enter homeownership more quickly. In Minneapolis, for example, the average amount of down payment assistance available across the metro is just under $22,750, according to data from Down Payment Resource. A median-income buyer in Minneapolis without down payment assistance would need a 27% down payment to comfortably afford the typical home. With $22,750 in down payment assistance, they would need to put 21% down.

Down Payment Resource Founder and CEO Rob Chrane said down payment assistance providers have responded to the difficult housing market by increasing the number of programs offered and expanding inventory options with support for manufactured homes and owner-occupied multi-unit homes.