While the median home sales price saw a slight uptick in December to $427,742, down payments on homes declined as a percentage of the sale price from 16.7 percent in December 2024 to 15.2 percent.
“Down payments may be falling in part because Americans are seeking out more affordable homes due to high prices, elevated mortgage rates and economic uncertainty,” Redfin principal economist Sheharyar Bokhari said in the report.
“Sellers typically prefer buyers who make large down payments because it signals financial stability, but sellers don’t have much say in today’s market.”
Orlando experienced the largest median down payment percentage decline at 6.3 percent in December. Buyers in Charlotte, North Carolina, paid 4.4 percent less for down payments, and those in Anaheim, California, paid 3.6 percent less.
Conversely, Chicago buyers made larger down payments, spending 4.9 percent more, while Milwaukee buyers put down 3.7 percent in additional cash, and Cleveland buyers paid 3 percent more.
In terms of the amount paid, year-over-year data indicate median down payments dropped by nearly 24 percent in Orlando, nearly 23 percent in Cincinnati, and almost 19 percent in Atlanta. On the other side, the biggest hikes in down payments were seen in Cleveland at nearly 32 percent; Providence, Rhode Island, at 20.4 percent; and Baltimore at 20 percent.
In San Francisco, where the median home price was $1.3 million in January, down payments were the highest in the country at $400,310. Other California buyers in San Jose and Anaheim made average down payments of $360,000 and $270,800, respectively.
The lowest down payments recorded were made in Virginia Beach, Virginia, at just $8,700. Redfin noted the metro has the highest share of homebuyers taking VA loans, which require little or no down payment.
The report attributes the drop in cash sales to lower mortgage rates and a stronger buyer’s market. Because buyers today are facing less competition, they may be opting for mortgages instead of depleting cash reserves. Almost 15 percent of buyers in December opted for FHA loans, which typically require just a 3.5 percent down payment.
VA loans, which are available to veterans, service members, and their surviving spouses, accounted for 7 percent of mortgaged homes in December.
All-cash purchases were most popular in West Palm Beach, Florida, where a little more than 47 percent of buyers paid cash. Two other Florida locations—Jacksonville and Miami—both recorded that more than 39 percent of sales were for cash.
Just a little more than 17 percent of Seattle buyers paid cash for their homes, and California’s Oakland and Sacramento cash buyers represented less than 20 percent of all buyers.
In San Francisco, 98.1 percent of buyers used conventional loans, as did nearly 94 percent in San Jose.
