Photo credit: Michael Patrick
First time buyers in the USA are coming out of the woodwork, as down payments for homes fall to their lowest level in three years.
The latest report from RealtyTrac shows that the average down payment for single family homes, condos and townhomes purchased in the first quarter was 14.8 per cent of the purchase price, down from 15.2 per cent in the previous quarter and 15.5 per cent a year ago. The amount is now at its lowest level since Q1 2012.
The average down payment in dollars was $57,710 in the first quarter, up slightly from $57,618 in the previous quarter and down slightly from $57,992 in the first quarter of 2014.
The report also shows that the average down payment for FHA purchase loans originated in the first quarter was 2.9 per cent of the purchase price while the average down payment for conventional loans was 18.4 percent of the purchase price. The average down payment in dollars for FHA purchase loans originated in the first quarter was $7,609 while the average down payment for conventional loans backed by Fannie Mae and Freddie Mac was $72,590.
“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,” says Daren Blomquist, vice president at RealtyTrac, “given that first time homebuyers typically aren’t able to pony up large down payments.”
“Also helping tilt the balances toward first time homebuyers in the first quarter is less competition from the large institutional investors that have been buying up starter home inventory as rentals,” he adds.
The report also analysed first quarter down payments for purchase loans in 367 counties nationwide with sufficient data and a population of at least 100,000. Among the nation’s 20 largest counties, the lowest were in Wayne County, Michigan (12.6per cent) and Clark County, Nevada (13.3 per cent). The largest were Manhattan, New York (37.2 per cent), Kings County, New York (29.3 per cent) and Queens County, New York (27.3 per cent).