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November 13th, 2012

NAR Survey: Homebuyers making smaller down payments



Money houseDown payments are a big deal for most home buyers, whether they are first-timers or repeat purchasers. First-timers, in particular, often struggle to save enough for a down payment, while trying to understand how the size of their down payment can dictate the terms of their loan.  The National Association of Realtors 2012 Profile of Home Buyers and Sellers , offers some new insight on how recent market conditions influenced down payments.

The survey found the median down payment for all homebuyers this year was 9 percent of the purchase price. The median for first-time buyers was 4 percent while the median for repeat purchasers was 13 percent.

Paul Bishop, NAR vice president of research, explained in a statement that first-timers traditionally make small down payments while repeat buyers are more inclined to put down 20 percent, if they can, to avoid paying mortgage insurance. However, he added that many repeat buyers have made smaller down payments in recent years due to the decline in home values.

Buyers reported that they cut back their spending to save up for a home purchase. Forty-two said they spent less on luxury items, 35 percent spent less on entertainment and 27 percent cut their clothing budgets.

Down payment sources for first-time buyers

First-time homebuyers who obtained a mortgage to buy their home obtained their down payment from a variety of sources:

  • Seventy six percent tapped into savings
  • Twenty four percent received a gift from their parents or, less typically, another relative or friend
  • Eleven percent tapped into a 401(k) retirement account
  • Six percent received a loan from a friend or relative
  • Six percent sold stocks or bonds

(The total exceeds 100 percent because some respondents used multiple sources of down payment funds.)


The survey also found that 46 percent of the first-time buyers selected an FHA mortgage and. 10 percent chose a VA loan. Ninety-three percent of first-time buyers chose a fixed-rate mortgage.

The NAR’s 2012 profile is conducted annually, measuring the demographics, preferences, motivations, plans and experiences of recent buyers and sellers. This year’s eight-page survey questionnaire was mailed in July to a national sample of 93,502 home buyers and sellers who purchased a home between July 2011 and June 2012, according to county records. A total of 8,501 usable responses were received.

One Response to “NAR Survey: Homebuyers making smaller down payments”

  1. Jason Says: November 25th, 2012 at 10:13 pm

    I’m making the assumption that the article is talking about purchases of pre-existing homes and not new homes, although it doesn’t say either way. I’m not on the side that knows this for sure, but it seems like we’re still seeing normal down payments on our new homes.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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