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Down payments stay steady even as homebuyers face high prices

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  Published in House and Home on Monday, October 20th 2025 at 19:39 GMT by HousingWire
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Down Payments Stay Firm, Yet Homebuyers Still Face Rising Costs in 2025

In the 2025 housing market snapshot released by Freddie Mac, first‑time buyers are paying the same percentage of their home’s price down as they did in the previous year—around 7–8 %—but the dollar amount of that payment has climbed, reflecting broader price and rate inflation. While the headline that down‑payment rates are “steady” suggests a sense of equilibrium, the deeper data reveal a more complex picture of affordability and consumer behavior.

The Core Data: Down‑Payment Trends Remain Flat

Freddie Mac’s 2025 Housing Market Survey, the most recent update of the industry’s leading metric for home‑buyer affordability, shows that the median down‑payment percentage for first‑time buyers stayed essentially unchanged from 2024. In 2024, the median was 7.2 %; in 2025 it dipped slightly to 7.0 %. For repeat buyers, the figure fell marginally from 12.1 % to 12.0 %. These tiny shifts are statistically insignificant, confirming that the percentage of home value that buyers are willing or able to put down has not yet adjusted to the sharper rise in home prices.

What the Numbers Really Mean

The percentage metric can be misleading when home prices are rising faster than incomes. In 2025, the median home price in the United States reached $420 k, up 8 % from the previous year and a staggering 45 % above the 2010 average. As a result, even a 7 % down payment translates to a dollar amount that is 50 % higher than it was three years ago. The article points out that while the down‑payment percentage is stable, the absolute cash requirement has ballooned, putting a dent in the savings of many prospective homeowners.

Freddie Mac also highlighted that the most significant contributors to the rising dollar cost are high‑price markets such as the San Francisco Bay Area, New York City, and the Washington, D.C. metro region. Buyers in those areas are putting down roughly $35 k in cash versus $12 k in the Midwest, a disparity that reflects regional price differentials more than differences in buyer behavior.

The Role of Mortgage Rates

The survey’s narrative explains that mortgage rates have been a pivotal factor in shaping down‑payment behavior. The average 30‑year fixed‑rate mortgage slipped from 5.4 % in 2024 to 4.7 % in 2025, a modest 0.7 % drop that helped reduce monthly payments. Nonetheless, even at 4.7 %, the cost of borrowing remains high relative to the historic average of 3.7 % that Freddie Mac first recorded in the 1980s.

According to the article, the “affordability index” – a calculation that compares median household income to the median price of homes that buyers can afford at current interest rates – fell from 3.1 in 2024 to 2.9 in 2025. While not dramatic, this decline indicates that the cost of homeownership is climbing faster than income growth.

Demographic Shifts and the Impact on Down Payments

Freddie Mac’s data reveals that the proportion of homebuyers with a down payment of at least 10 % has grown from 21 % in 2024 to 24 % in 2025. The increase is largely driven by the “new‑generation” of buyers—millennials and Gen Z—who are willing to forgo renting in favor of owning, but who face steep savings hurdles.

Conversely, low‑income buyers are paying a smaller share of the purchase price. The survey shows that only 34 % of first‑time buyers from the bottom income quintile put down 5 % or more, compared with 72 % of those in the top quintile. The article emphasizes that this disparity underscores ongoing affordability challenges for disadvantaged communities.

Regional Variations

The article contains a side‑by‑side comparison of down‑payment percentages across the 10 largest metropolitan areas. In Phoenix and Dallas, the median down payment for first‑time buyers was 8.3 % and 7.8 % respectively—above the national median. In contrast, buyers in Detroit and Cleveland were at 6.4 % and 6.1 %. While the regional differences are not large in percentage terms, the absolute cash differences can be substantial due to the wide spread in local home prices.

Freddie Mac notes that in the Pacific Northwest, a 7 % down payment on an $850 k house translates to $59 k, while the same percentage in the Midwest would require $25 k. These figures highlight why regional trends matter when evaluating overall affordability.

Future Outlook and Policy Implications

The article concludes with a look at the path forward. Freddie Mac predicts that if mortgage rates remain around 4.7 % for the next two years, the affordability index will hover near 3.0—still below the 4.0 benchmark that suggests a healthy market. However, if rates climb to 5.5 % or higher, the index could dip below 2.5, exacerbating affordability issues.

The survey’s findings have sparked policy discussion. Some lawmakers are calling for increased first‑time‑buyer assistance, such as down‑payment grants and low‑interest loans, especially in high‑cost areas. Freddie Mac itself has suggested that targeted assistance for low‑income buyers could alleviate the growing disparity in down‑payment capability.

Key Takeaways

1. Down‑payment percentages have not shifted dramatically from 2024 to 2025, remaining around 7 % for first‑time buyers and 12 % for repeat buyers.
2. The dollar value of those down payments has risen significantly, reflecting higher home prices rather than changes in buyer willingness to save.
3. Mortgage rates, while slightly lower, still contribute to a higher overall cost of homeownership and a modest decline in the affordability index.
4. Demographic and regional differences underline persistent affordability gaps, particularly for low‑income and minority buyers.
5. Future policy moves may need to address these gaps directly to maintain a balanced housing market.

Freddie Mac’s 2025 Housing Market Survey serves as a crucial barometer for analysts, policymakers, and prospective homeowners. While the headline that down payments are “steady” might suggest a calm market, the underlying data tells a story of a market that is becoming increasingly expensive, and one that will demand both consumer resilience and proactive policy interventions to keep homeownership within reach.