Lisa Mailhot | June 18, 2025
Buyers
For the first time in nearly two years, the typical U.S. homebuyer’s down payment has dropped in dollar terms. “The typical U.S. homebuyer’s down payment is $62,468, down by roughly 1% year over year.” While this doesn’t sound drastic, it reflects broader economic adjustments. Percentage-wise, down payments remain steady at 15%, but buyers are clearly adapting by targeting less expensive homes.
This trend reflects more than just dollar signs—it’s about buyer psychology. As affordability challenges grow, especially with mortgage rates hovering around 7%, buyers are making careful decisions. First-time buyers are back, hunting for starter homes and tapping into down payment assistance options.
Although home prices increased 1.4% year over year in April 2025, that’s a significant slowdown compared to the 4% rise seen the year before. Slower price growth is one reason down payments are dropping. But the bigger story is that many mortgaged buyers are simply purchasing more affordable homes.
“Mortgaged homebuyers are likely purchasing cheaper homes because of affordability challenges.” Not everyone is laying down 20% anymore. In places like Jacksonville, Detroit, and Virginia Beach, median down payments have dropped as low as 2–5%.
Government-backed loans are helping many buyers break into the market with smaller upfront costs. “Roughly one of every seven (15.3%) of mortgaged sales used an FHA loan in April,” and VA loans hit a five-year high for April at 7.2%.
FHA loans, ideal for low-to-moderate-income and first-time buyers, require as little as 3.5% down. VA loans, which are exclusive to military families, often require no down payment at all. This shift signals that sellers are now more willing to consider buyers using these types of loans—something that rarely happened during the red-hot market of 2021 and early 2022.
Even as mortgage buyers navigate affordability, cash buyers continue to dominate certain markets. “Just under one in three (30.7%) of home sales were all cash in April, down slightly from 31.6% a year earlier.” The slight dip reflects falling mortgage rates, but the share of cash purchases remains high.
Some markets, especially in Florida and parts of the Midwest, are seeing as many as 50% of homes purchased in cash. These buyers often have a competitive edge, especially in bidding wars or when sellers prioritize quick closings.
Here in Orange County, the dynamics mirror many national trends—but with local twists. In Anaheim, for example, the typical buyer puts down 25%, one of the highest in the country. Cash purchases make up nearly 29% of sales, and the use of FHA loans is relatively low at 4.8%, showing the region’s continued demand for conventional financing and well-qualified buyers.
The market is shifting. With down payments softening and government-backed loans on the rise, we’re officially in a buyer-friendly season. Whether you’re buying your first home or planning to list your property in a changing landscape, now is the time to move smartly. If you’re considering a move in or around Orange County, let’s connect. At Whitestone Real Estate, we combine local expertise with data-driven strategy to help you navigate every market turn with confidence.
Reference: Anderson, D. (2025, June 16). Homebuyers’ down payments are shrinking for the first time in almost two years as housing market cools. Redfin.
Home values are now falling annually in four major U.S. cities, signaling a shift in the national housing market. Learn which metros are affected, why this matters, an… Read more
Despite economic uncertainty, the luxury real estate market continues to thrive in 2025. High-end buyers are capitalizing on cash transactions, turnkey properties, and… Read more
Southern California’s housing market is cooling in mid-2025, with rising inventory and more price cuts across Newport Beach and Orange County. Buyers are gaining contr… Read more
Explore the Southern California real estate market in Q2 2025 with insights on inventory trends, price changes, and buyer behavior in cities like Corona, Costa Mesa, D… Read more
As mortgage rates drop to their lowest level in months, homebuyers are gaining more purchasing power. Discover how this shift is benefiting house hunters and what it m… Read more
California is tackling its housing crisis by rolling back the California Environmental Quality Act (CEQA), long criticized for stalling new developments. This game-cha… Read more
The housing market is experiencing some noticeable changes, from fewer new listings to a drop in buyer activity. In this blog, we dive into the latest market shifts, w… Read more
The median sales price of a U.S. home has surged to a record high of $396,500, but with more homes on the market, buyers are in a stronger position to negotiate. Learn… Read more
Mortgage applications have increased by 1.1% following a decline the previous week, signaling some shifts in the housing market. In this blog, we explore the latest mo… Read more
Let's find a time that suits you best to chat about your goals, show you how we work, and figure out how we can help you the most