The Typical Millennial Homebuyer Downpayment Is 12 Percent

According to mortgage software company Ellie Mae, the typical home buyer born between 1980-1999 made a 12% down payment during the twelve months ending April 2020.

June 12, 2020 by Dan Green

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The Housing Headline

Millennial-aged home buyers rarely make 20% down payments on homes.

The News Behind The Housing Headline

According to Ellie Mae, the typical Millennial-aged home buyer makes a 12 percent down payment when they buy a home.

The data spans the twelve months ending April 2020 and comes from the mortgage software company’s Millennial Tracker, a monthly closed-transaction analysis for home buyers born between 1980-1999.

The report shows that home buyers born after 1980 regularly make down payments of less than twenty percent and that the average size of a home buyer’s downpayment varies by loan type:

  • Conventional mortgages: 16 percent downpayment
  • FHA mortgages: 4 percent downpayment
  • VA mortgages: 9 percent downpayment

The report shows little difference in the downpayments made by married buyers (12 percent) vs. non-married buyers (11 percent); by single male buyers (12 percent) vs. single female buyers (12 percent); and by home buyers in their 20s (12 percent) vs. home buyers in their 30s (13 percent).

The most significant correlation to downpayment size is loan size. Larger loan sizes correlate with smaller downpayment percentages.

The average Millennial homebuyer age is now 30.1 years.

Why This Housing News Matters To You

According to the National Association of REALTORS® and its annual Home Buyers and Sellers Generational Trends Report, “saving for a downpayment” delays Millennial homeownership more than any other factor.

When you’re buying a single-family home , though, your lender doesn’t require a large downpayment – and you might not want to make one, anyway.

Making a smaller downpayment leaves more cash in your bank account and having access to cash is good. Cash is a safety net for homeowners.

Cash in the bank can be used for:

  • Emergencies such as injury or illness
  • Urgent home or auto repairs that aren’t covered by insurance
  • Loss of income due to job loss

By contrast, downpayments are inaccessible except through refinancing or selling your home – neither of which is an instant transaction like writing a check or withdrawing cash from a bank.

It’s okay to make a down payment of less than twenty percent and, for a lot of home buyers, it’s smarter than sacrificing everything you’ve saved. With a low downpayment loan, you can buy the home, save the cash, and keep yourself liquid for life’s big and small emergencies.

At today’s mortgage rates, the mortgage payment on a $219,000 home loan would be approximately $1,000 per month.

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