Coming up with a 20 percent downpayment is one of the biggest obstacles to homeownership for many prospective buyers. In the U.S., to buy a home at the median price…

A 20% Downpayment Represents This Much of Your Annual Income

A 20% Downpayment Represents This Much of Your Annual Income

Coming up with a 20 percent downpayment is one of the biggest obstacles to homeownership for many prospective buyers.

In the U.S., to buy a home at the median price of $192,500, a buyer must scrape together $38,500 in cash – plus any closing costs and moving expenses — to make sure they qualify for financing and get the best terms on their mortgage.

How much of that 20 percent eats into an annual household income is the subject of a Zillow Group Report. On average, a downpayment will cost buyers two-thirds of their annual income, Zillow found.

Among the costliest housing markets, buyers in the San Jose, San Francisco and Los Angeles metro areas must come up with the largest percentage of their income to buy a home – 182 percent of the average annual income to put 20 percent down on the median home.

In San Jose, where the median income is $105,455, a down payment on the median $961,600 home is $192,320.

At the other end of the spectrum, buyers in Pittsburgh, Indianapolis, and Kansas City would have to set aside the smallest slice of their income for the ideal down payment: 48 percent of the median annual wage.

One in five prospective home buyers said saving for a down payment is their top concern, second only to finding an affordable home, which was their top concern. Most – 56 percent – saved for their down payment the old-fashioned way, setting aside a little money at a time, according to the Zillow Group Report.

“While it’s possible to buy a house with a smaller down payment, 20 percent ensures the best rates,” said Zillow Chief Marketing Officer Jeremy Wacksman. “As important as it is to find a monthly payment you can afford, some buyers’ budgets will come down to the amount of cash they can bring to the table.”

Nearly half of all home buyers are buying for the first time, according to Zillow. Those buyers can’t rely on the equity in their current home and must come up with the cash.

See Zillow’s chart below:

Metro Area

Zillow Home
Value Index

Median 20%
Down Payment

Median Incomeiv

Percent of Income
Required for
Down Payment

United States

$ 192,500

$ 38,500

$ 57,397

67%

New York/ Northern New Jersey

$ 400,500

$ 80,100

$ 70,502

114%

Los Angeles

$ 590,000

$ 118,000

$ 64,806

182%

Chicago, IL

$ 203,400

$ 40,680

$ 65,002

63%

Dallas-Fort Worth, TX

$ 200,400

$ 40,080

$ 62,607

64%

Philadelphia, PA

$ 213,800

$ 42,760

$ 67,068

64%

Houston, TX

$ 176,000

$ 35,200

$ 62,099

57%

Washington, DC

$ 378,000

$ 75,600

$ 95,176

79%

Miami-Fort Lauderdale, FL

$ 245,200

$ 49,040

$ 51,528

95%

Atlanta, GA

$ 172,300

$ 34,460

$ 61,967

56%

Boston, MA

$ 408,400

$ 81,680

$ 80,846

101%

San Francisco, CA

$ 824,600

$ 164,920

$ 91,777

180%

Detroit, MI

$ 134,400

$ 26,880

$ 55,153

49%

Riverside, CA

$ 318,200

$ 63,640

$ 57,581

111%

Phoenix, AZ

$ 228,900

$ 45,780

$ 57,317

80%

Seattle, WA

$ 412,600

$ 82,520

$ 77,809

106%

Minneapolis-St Paul, MN

$ 235,000

$ 47,000

$ 72,981

64%

San Diego, CA

$ 526,500

$ 105,300

$ 69,374

152%

St. Louis, MO

$ 147,800

$ 29,560

$ 58,114

51%

Tampa, FL

$ 177,200

$ 35,440

$ 49,805

71%

Baltimore, MD

$ 256,600

$ 51,320

$ 73,893

69%

Denver, CO

$ 352,800

$ 70,560

$ 72,470

97%

Pittsburgh, PA

$ 133,400

$ 26,680

$ 55,671

48%

Portland, OR

$ 351,800

$ 70,360

$ 66,047

107%

Charlotte, NC

$ 166,600

$ 33,320

$ 55,923

60%

Sacramento, CA

$ 350,200

$ 70,040

$ 65,002

108%

San Antonio, TX

$ 156,200

$ 31,240

$ 55,796

56%

Orlando, FL

$ 198,100

$ 39,620

$ 52,189

76%

Cincinnati, OH

$ 147,800

$ 29,560

$ 58,567

50%

Cleveland, OH

$ 130,600

$ 26,120

$ 52,565

50%

Kansas City, MO

$ 151,900

$ 30,380

$ 62,639

48%

Las Vegas, NV

$ 213,700

$ 42,740

$ 52,690

81%

Columbus, OH

$ 160,400

$ 32,080

$ 60,068

53%

Indianapolis, IN

$ 133,600

$ 26,720

$ 55,921

48%

San Jose, CA

$ 961,600

$ 192,320

$ 105,455

182%

 

 

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