“Down payments have always been important, but in the current market, where interest rates remain high and volatile and home values are stable or rising, boosting the amount you put down can make the difference between a home that’s affordable and one that’s not,” Zillow’s chief economist, Skylar Olsen, wrote in an analysis yesterday. 

The analysis, looking at major metropolitan areas, found homebuyers earning the median income need to put down 35.4%, which equates to almost $127,750, to comfortably afford payments on the typical home in America. 

Comfortably, in this case, means you’re spending no more than 30% of the typical income in your specific area on housing—so your mortgage payment, property taxes, and insurance. Anyone who spends more than 30% of their income on housing is considered cost-burdened, and severely-cost burdened if housing takes up more than half their income. (In May, the value of a typical home was $360,310, and the typical monthly mortgage payment was $1,931, after a 20% down payment, per Zillow). 

“In more expensive markets, where home values have long outpaced incomes, middle-income households need an even bigger down payment share on top of the bigger price tag,” Olsen wrote, pointing to some sunny California cities, among others. 

In Los Angeles, for one, a median-income household needs to put down 81.1%, or $780,203, to afford the typical home and its monthly payments; she called that percentage, the highest in the nation, “nearly impossible.” In San Jose, they’d need to put down 80.9%, or more than $1.3 million, “which is more than the typical home is worth in every other major market.” 

In New York City, median-income households would need to come up with a more than 60% down payment, in Miami, they’d need to come up with a 64.5% down payment—and the list goes on. 

“A median-income household in Seattle—making around $116,000—would need about $462,000 to lower the debt enough to comfortably afford the monthly payment on the typical home, worth almost $753,500,” Olsen wrote. “It would take almost 24 years to build up that kind of savings if that household saved 10% of their income every month into a cash account earning a guaranteed 4% return.”

Olsen continued with another example: “In a more affordable market like Atlanta, a median-income household would need more than $118,000 saved for 30.5% down on the typical home in that market, currently valued at almost $387,500. That would take more than 10 years,” she wrote.

People across the country already struggle to come up with even 20% down. The National Association of Realtors found the typical down payment in the year ending June 2023 was just 8% for first-time buyers and 19% for repeat buyers. And they often rely on outside help: Last year, 43% of buyers used a gift from family or friends for part of their down payment, according to Zillow. A separate Redfin-commissioned survey found more than a third of millennials and Gen Zers planning to buy a home expect their parents, or family, to help with their down payment.

There’s only 10 out of 50 major metropolitan areas where a household earning the median income can put less than 20% down and still have an “affordable” payment on the typical home, Zillow found. “Most are in the Midwest, where home values have largely grown at a strong clip in recent years,” Olsen wrote. 

Austin, Jacksonville, Charlotte, and Raleigh are others where a median-income household can put 20% down. “The relative affordability of these markets is a big reason why many of them were boom markets during the pandemic, and likely will be into the future,” she wrote. If so, they may not be considered affordable for much longer.