Steep post-pandemic down payments and mortgage rates have made purchasing a home challenging for many prospective buyers. However, a new report from Realtor.com has found homebuyers may be able to breathe a sigh of relief.
Median down payments dropped to their lowest level in four years, according to the report. At the same time, mortgage rates have fallen from a year ago and existing-home prices increased only modestly in the first quarter of the year.
Though housing market conditions remain far from ideal, Jake Krimmel, senior economist at Realtor.com, says the report’s findings should offer hope to prospective homebuyers.
“With most local housing markets moving in a buyer-friendly direction, we are seeing more homes on the market, builders slashing prices and lower asking prices on existing homes than a year ago,” he says. “These are the important signs that buyers have been hoping would materialize: better market balance, falling prices and lower rates. If these trends hold up, we’ll see affordability continue to improve, even if it’s a slow journey, just bit by bit.”
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The Median Down Payment Hits Lowest Level Since 2021
In the first quarter of 2026, the median down payment fell to $23,400, hitting its lowest level since 2021 and dropping from $28,900 a year ago. This represents a 19% drop year over year.
The report notes this reflects the broader housing market’s cooling prices and rising supply — “a combination that is giving buyers more negotiating room and reducing the pressure to lead with an outsized down payment,” the report says.
The South and West experienced the greatest year-over-year declines in down payment amounts. The median down payment in the South was $21,100 in the first quarter of 2026, compared with $23,700 the year before. In the West, it dropped from $53,400 to $43,700 early this year. The report notes that trend aligns with rising inventory and moderating prices in those areas.
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Government Loans Are Making Up a Greater Portion of Sales
The report also found that a substantial proportion of borrowers are taking advantage of government-backed mortgage programs, which may require a lower down payment than conventional conforming loans.
Loans backed by the Federal Housing Administration and the Department of Veterans Affairs now account for a third of purchase mortgages, according to the report. VA loans alone account for 11.7% of purchase mortgages in early 2026, their highest share in over a decade.
“Government-backed programs are serving as a critical pressure valve, keeping the door to homeownership open for buyers who might otherwise be shut out entirely,” says Hannah Jones, senior economic research analyst at Realtor.com, in a release. “But the growing reliance on FHA and VA financing also reflects how much the conventional path to homeownership has narrowed for buyers without significant cash reserves.”
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FHA loans have a minimum down payment as low as 3.5%, and VA loans don’t have a minimum down payment requirement. Those who aren’t first-time borrowers typically need to put down 5% on a conventional conforming loan.
The fact that buyers are taking advantage of government-backed loan programs “tells us the market is broadening,” says Jones, “but the path to homeownership remains a difficult one for many households.”
Indeed, a U.S. News survey in May found homebuyers are seeking out creative ways to make buying a home more accessible. Fifteen percent of respondents plan to split the cost of purchasing a home with a friend, while 12% will buy with a parent and 9% with a sibling. Meanwhile, 57% of prospective homebuyers reported taking on additional work to qualify for a larger mortgage or to cover a higher monthly payment.
While down payments increased in March and April, according to the report, it remains to be seen whether they will reach typical spring-season levels. Low-down-payment regions in the South and Midwest accounted for 71% of sales in 2025, and changes in those markets could affect national numbers. On top of that, buyers using low-down-payment government programs are most likely to exit the market if economic uncertainty continues to grow.
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The Price of Entry May Be Dropping for Prospective Homebuyers, Survey Finds originally appeared on usnews.com
