The share of buyers taking advantage of low down payment mortgages dropped to an 11-year low in 2014, according to a report from RealtyTrac.
The report, which analyzes nearly 20 million purchase loans for single-family homes and condos nationwide from 2004 through 2014, shows that about 25% of buyers put less than 3% down using conventional or Federal Housing Administration loans. This compares to 27% in 2013, 46% in 2009 (when a first-time home buyer tax credit stimulated purchases) and 37% in 2006.
Although this might seem like a good deal of fluctuation, down payments have averaged between 13% and 16% for the past decade, according to RealtyTrac. The average down payment hit a high of 15.6% ($58,900) in 2013, but tumbled to an 11-year low in 2009, when it was 12.9%.
The average down payment in 2013 was around $58,900, while in 2014, it fell slightly to $58,496.
As is to be expected, lower down payment loans, particularly those ranging from 0% to 3%, are predominantly used for lower-priced homes, typically under $200,000 – whereas for homes costing more than $500,000, borrowers are typically putting down 20% or more.
The number of borrowers taking out 3% down payment loans is expected to increase in 2015 mainly because of new programs introduced by Fannie Mae and Freddie Mac allowing up to 97% loan-to-value ratio on select loans for select borrowers.
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