Average Down Payments Rise in Q4

Down payments on houses trended upward in the fourth quarter of 2014, jumping more than one and a half percentage points from the previous year, LendingTree said Tuesday.

According to the company's most recent data, the average down payment on conventional, 30-year fixed-rate loan offers made to LendingTree borrowers last quarter was 17.59 percent, up from 16.01 percent in the final months of 2013. A down payment of 20 percent is typically required for borrowers to avoid having to pay for mortgage insurance.

In dollar amounts, the average down payment was up about $2,000 to $47,585.

"The improving job market, rising home values and low mortgage rates have helped to bring borrowers with sizeable down payments in to the housing market during [the] fourth quarter," said Doug Lebda, founder and CEO of LendingTree. "It's encouraging to see responsible borrowing behavior. A substantial down payment will allow borrowers to build home equity, ease lender risk, avoid paying [private mortgage insurance] and reduce monthly mortgage payments, all of which will help to further strengthen the overall economy."

While down payments have been on the rise, that trend may not last with the launch of new low down payment products by Fannie Mae and Freddie Mac and a recent reduction in annual premiums for mortgages insured by the Federal Housing Administration (FHA).

Arkansas ranked lowest among the states for down payment percentages, averaging 14.70 percent in Q4 ($31,293 by dollar amount). Also sitting low on the list were North Dakota (15.09 percent, or $30,869); Indiana (15.18 percent, or $32,307); Missouri (15.55 percent, or $31,808); and Ohio (15.62 percent, or $31,140).

At the other end, the District of Columbia boasted the highest average down payment percentage at 20.26 percent, followed by New York (20.02 percent) and California (19.83 percent).

At the market level, the Golden State was home to the highest down payment percentages in the nation, led by San Jose (23 percent), San Francisco (22.16 percent), and San Diego (21.29 percent).