Money & The Economy

Millennial Home Buyers Most Likely to Put Less Than 20% Down

The largest generation of home buyers also gets the most money from friends or family to make it work and is most likely to tap multiple sources

  • Putting 20 percent down is conventional wisdom, but fewer than half of buyers do it.
  • First-time buyers are more likely to cash out investments or use retirement funds toward a down payment.
  • Buyers in Atlanta are more likely to put down 5 percent or less than they are to put down 20 percent or more.

Saving for a down payment is the biggest hurdle to homeownership, and the size of that down payment sets the stage for the entire home shopping experience. It is an indicator of what can or It can make the difference between a monthly mortgage payment that’s affordable and one that stretches a household’s budget too thin.

The 2018 Zillow Group® Consumer Housing Trends Report analyzed home buyers nationally and in five major metro areas – AtlantaChicagoWashington, D.C.Phoenix and San Francisco – and their decisions about their down payments, including how much they put down and where they got the money. The survey revealed that just as U.S. housing markets vary greatly by region, so do down payment trends.

A down payment of 20 percent of a home’s purchase price is a longstanding benchmark, to keep monthly payments lower, save on interest and avoid paying for costly mortgage insurance. Forty-three percent of buyers nationally put down 20 percent or more, the survey data show. Atlanta and Phoenix had the smallest share of buyers — at just over 30 percent — putting that much down. Buyers in Phoenix were just as likely to put down 5 percent or less as they were to put down 20 percent or more. Even more concerning are buyers in Atlanta, who put down less than 5 percent more often than they put down at least 20, which opens them up to greater risk of becoming underwater on their mortgages. Buyers in ChicagoSan Francisco and Washington, D.C., however, are at least as likely as the typical national buyer to put down at least 20 percent.

Zillow research has shown it takes more than seven years for a typical American home buyer to save a 20 percent down payment on the typical-valued home. In some markets it’s much higher; San Francisco, for example, pencils out to more than 18 years to save the $193,440 needed. Still, more than half of buyers there put down 20 percent or more. So how do they manage that significant barrier to home ownership?

The Consumer Housing Trends Report shows that savings still account for the largest chunk, with 70 percent of buyers nationwide saying savings made up at least some portion of their down payment. Second (39 percent) was proceeds from a previous home sale, which typically accounted for about 20 percent of the total down payment. What does that mean for first-time buyers who don’t have that equity nest egg? Fifty-one percent said their down payment included a gift and/or loan from family or friends.

For millennial buyers – the largest group of buyers and the most likely to use multiple funding sources for their down payment –about half used a gift or loan from family or friends for at least a portion of their down payment, accounting for about one-fifth of the down payment on average. Other responses included investments and retirement funds.

“Saving up for a down payment can be tough and requires good budgeting and long-term planning, especially when for many of us the cost of rent and everyday life outpaces what we’re able to put in the bank. Even if you don’t have plans to buy a home in the next year or two, it never hurts to start setting aside savings for a future home purchase,” said Zillow senior economist Aaron Terrazas. “There are many mortgage options that require less than 20 percent down, but buyers should be careful that they don’t set themselves up to be underwater. Interest rates are rising, of course, but for many, waiting a bit longer and saving for a larger down payment might still be the way to go as they weigh their current stability and housing needs against their long-term futures.”

Metropolitan Area

Median Home


Share of buyers
who put down 20
percent or more

Share of buyers
who put down 5
percent or less

United States





San Francisco, CA





Washington, D.C.





Chicago, IL





Atlanta, GA





Phoenix, AZ






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Carl Fox

Carl Fox is the senior money and finance writer for Conservative Daily News. Follow him in the "Money & The Economy" section at CDN and see his posts on the "Junior Economists" Facebook page.

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