I’ve been talking about down payments a lot lately, thanks to all the new zero down and 1% down loan options that sprang out of nowhere in the past few weeks.
It seems every lender out there is beginning to introduce a lower and lower down payment requirement to get homeowners in the door. And it might be out of necessity, not just convenience.
The brains over at realtor.com crunched some numbers to determine what it would take to come up with the average down payment in America’s 15 top cities and the results weren’t very welcoming.
Perhaps that explains the resurgence of all these low-down payment mortgage programs.
Can You Set Aside $68 a Day for Five Years?
I’ll start with my own beloved city, Los Angeles, where the typical down payment is 17%. In order to squirrel away enough cash for an 83% LTV mortgage, you’ll need to set a daily savings goal of $67.95.
Yes, instead of spending money every day on gas, groceries, lattes, Uber, healthcare, and so forth, you’ll need to sock away $68 for five straight years while still paying all your bills and living your lavish lifestyle.
Only then will you have the average down payment, roughly $125,000, needed to buy a $678,000 median home price. Oh, and that median is rising…
Of course, as I mentioned, there are plenty of loan programs that require a lot less than 17% down, including the many 1% down options surfacing, the 3% down option widely available, and of course FHA, which only requires 3.5% down.
You can also get a USDA loan if it’s in a rural area and come in with no down payment at all.
So there are options here, assuming you’re able to convince the seller in a hot market that you’ll get approved for a mortgage over someone else willing to put 20% or more down (or simply pay in cash).
Assuming you can’t muster $68 in savings daily, you can stretch out the down payment goal to a full decade and save $33.97 per day instead.
By then home prices might just be on sale again, you never know.
Ready to Save $100+ a Day to Buy in SF?
The scary part is that Los Angeles isn’t even the least affordable city in the nation. If we drive or fly (or take a hyperloop) north to San Francisco, a prospective home buyer will need to save $104.46 per day for five years to come up with the average 21.8% down payment.
Again, that’s if home prices stay put and don’t just keep on rising to the stratosphere. And even then, you’ll still have to compete with a million other home buyers just to get your offer accepted.
That might explain why some banks are offering unique loan options, such as the POPPYLOAN, to high-paid workers who may not have the necessary funds for a large down payment at the moment.
If you want to take things a little slower, you can save $52.23 per day for 10 years and accomplish the same thing. Heck, 2026 might be a great year to finally buy a home!
It’s Not All Bad News
While I touched on some of the more unattainable cities across the nation, or perhaps across one state, there are still bargains out there.
In Detroit, you only need to save $13.14 per day for five years to come up with the 12% down payment needed to buy a median priced home valued at $200,000.
If you extend the timeline to 10 years, the daily saving goal drops to just $6.57. That seems pretty reasonable.
And it will only set you back $15.57 per day for 1,825 straight days to buy a home in Philly, or $7.79 per day for 10 years.
Chicago is fairly reasonable as well, with daily savings of $19.44 required for five years, or $9.72 per day for 10 years.
If that all sounds too cold for you, Phoenix homes can be had for daily savings of $20.14 for a period of five years. Or just $10.07 if you save for a decade.
The takeaway here is that buying a home isn’t an overnight decision, even if there are loan programs out there that seem to make it so.
If you’re a parent, you could start socking away some cash each day/month for your kid so they can move out eventually…