A cluster of homebuying dictums has cropped up in recent years and become entrenched as canon. Move fast. Be decisive. Be ready to make a bid by being pre-approved for a mortgage. Expand your horizons and remain flexible to find an affordable dream home. Roll with the punches.

And the one that seemed to tower over the rest: Put as much money as you can for a down payment.

In the most competitive markets, buyers need to plunk down quite a bit of cash (and maybe say a prayer or three) to make their offers more appealing to sellers, compete with all-cash buyers, and ultimately win a bidding war. However, not all markets have such a high barrier to entry, especially during this real estate slowdown. In some markets, buyers don’t need to come up with much cash, if any, to snag prime real estate.

Realtor.com® set out to find the real estate markets where buyers are making the largest down payments for a home—and where they’re putting down the smallest (as a percentage of the home sale price).

The general rule of thumb is buyers should aim to kick in least 20%, which allows them to avoid paying private mortgage insurance each month. In September, that totaled $85,900 on the median-priced home of $429,500, according to Realtor.com data. (This doesn’t include closing and other costs.)

“When prices are rising so much faster than incomes, it’s hard to save more” for a down payment, says Sean Moss, executive vice president of product and operations at Down Payment Resource. “The goal post is always moving.”

Buyers generally need to put down more in the pricier, more competitive markets and in vacation and retirement destinations. Retirees can often sell their existing residences and use the money they earn to pay for their forever homes. And with mortgage rates hovering around 8%, many folks would rather put down more cash so they don’t have to pay interest on a larger loan.

Conversely, down payments were much lower in areas near military installations. That’s because active service members and veterans can use 0% down mortgages offered through the U.S. Department of Veterans Affairs. On top of that, mortgage rates for these loans are typically lower than for 30-year fixed-rate loans.

The good news for buyers: Down payments have fallen over the past year as the housing market has become less competitive. Buyers put an average of 13.8% of the sale price down in the third quarter of this year, down from 14.7% last year, according to a Realtor.com analysis of data from real estate data firm Optimal Blue.

What many buyers don’t realize is how many low and no down payment loans and financial assistance are available, says Moss.

Like VA loans, U.S. Department of Agriculture loans also require no down payment. Then there are Federal Housing Administration loans, which require a minimum of 3.5% down. There is also down payment assistance available for those having a hard time coming up with those funds.

In 2022, about 53.5% of mortgages made in the 10 largest metropolitan areas were eligible for assistance, according to Down Payment Resource. These borrowers were eligible for about $18,144 in down payment funds. In many cases, this money could also be used to help cover closing costs and even buy down mortgage rates.

To come up with the places with the highest and lowest down payments, we dove into data from Optimal Blue. We looked at the average down payments as a percentage of the home sale price in the 150 largest metropolitan areas in the third quarter. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.) We included just one per state to ensure geographic diversity.

Where homebuyers are making the largest down payments

1. Santa Rosa, CA

Average down payment as a percentage of the home sale price: 25%
Median down payment: $147,550
Median home list price in September: $1,070,990

About an hour north of San Francisco in the heart of Sonoma County’s wine country lies Santa Rosa. It’s the most expensive metro on our list, by a lot. And if we hadn’t limited our analysis to just one metro per state, high-priced California housing markets would have taken six of the top 10 slots.

Many of the buyers in the area are nearing retirement or seeking a vacation home, says local real estate broker associate Daphne Peterson, of Keller Williams Realty. Some are relocating to the area and using the proceeds from the sale of their previous homes to fund their new purchases. This allows them to avoid taking out a more expensive loan at today’s higher mortgage rates.

“Prices are expensive, but they’re not as expensive as many surrounding counties,” says Peterson. “It is attracting a lot of people from higher-priced areas who may be cashing out the equity of their home and deciding to retire here.”

2. North Port, FL

Average down payment (percentage): 23.5%
Median down payment: $81,853
Median home list price: $525,000

The metro, which includes Sarasota, is located on the southwestern coast of Florida along the Gulf of Mexico. Like Santa Rosa, it’s also popular with retirees and vacationers looking to pick up an extra home, making it competitive when there are only a limited number of homes available.

Nearly all of relocation specialist Linda Starcher‘s sales have been cash deals over the past year.

“Our market is mostly retirees and pre-retirees moving here for the majority of the year as their permanent home,” says Starcher, of Re/Max Alliance Group.

These older buyers often have a home they can sell, giving them the cash they need to purchase a new home without taking out a mortgage.

“Our sellers can afford to wait for a strong buyer … all cash or those with a very strong down payment,” says Starcher.

3. Fort Collins, CO 

Average down payment (percentage): 23.2%
Median down payment: $105,533
Median home list price: $625,000

Over the past few years, Fort Collins has emerged as a slightly more affordable alternative to Denver, about an hour south. (The median home price in the Denver metro was $649,000 in September.) Founded as a military fort in 1864, Fort Collins has evolved into an outdoorsy community with plenty of museums and art galleries.

However, the housing market isn’t as competitive as it was during the COVID-19 pandemic. There were about 21% more homes on the market in September than there were a year earlier. The number of sellers cutting prices has also risen.

The majority of homes for sale in the city are single-family houses, although there are plenty of condos on the market as well. Buyers can check out this four-bathroom, 3.5-bathroom house with a recently remodeled kitchen, which is listed for $550,000.

4. Asheville, NC 

Average down payment (percentage): 21.8%
Median down payment: $63,733
Median home list price: $600,000

The small, funky city in the Blue Ridge Mountains, known for its outdoorsy lifestyle and craft beer scene, has long attracted artists, vacationers, and retirees. About two hours from Knoxville, TN, to the west and Charlotte, NC, to the east, the area is now drawing wealthier buyers to its growing luxury real estate market.

Home list prices have soared over the past few years as a result of that demand. Prices rose 50% from September 2019 to September 2023. However, the number of homes for sale over the same period dropped about 56%.

That competition, plus buyers who are able to sell homes and use the money they make to buy new ones, has resulted in higher down payments.

5. Boston, MA

Average down payment (percentage): 21%
Median down payment: $108,654
Median home list price: $849,000

Beantown buyers are making large down payments for one simple reason: That’s often what they need to do to win bidding wars.

The problem is there aren’t enough homes to go around in this high-demand city. The number of properties for sale in the metro was down 16.6% year over year in September. Meanwhile, prices were up 14.1% over the same period as buyers battled it out over real estate.

“Here, it’s standard to put at least 20% down,” says Compass agent Amy Goldberg, who works primarily in downtown Boston. “Because the rates are higher now, if you put more down, it makes your monthly payments more comfortable.”

This two-bedroom, 1.5-bathroom, upper-level duplex in a brownstone with a shared yard is on the market for $709,000. Buyers looking for a single-family house can view this four-bedroom, two-bathroom Colonial-style home with an outdoor patio for $599,900.

Rounding out the top 10 is Myrtle Beach, SC, where buyers put down an average of 20.7% of the home sale price. It was followed by Boise, ID, at 20.5% and Portland, ME, at 20.3%. Salisbury, MD, and New York City tied for the No. 9 and No. 10 spots with buyers putting down an average of 19.9%.

Where homebuyers are making the smallest down payments

1. Killeen, TX

Average down payment (percentage): 5.3%
Median down payment: $2,182
Median home list price: $325,000

It’s not a surprise that Killeen made our list. The city, about an hour north of Austin and an hour southwest of Waco, is an Army town, home to Fort Cavazos, formerly called Fort Hood. It’s the largest military base in Texas with more than 53,000 soldiers and their families based here.

Many of the area’s buyers are either active service members or veterans and have access to popular VA loans that don’t require a down payment. Those loans pushed down the average down payment in the local housing market.

The market also doesn’t appear to be as competitive as other places on our list. The number of homes for sale was up 37.3% in September compared with a year earlier, according to the most recent Realtor.com data. Homes are also staying on the market for 34% longer, at a median of 56 days.

Most of the homes for sale in Killeen are single-family houses. Buyers can still find plenty of brick ranches for less than $200,000, including this 1,300-square-foot, three-bedroom, two-bathroom home priced at $170,000. There is also new construction, including this four-bedroom, three-bathroom house for about $450,000.

2. Fayetteville, NC 

Average down payment (percentage): 5.9%
Median down payment: $2,779
Median home list price: $330,000

Fayetteville is another military town with more than 50,000 soldiers stationed at Fort Liberty, formerly known as Fort Bragg.

The fort “is responsible for a disproportionate number of sales,” says real estate broker Bernard Fleming, of Fleming Real Estate. “We know that every year a number of soldiers are going to be coming to be stationed here and a number are going to be moving out.”

The loan of choice for these military buyers is VA mortgages. However, the market has become so competitive due to the lack of homes for sale that even VA buyers might now be making small down payments and offering over the list price to spur sellers to choose their offers.

“People are still waiting in line to get homes,” says Fleming.

3. Shreveport, LA

Average down payment (percentage): 6.7%
Median down payment: $4,587
Median home list price: $245,000

The city in northwest Louisiana, known for its riverboat casinos, is also popular with military buyers.

The area is home to the Barksdale Air Force Base, which has a population of about 15,000 active-duty personnel, reservists, and civilians. The city also has the Overton Brooks VA Medical Center.

Buyers can find this three-bedroom, two-bathroom home on the market for $250,000. Those looking for some space to stretch out in can check out this three-bedroom, 1.5-bathroom cottage with a deck on an acre of land. It’s priced at $269,000.

4. Huntington, WV 

Average down payment (percentage): 8.2%
Median down payment: $4,802
Median home list price: $179,900

The second-largest city in West Virginia, the former manufacturing hub is home to Marshall University and Camden Park, one of the nation’s oldest amusement parks.

However, the area has been hurt by the decline in manufacturing. Many residents left the metro in the second half of the 20th century. Then the opioid crisis struck. Today, nearly a third of the residents of the city proper lived in poverty in 2022, according to the U.S. Census Bureau.

The troubles that have plagued the area have resulted in some of the lowest home prices on our list—about 58% less than the national median list price.

This two-bedroom, two-bathroom Cape Cod, spanning about 2,500 square feet, is on the market for $179,900 after a $5,000 price cut.

5. Augusta, GA

Average down payment (percentage): 8.3%
Median down payment: $5,586
Median home list price: $302,430

Augusta is yet another military hub where homebuyers are making low—or no—down payments. Fort Eisenhower, formerly known as Fort Gordon, is located just southwest of the city. It was designated as the U.S. Army Cyber Center of Excellence in 2014.

“You got a lot of VA buyers,” says Frank Mears, senior vice president of Meybohm Real Estate in Augusta. “You have first-time buyers who are using FHA loans.”

Buyers who use FHA loans can often put down as little as 3.5%.

But there’s a shortage of homes here. Even when military personnel leave the fort, they often keep the home they own and use it as a rental property, says Mears. Many plan to return to the fort in the future or anticipate retiring in the area.

Sellers generally prefer buyers who can put some money down. In some areas where there aren’t many homes for sale, buyers might still have to waive home inspections and appraisals to compete with multiple offers.

“If there’s no inventory, the only way you’re going to get a house in that neighborhood is if you have no contingencies,” says Mears.

The rest of the top 10 metros with the lowest down payments were Mobile, AL, with buyers putting down an average of 8.5% of the home sale price; Virginia Beach, VA, at 8.7%; Gulfport, MS, at 8.9%; Lakeland, FL, at 9.4%; and Peoria, IL, at 10%.

The post Winning the Bid: The Cities Where Homebuyers Are Making the Largest—and Smallest—Down Payments appeared first on Real Estate News & Insights | realtor.com®.