For the first time in nearly two years, the typical U.S. homebuyer is putting down less cash at closing.
According to a new report by Redfin, analyzed in today’s Hot Sheet with Byron Lazine, the median down payment dropped to $62,468 in April 2025, a drop of about 1% year over year. While the percentage of the purchase price stayed flat at 15%, this drop in dollar amount signals a shift in buyer behavior.
As affordability challenges mount and the market tilts slightly in favor of buyers, more people are opting for smaller down payments or government-backed loans, while others are skipping the mortgage altogether by paying in cash.
So, what’s behind the drop in down payments? And what does this mean for you?
Key Stats From Redfin’s Report
Here’s what the data shows for April 2025:
- The typical down payment was $62,468, down from the year prior. While this figure is still higher than pre-pandemic norms, it represents the first YoY drop in nearly two years.
- Percentage-wise, the typical buyer is still putting down 15%, nearly unchanged from 15.1% a year ago.
- The share of FHA loans rose to 15.3%, up from 14.2% in April 2024.
- VA loans made up 7.2% of mortgaged purchases, their highest April share since 2020.
- Nearly one in three buyers (30.7%) paid all cash—slightly below last year’s 31.6%, but still historically high.
Buyers are getting creative. Many are looking for ways to stretch their buying power in a market that still feels expensive. And that includes leaning into financing programs designed for lower upfront costs.
Why Down Payments Are Shrinking
The dip in dollar-amount down payments might seem minor at first glance, but it marks a notable break in trend.
For nearly two years, down payments had been on the rise, or at least holding steady, driven by intense buyer competition, rising home prices, and a preference for stronger financing packages. Now, several factors are converging to push the typical down payment down, even while home prices themselves are ticking up.
Mortgage rates remain near 7%, more than double what buyers enjoyed during the pandemic. That alone is enough to force many to rethink their purchase price and loan structure.
At the same time, economic concerns haven’t gone away. Many buyers are choosing to hold more cash in reserves instead of locking it into a down payment. This has led to a shift toward smaller homes, more affordable markets, and loan programs that don’t require 20% down.
Finally, it’s important to note that about 31% of all home purchases in April were all cash, and these are excluded from down payment data. So when we’re looking at declining down payments among mortgaged buyers, we’re really seeing a reflection of those opting for more modest properties or relying on FHA and VA loans.
Why This Matters for Agents
These shifts may not feel dramatic on paper, but they represent a real change in buyer psychology. And that has direct implications for the conversations agents are having every day.
For one, sellers may need help adjusting their expectations. In the high-demand market of 2021 or early 2022, it was easy to pass over offers with FHA or VA financing. But in 2025, things have changed. With more inventory and longer days on market, sellers may be more willing to accept offers that include government-backed loans or lower down payments. Agents can help guide them through the risks and benefits of that shift.
Second, first-time buyers are still active, especially in markets where FHA loans are commonly used. These clients often come in with more questions and more anxiety around affordability. They need a knowledgeable, empathetic agent who can help them navigate rate shopping, down payment assistance, and lending requirements.
Lastly, while cash is still king, it’s not equally dominant in every market:
- High-cash metros like Cleveland, West Palm Beach, Jacksonville, and Miami are still seeing nearly 40–50% of transactions close without a mortgage.
- But in places like Oakland, San Jose, and Seattle, all-cash deals account for less than 20% of sales.
That kind of hyperlocal insight can give your buyers and sellers the edge in negotiation.
