RealtyTrac’s Q1 2015 U.S. Home Purchase Downpayment Report finds that homebuyers continue to put less money down on a new home.
In the first quarter of 2015, the average downpayment (single family homes, condos and townhomes) was 14.8 percent of the purchase price, down from 15.2 percent the previous quarter and from 15.5 percent a year earlier.
The average downpayment for FHA purchase loans in the first quarter was 2.9 percent of the purchase price, while the average downpayment for conventional loans was 18.4 percent.
As a percentage of all loan originations, the number of FHA loans rose each month during the first quarter: from 21 percent in January to 22 percent in February to 25 percent in March.
“Downpayment trends in the first quarter indicate that first time homebuyers are finally starting to come out of the woodwork, albeit it gradually,” says Daren Blomquist, vice president at RealtyTrac. “New low downpayment loan programs recently introduced by Fannie Mae and Freddie Mac, along with the lower insurance premiums for FHA loans that took effect at the end of January, are helping, given that first time homebuyers typically aren’t able to pony up large downpayments.”
Blomquist also credits a decline in the number of institutional investors.
More buyers were approved for low downpayment loans in the first quarter. The share of low downpayment loans – defined as ones with a loan-to-value ratio of 97 percent or higher, or 3 percent downpayment – was 27 percent of all purchase loans in the first quarter, up from 26 percent in the fourth quarter and also 26 percent a year ago.
However, the share of conventional loans that were low downpayment decreased throughout the quarter, from 11 percent in January and February to 10 percent in March. Meanwhile, the share of lowdownpayment FHA loans increased from 83 percent in both January and February to 84 percent in March.
©2015 Florida Realtors® – Reprinted with permission ©Florida Realtors.