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6 Ways Today’s Homebuyers Come Up With a Down Payment Amid High Rates

Young couple saving up for a down payment on a house.
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As mortgage rates rise, buying a home has become more challenging. Simply finding the money for a down payment can seem like an overwhelming task.

Recently, Zillow surveyed more than 6,500 homebuyers and asked them how they are coming up with a down payment in this era of rising mortgage rates.

Here are the top ways they identified.

1. Save it up over time

couple saving coins
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Mortgage homebuyers who tapped this source to finance their down payment: 75%

Half of the homebuyers in today’s market are purchasing a home for the first time, according to Zillow. That percentage has jumped from 37% in 2021 and is the highest Zillow has ever recorded.

Many of these first-time homebuyers have little choice but to save the money for a down payment dollar by dollar. The average homebuyer now needs nearly 12 years to save for a down payment — a big mountain to climb.

2. From the sale of their previous home

Excited couple with the keys to their new home
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Mortgage homebuyers who tapped this source to finance their down payment: 46%

Traditionally, first-time homebuyers have purchased a starter home and allowed equity to build over a number of years. Later, they have used that equity to purchase another, often bigger home.

Many of today’s homebuyers appear to be using this tried-and-true method for cobbling together a down payment.

3. Gifts from family and/or friends

cash gift
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Mortgage homebuyers who tapped this source to finance their down payment: 39%

Parents, grandparents and other loved ones have a long history of pitching in when first-time homebuyers need help with a down payment.

Nearly 4 in 10 of today’s homebuyers say they have benefited from such generosity.

Other sources of funding

Happy woman with money
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Other common ways that Zillow found today’s homebuyers are coming up with a down payment are:

  • Selling stocks or other investments: 35%
  • Borrowing from family or friends: 33%
  • Tapping retirement funds: 32%

If you are in the market for a new home, stop by Money Talks News’ Solutions Center and search for a great mortgage rate.

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