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Tackling Home Financing and Down Payment Misconceptions

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Despite the current attention around buyers paying all-cash for homes, the majority of home buyers finance their home purchase.

Among primary residence buyers, 74% percent financed their home purchase, a share that rises to 91% among first-time buyers. When financing a home, buyers typically have a down payment. But how much is it? And where does it come from?

Two of the biggest unknowns among home buyers are as follows:

  • What is the typical down payment?

  • What is needed to enter homeownership?

This critical knowledge informs the potential buyer on just how much to save and—just as importantly—how long that process may take. Seeking the right source is better than relying on outdated information or, worse still, misinformation. Unfortunately, 97% of NAR members surveyed worked with clients who consulted family members for advice, instead of a real estate agent, even if the family member would not live in the home. Let’s take a look at the real data.

While many potential buyers believe they need a down payment of 20% for their first home purchase, the typical down payment for first-time buyers has ranged from 6% to 9%, dating back to 2018. Going way back to 1989 (when the NAR first started collecting this data), the typical down payment has only ever been as high as 10%. However, for repeat buyers, the typical down payment was 23% last year. In recent years, the down payments for repeat buyers have steadily increased as housing equity for owners has grown. By contrast, in 2014, repeat buyers put down only 13% of the purchase price as a down payment.

Buyers have many loan options. The majority of all buyers use conventional financing to purchase a home. Among first-time buyers, 29% used an FHA loan. FHA loans allow borrowers to put down just a 3.5% down payment. Nine percent of first-time buyers used a VA loan. For VA loans, no down payment is required.

A mortgage broker or housing counselor can discuss the loan options available to buyers. Another resource for potential home buyers is the Down Payment Resource. There is an interactive website that directs potential buyers to state and local programs for which they may qualify. Programs may be available in local areas to assist with down payments, but also with student loans, property taxes, and even home renovations.

The last question may be this: Where does that down payment money come from? For nearly 70% of first-time buyers, the source of their down payment is savings. Twenty-five percent of buyers used a gift from a friend or relative. The share receiving family help has declined from a high of 36% in 2010. In 2010, there was a surge in first-time home buyers entering the market with the First-Time Home Buyer Tax Credit. Family may have encouraged buyers to enter the homebuying process and provided any help they could at the time. Additionally, as the age of first-time buyers has increased to an all-time high of 38 years old, it could be uncomfortable to ask family for help in purchasing their first home.

The share of first-time buyers who used financial assets for their down payment has increased in recent years. Twenty-one percent of first-time buyers used the proceeds from stocks or bonds, a 401(k), an IRA, or even cryptocurrency. To give this historical context, from 1997 to 2002, just 8%-11% of first-time buyers used financial assets. This uptick may be due to the increased number of younger investors or wealthier first-time buyers in the housing market.

While the share of first-time buyers who use inheritances for their down payment is still under 10%, it is worth noting that this share is at an all-time high. Seven percent of first-time buyers used a generational transfer of an inheritance to help them become homeowners. Additionally, due to higher home prices, buyers may need to utilize multiple sources to put together a down payment.

Read more at NAR

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Mortgage Rates Drop Ahead of Independence Day Weekend

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Mortgage rates continued to fall Thursday, slipping to a 12-week low ahead of the holiday weekend as markets awaited key economic data before the next Federal Reserve policy meeting.

The average rate on 30-year fixed home loans decreased to 6.67% for the week ending July 3, down from 6.77% last week, according to Freddie Mac. Rates averaged 6.95% during the same period in 2024.

It marked the biggest one-week decline in mortgage rates since March, and the lowest level for rates since early April, when President Donald Trump's Liberation Day tariff announcement sent long-term bond yields into nosedive.

However, this week there was little in the way of headlines to drive mortgage rates lower, and investors may have simply been repositioning their portfolios for the end of the month and the second quarter.

Financial markets had also been growing more optimistic about the chances of a Federal Reserve rate cut later this month—although those hopes were dashed on Thursday morning when the June jobs report showed robust employment growth that beat expectations.

Regardless of why they are falling, the move lower for mortgage rates ahead of Independence Day will come as welcome news for prospective homebuyers struggling to find a home in their budget.

"Declining mortgage rates are encouraging and, while overall affordability challenges remain, we are seeing more sellers enter the market giving prospective buyers an advantage,” says Sam Khater, Freddie Mac’s chief economist.

New listings and active inventory continued to rise on an annual basis for the week ending June 28, and homes spent longer on the market, according to the Realtor.com® economic research team's weekly housing update.

Mortgage purchase applications jumped 16% last week compared to one year ago, showing renewed interest from buyers after a slow spring season, according to data from the Mortgage Bankers Association.

The uptick follows sluggish activity in May, when sales of new homes dropped 6.3% compared to a year earlier, and existing home sales dipped 0.7% annually.

"The reduction in sales is leading to slightly higher inventory levels and will help create a more buyer-friendly housing market, but the process is expected to be a gradual one as economic uncertainty persists," says Realtor.com Senior Economist Anthony Smith.

How mortgage rates are calculated

Mortgage rates are determined by a delicate calculus that factors in the state of the economy and an individual’s financial health. They are most closely linked to the 10-year Treasury bond yield, which reflects broader market trends, like economic growth and inflation expectations. Lenders reference this benchmark before adding their own margin to cover operational costs, risks, and profit.

When the economy flashes warning signs of rising inflation, Treasury yields typically increase, prompting mortgage rates to go up. Conversely, signs of falling inflation or weakness in the labor market usually send Treasury yields lower, causing mortgage rates fall.

The mortgage rates you’re offered by a lender, however, go beyond these benchmarks and take some of your personal factors into account.

Your lender will closely scrutinize your financial health—including your credit score, loan amount, property type, size of down payment, and loan term—to determine your risk. Those with stronger financial profiles are deemed as lower risk and typically receive lower rates, while borrowers perceived as higher risk get higher rates.

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As Featured in West + Main Home Magazine: The House that Became a Home

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Rob + Jenn Bennett

““We love spending time here & hosting friends and family—it works so well for bringing everyone together.”
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— Rob + Jenn Bennett

When W+M agent Anne Collins’ clients, Rob + Jenn Bennett, purchased their home five years ago, they saw beyond the wear and tear of its rental years. Originally built in 2005, with an addition in 2012, the home had strong bones but needed some attention to bring cohesion to its various updates over the years.

“It just needed some love,” they said. Their vision was threefold: refresh the worn areas like bathrooms and flooring, create a more unified design between the original home and the addition, and transform the lower-level entry into a welcoming, functional space for both daily life and entertaining.

Since they were touching so many areas of the home, they knew professional guidance was essential. Designer Katie Becker helped them refine their style, ensuring consistent materials and finishes throughout, while contractor Richard Hedley and his team managed the execution. “Working with a designer was key,” they shared. “Her detailed plans and material selections allowed the contractor to provide an accurate estimate and kept the project on track.”

As the renovation progressed, their original scope expanded. Rather than taking on multiple projects over the years, they decided to complete as much of their wishlist as possible while the experts were already on-site. “We wound up replacing countertops and painting the kitchen island while we had the materials and tradespeople available,” they explained.

Now, the home finally reflects their lifestyle and tastes. Rob’s favorite transformation? The mudroom-turned-entryway. “It’s amazing how removing a half-wall and adding cabinetry totally transformed the space—both in look and functionality.” For Jenn, it’s the built-in bookcases in the lower-level den. “This all started because I ran out of space for my book collection,” she laughed. “Now, we have a beautiful focal point that completely changed how we use the room.”

Looking back, they’re grateful they took the leap when they did. “Instead of waiting for the ‘right time’ to make these updates, we get to enjoy them now,” they said. “We love spending time here and hosting friends and family—it works so well for bringing everyone together.”

 

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2025 Is All About Outdoor Living—and These Are the Upgrades Everyone Is Doing to Make the Most of It

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Homeowners across the U.S. are stepping outside and staying there. According to Thumbtack’s newly released 2025 Curb Appeal Report, created in partnership with Zillow, outdoor spaces aren’t just getting more attention this year—they’re redefining how people live at home.

Labeled "The Year of Outdoor Living," 2025 is all about bold outdoor upgrades, long wish lists, and an undeniable lifestyle shift. Based on data from over 1,000 homeowners and trending project insights, the report shows that today’s yards aren’t just places to grill, they’re designed to reflect personal style, bring comfort, and even rival indoor living spaces.

The Outdoor Living Boom

More than one in three homeowners now describe their yard as their sanctuary, and many are making big investments to create dream-worthy outdoor escapes. In fact, 71% of those surveyed said they’d consider going into debt to build the perfect space. Whether it’s a resort-style pool with a waterfall (the most desired feature overall), an outdoor kitchen with a pizza oven, or even a climate-controlled greenhouse, homeowners are reimagining what their yards can be.

The average costs of popular upgrades, based on Thumbtack and Zillow data, include:

  • Patio: $4,598

  • Fence: $3,314

  • Garden: $373–$1,382

  • Detached garage: $16,000–$37,000

  • Swimming pool: $1,500 to $85,000+

From Kitchens to Coops

According to the survey, homeowners are willing to give up indoor features, like kitchen islands, home offices, and guest bedrooms, if it means gaining more space or amenities outdoors. Even more telling: 60% of respondents admitted to canceling plans just to stay home and enjoy their yard, while more than a quarter spend 10+ hours a week outside.

And the vision for outdoor living is expanding; there's a growing interest in terms like “barn,” “farm,” and “horses.” More than 50% of homeowners say they’ve dreamed of owning a farm or horses, and 59% would even move farther from a city to have more land.

Not Everything Is a Hit

While many upgrades draw admiration, some outdoor trends are generating neighborhood side-eyes. The report states the following:

  • 27% of homeowners are over seasonal inflatables

  • 21% aren’t sold on faux grass

  • 18% say they'd skip the giant patio television trend in favor of nature

Still, most homeowners are willing to put in the work, and the budget, for spaces that bring joy and boost curb appeal. Top complaints include ongoing maintenance, like weed control and watering, but the desire for a beautiful, functional outdoor area often outweighs the hassle.

Cities Leading the Way

Some cities are paving the path in outdoor design. Based on project requests per capita, markets like Austin, Charlotte, and Atlanta are seeing high activity.

In 2025, curb appeal isn’t just about how a home looks, it’s about how it feels. Homeowners are embracing outdoor living as a lifestyle, and they’re ready to invest and even sacrifice to create spaces that truly reflect who they are.

Read more at Better Homes and Gardens

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Desperate To Sell But Can’t Afford Upgrades? Agents Recommend These Budget-Friendly Fixes

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If you're planning to sell your home soon, you've likely heard one phrase repeatedly: curb appeal. In other words, you have to make your well-loved, lived-in home catch the eye of potential buyers in the best possible way.

"Buyers are making decisions about your listing in the first seven seconds of arriving," says Tiffany Szakal, agent and managing broker at The Local Element in Grand Rapids, MI.

But it usually takes a lot of elbow grease—not to mention a large check—to spruce up your house to sell.

So what's a seller to do if they're strapped for cash and can't afford to replace the '90s linoleum floor in the bathroom with fancy new tile? (Or maybe you don't want to throw money at improvements you'll never get to enjoy.)

Don't sweat it. We gathered some cheap tricks from the pros that will make your home irresistible to homebuyers.

Paint the right rooms

Do you have a meager paint budget? Don't worry, you don't have to repaint the entire house in the latest trendy paint colors to impress homebuyers. But you should take a close look at the rooms homebuyers focus on the most.

"I think about bathrooms and kitchens," says Wendy Gladson, a real estate consultant at Compass in Los Angeles. "It doesn't take much paint because there are generally more cabinets than wall space."

Painting the living room is always a good idea, too, just because it's the first inside impression.

"Surprisingly, the garage door is something that should also be high on the priority list," says Gladson. "In some cases, it makes up 40% of the front of the home. And a quick coat of fresh paint will go a long way toward brightening the home's first impression."

And while buying paint, get some for the front door, too. Pro tip: Yellow and cherry red attract buyers.

Get discounted staging advice

Whether it's the paint colors or oddly arranged furniture, many homebuyers just can't get past what's in front of them and visualize how they'll make their home instantly appealing.

Home staging helps eliminate the guesswork, but the whole shebang of staging services can get pricey. Luckily, many stagers offer a consultation or hourly fee.

"It's a cheaper alternative to using all of their product, and sometimes something as simple as moving the sofa to a different position in the house makes a world of difference," says Gladson.

Also, stage your closets and pantry

Staging isn't just for furniture and artwork. Stage your closets, pantries, and cabinets to show their storage capacity. And since you can do this yourself, it will cost you nothing!

"An extra-full pantry and closet don't allow a buyer to visualize the space, especially in dark rooms or areas," says Martha Gaffney, a strategic real estate adviser at Real Estate Bees in Pelham, NY.

So remove half to one-third of the stuff in your closet, pantry, and cabinets. Homebuyers should be able to see most of the floor and the ceiling.

Restore dull and drab wood floors

Refinishing hardwood floors is pricey.

Yet you can easily breathe new life into old floors and even fill in scratches by mopping on a water-based polyurethane wood floor restorer to get back that rich, high-gloss finish of a newer floor.

And one application should last through all the foot traffic of your open houses.

DIY upholstery cleaning

Sure, there are other things you would rather do on a Saturday than lug around a rented carpet and upholstery cleaner from room to room. But it is a chore that pays off, especially when you have pets.

Homebuyers pick up pet smells as soon as they walk through the front door. But the sellers tend to be nose-blind and don't realize how badly Fido is stinking up the home.

So invite your brutally honest friends over after you clean all the pet areas. If they still smell pet-related odors, find the culprit and deodorize it.

Let there be light

Natural light makes a home feel larger, cleaner, and more inviting. And if your home is lacking natural light, there's an easy trick to let more light in instantly.

"Wash your windows and remove the screens as they filter light," says Gladson. Install full-spectrum lightbulbs that mimic the midday sun for rooms lacking in natural light.

Renovate on the cheap

Consider second-hand stores when you want to make a few improvements but have limited funds.

"I highly recommend your local Habitat for Humanity ReStore," says Szakal, of The Local Element.

"They have a ton of renovation items, including paint, cabinets, hardware, appliances, tile, etc., for affordable prices," says Szakal. "And a big bonus is that your purchase helps contribute to affordable homeownership in your community."

Don't forget the yard, either. Grab some garden gloves and tools and tidy things up.

"This is a high-impact, no-to-low-dollar investment area where a seller can make a huge difference," she adds.

Read more at Realtor.com

Related Links

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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