DETROIT — The amount of time it takes first-time homebuyers to save for a down payment varies dramatically depending on where they live—up to 65 years in some markets-, according to a new analysis by Rocket Mortgage.
Rocket Mortgage estimated a typical household would need 65.2 years to save the median first-time homebuyer down payment in New York City, assuming it saves 5% of its annual income each year. By comparison, buyers in Detroit would need just 3.9 years to reach the same goal.
The analysis combines Rocket Mortgage’s proprietary first-time homebuyer down payment data with local home prices and household incomes across 49 of the nation’s largest metropolitan areas.
Rocket Mortgage said the longest saving timelines were concentrated in high-cost coastal housing markets, where first-time buyers often make substantially larger down payments than the minimum required to qualify for a mortgage.
The Coast is the Most
Among the markets requiring the most time to save:
- New York City: 65.2 years to save a median $265,000 down payment, about 30% of the purchase price.
- San Francisco: 57.2 years to save a $400,000 down payment, equal to 27% of the purchase price.
- Los Angeles: 41.5 years to save a $170,500 down payment, about 20% of the purchase price.
- Boston: 37.8 years to save a $185,000 down payment.
- Anaheim, California: 33.6 years to save a $170,000 down payment.
Rocket Mortgage said buyers in these markets frequently choose to make larger down payments to reduce monthly mortgage payments enough to meet debt-to-income requirements on higher-priced homes.
Midwest is Best
By contrast, several Midwest cities ranked among the fastest places for first-time buyers to accumulate a down payment.
The five quickest markets were:
- Warren, Michigan: 3.1 years.
- Detroit: 3.9 years.
- Virginia Beach, Virginia: 4.3 years.
- Fort Worth, Texas: 4.3 years.
- Indianapolis: 4.4 years.
According to Rocket Mortgage, the median first-time buyer down payment was $7,600 in Detroit and $8,797 in neighboring Warren. In both markets, buyers typically put down about 5% of the purchase price, well below the percentages common in many coastal cities.
Saving Remains a Challenge
Despite lower home prices in more affordable markets, Rocket Mortgage said many prospective buyers continue to struggle to accumulate even modest down payments.
The company found:
- 51% of prospective first-time buyers in the Midwest said saving for a down payment is a barrier to homeownership.
- 38% of prospective buyers nationally cited the same concern.
Rocket Mortgage said the findings suggest education about available financing options may be as important as affordability itself.
A ‘Surprise’ for Many
“Many first-time buyers are surprised to learn they may qualify for programs that make homeownership more affordable and, in many markets, the idea that you need 20% down is simply a myth,” Bill Banfield, Rocket Mortgage’s chief business officer, said in a statement.
Rocket Mortgage said helping prospective buyers understand realistic down payment requirements and available assistance programs could enable many households to purchase homes sooner than they expect.
