As home prices increase, conventional down payment requirements continue to surge
Affordability issues have emerged as some of the most prominent concerns facing buyers in the US housing market – and surging home prices and potential cuts to federal downpayment assistance programs are only compounding those problems, particularly for new buyers.
Realtor.com released its fourth-quarter report on down payments in March, reporting an average downpayment of 14.4%, around $30,250. While both values were lower than the all-time high of 15.1% and $32,700 set in the second quarter of 2024, they are all-time records for Q4.
Miki Adams (pictured top), president of CBC Mortgage Agency, said these surges in the cost of downpayments are hurting all homebuyers, but especially those looking to buy their first home.
“We have to be open to looking at how we can solve this problem, because it's a really big problem in America right now,” Adams told Mortgage Professional America. “The opportunity to own a home shouldn't be left to only those with wealth or those who have family money. We need to keep it available, an opportunity available to everybody.”
It appeared that the Trump administration could cut federally backed downpayment assistance programs. For now, a federal judge has blocked Trump’s attempt to freeze funding. Adams said it was a close call for those programs, but they’re not out of the woods just yet.
“We had that recent proposed freeze in federal funding that threatened hundreds of homebuyer assistance programs, and you know that that was a threat,” Adams said. “We don't know what we're going to see ultimately, what programs will be eliminated, if any, or what freezes will be fully enforced. But there's no question that it could impact up to one-third of the housing assistance programs. That would not be a good result, because we're just so challenged as it is.
“Our home buyers need as much help as possible right now. So, scrapping any of the programs or putting them on hold, freezing them would be a real detriment to what we're seeing in America, which is the affordability challenge.”
Privately backed down payment assistance programs may be one solution
If federal programs are cut, brokers may have to steer customers to privately backed down payment assistance programs.
CBC Mortgage Agency was founded in 2013 by Cedar Band Corporation, which is owned by Cedar Band of Paiutes in Utah. Unlike local, privately backed down payment assistance programs, CBC Mortgage Agency is chartered nationwide. In January, the organization helped its 50,000th family.
“We offer downpayment assistance across the country,” Adams said. “Most of the programs are state-focused, community-focused, or county-focused. We are national. The benefit is that we have one set of underwriting guidelines that can be applied across all states, making it much easier to implement.”
CBC offers two types of down payment assistance: a repayable second mortgage and a forgivable second mortgage. Adams said the forgivable mortgage is forgiven once there are 36 on-time payments of the first mortgage.
Adams believes the mission of CBC is critical due to the communities they serve with down payment assistance.
“First of all, over 60% of our borrowers are minorities,” Adams said. “Over 90% of our borrowers are first-time home buyers. But that's not to say that that is solely where our focus is. We are also focused on middle-income earners, even higher-income earners who have just started their careers. They may not have yet had an opportunity to save up for a down payment or may not come from generational wealth and have access to down payment assistance from their families.”
Gifted downpayments from families are a growing option for borrowers who need assistance. However, if the loans are sold on the secondary market to Fannie Mae or Freddie Mac, some rules govern this type of down payment assistance.
Hoping for a good outcome
Adams notes that there are over 2,000 downpayment assistance programs nationwide. Private-funded programs may become even more important depending on future funding and job cuts from Washington.
Mortgage lawyer Peter Idziak from Polunsky Beitel Green says the CFPB ruling reassures the industry, preventing regulatory uncertainty. He notes lenders feared a total agency shutdown but now expect a “smaller, more efficient” bureau. https://t.co/abGXN08cc2
— Mortgage Professional America Magazine (@MPAMagazineUS) April 2, 2025
“We are recognizing that there are ways we can support getting people into homes,” Adams said. “It doesn't require federal subsidies. There are other ways to do it.”
Still, many programs that rely on federal funds are still up in the air pending appeals of a federal funding freeze. At this point, Adams can only hope that those programs won’t be cut.
“Even though the full shutdown was temporarily averted, we're still seeing uncertainty and broader budget pressures that could reduce or flatten the assistance programs out there,” Adams said. “I think we're just going to have to hang in there and hope for a positive outcome that we don't see much in the way of curtailment on housing programs.
“I think it takes all of us. Well over 2,000 different programs are available for homebuyers, and we need all the help from every one of them.”
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