Average Down Payment in the San Francisco Bay Area: 2024 Update

Home buyers in the San Francisco Bay Area have a lot of questions when it comes to down payments. We know this firsthand, because we’ve been fielding such questions for nearly 20 years.

One question in particular always seems to rise to the top:

“What’s the average down payment in the Bay Area?”

But those are just averages. Your down payment could be a lot less than that amount, if you use the right kind of mortgage program. So let’s take a deeper dive into this subject!

Estimating the Average Down Payment in the Bay Area

Identifying the typical or average down payment in the Bay Area requires a two-step process:

1. We need to know what an “average” down payment is, as a percentage of the purchase price.
2. We then need to apply that percentage to the typical price for a home in the Bay Area.

Surveys over the past few years have shown that the average down payment among all home buyers nationwide is approximately 13%. The average among first-time buyers is closer to 8%.

According to the California Association of Realtors, the median sale price in the San Francisco Bay Area was around $1,300,000 as of summer 2024.

Based on those figures, we could estimate the following:

• Average down payment among Bay Area first-time buyers: $104,000
• Average down payment among all buyers in the region: $169,000

A 20% Down Payment Is Not Necessary

There’s a widespread misconception that all home buyers have to make a down payment of 20% to qualify for a mortgage loan. But that’s not true. As you’ll learn in the next section, borrowers can often qualify for a much smaller down payment.

In the Bay Area, there are generally two types of home buyers who put 20% down:

• Those who borrow more than the typical mortgage amount, with a jumbo loan product.
• Those who choose to put 20% down, in order to avoid paying mortgage insurance.

But a typical home buyer purchasing a median-price property in the San Francisco Bay Area could qualify for a down payment as low as 3% to 5% of the purchase price.

So let’s shift gears now and explore these more accessible financing options.

How to Make a Smaller Upfront Investment

Averages like those presented above can help us monitor housing market affordability over time. But they can also be a bit misleading for a typical home buyer.

In reality, a Bay Area buyer could end up with a down payment significantly lower than the averages shown above, if they use a mortgage program that’s intended for that purpose.

Consider the following examples:

• FHA loans allow for a down payment as low as 3.5% of the purchase price.
• Some conventional home loans allow borrowers to put down just 3%.

Using that $1.3 million median home price from earlier, these programs could result in a down payment ranging from $39,000 to $45,000 for a typical buyer.

Military members and veterans have it even better. A lot of military folks who live in the Bay Area can qualify for the VA loan program. This program allows borrowers to finance the entire purchase price without making a down payment.

Leveraging the “Bank of Mom and Dad”

If the typical down payment for the Bay Area is beyond your financial reach, you could also consider using gift money.

All of the loan programs mentioned above permit borrowers to use gift money provided by an approved third party. This can be helpful for any home buyer, but especially here in the Bay Area where house prices far exceed the national average.

This financing strategy can help home buyers with limited savings in the bank overcome the upfront hurdles associated with a home purchase.

Borrowers could also compound these benefits by choosing a mortgage program with a low investment requirement. For example, a Bay Area home buyer could use an FHA loan with a 3.5% down payment and apply gift money, greatly reducing their own out-of-pocket expense.

Low Down Payments Can Bring Mortgage Insurance

We’ve looked at the average down payment among home buyers in 2024. And we talked about some of the ways a person could buy a home with a smaller investment.

Just know that if you do opt for a smaller down payment, you might have to pay for mortgage insurance. This is true for FHA and conventional home loans alike (but not the VA program).

When a conventional loan accounts for more than 80% of the home’s value, private mortgage insurance is typically required. That’s just an industry standard. And nearly all home buyers who use the FHA loan program have to pay for government-provided mortgage insurance.

This added cost is usually rolled into the loan, increasing the size of the monthly payments. So it’s something you should consider when choosing your financing strategy.

Your Best Bet: Start Saving Money Early

The down payment is usually the biggest upfront expense that Bay Area home buyers encounter. But it’s not the only one. Buyers typically have to pay for closing costs as well, and those can add up to thousands of dollars.

For these and other reasons, it’s wise to start saving money as soon as possible. This is one of the best things you can do to prepare for the home-buying process. So why not start today?

You could even create a separate savings account for this purpose, so you’re not as tempted to use the money you’ve put aside. You could set a specific goal for your savings, based on the amount you might need for the down payment and closing costs. It gives you something to aim for.

Key Points to Take Away From This Guide

We’ve covered a lot of information in this guide, and it’s all important. So let’s summarize. Here are some of the key points to keep in mind as you prepare to buy a home in the Bay Area:

• In 2024, the average down payment for a home purchase in the Bay Area is around $104,000 for first-time buyers, and around $169,000 for all buyers.
• These estimates are based on nationwide averages and local home prices, but actual down payments can vary.
• Many mortgage programs allow for investments as low as 3% to 5%, making homeownership more accessible for Bay Area buyers.
• FHA loans, which are popular among first-time buyers, allow for a minimum investment as low as 3.5%.
• Some conventional loans offer a down payment as low as 3%, including programs offered through Freddie Mac and Fannie Mae.
• Home buyers can use gift money from family members or approved donors to cover part or all of the down payment.
• Mortgage insurance is typically required when the loan-to-value ratio exceeds 80%. That’s why some Bay Area buyers put down 20% or more.
• The down payment is only one of the upfront expenses associated with a home purchase. Most buyers have to pay closing costs as well.
• Putting some extra money aside each month is one of the best things you can do to prepare for the home buying process, especially if you start early.