Typical Down Payment and Home-Buying Costs in the Bay Area, 2018

A recent report showed that the typical down payment among Bay Area home buyers was roughly $143,115 during summer 2018, for a median-priced home. But that’s based on a down payment of 15%. Your minimum required investment could be much lower than that, depending on the circumstances.

Typical Down Payment & Closing Costs for Buyers

On October 2, 2018 the real estate information company Zillow and the San Francisco company Thumbtack published the results of a joint study on down payments and other home buying costs.

According to their analysis:

“The typical first-time buyer [nationwide] puts down 15 percent as a down payment, according to the Zillow Group Report on Consumer Housing Trends 2018. That would be $32,700 for the typical U.S. home, worth $218,000 in July [2018].”

Note: A 15% down payment is not required for all home buyers. That’s just the investment amount used for this study. Some conventional mortgage programs allow borrowers to put down as little as 3%.

As you might imagine, the average or “typical” down payment in the San Francisco Bay Area is much higher than the nationwide figure mentioned above. That’s because home prices in the area are well above the national average and median.

Higher Costs in the Bay Area

So, how much is the average or typical down payment in the Bay Area in 2018? Assuming that the home buyer makes a 15% investment on a median-price home, the down payment would come to $143,115 in this scenario.

The total closing costs, according to this particular study, would add another $7,674. The typical moving costs in the San Francisco Bay Area come to around $1,270. So if you add up these three items — the down payment, closing costs, and moving expenses — it means that a typical home buyer in the Bay Area spends around $152,059 to complete a purchase and move into the property.

But again, your upfront costs could be significantly lower than that.

It’s also noteworthy that this study separated San Jose from the San Francisco metro area. Sometimes when analysts do “Bay Area” studies like this, they include the Silicon Valley as being part of the broader S.F. metro area. This can skew the averages upward, since homes in San Jose tend to be more expensive. But this report listed them separately. It also ranked those two metro areas at the top of the list, in terms of having the highest home-buying costs. No surprise there.

Buying a Home With Less Money Down

In a previous article, we cited another study that showed 52% of home buyers nationwide put down less than 20% when buying a home. This disproves a widespread misconception among buyers who believe they have to make a down payment of 20%. The truth is that some mortgage programs allow borrowers to make a much smaller upfront investment.

The authors of this study cited a 15% down payment as being typical among first-time home buyers in the U.S. But not everyone can afford an investment of that size, especially when you consider the higher home prices in the Bay Area.

Fortunately, you might not have to. Eligible borrowers can often qualify for a conventional loan with as little as 3% down. The FHA program requires a 3.5% minimum investment. And the VA program for military folks offers financing up to 100% of the purchase price. Closing costs in the Bay Area can also vary widely from one borrower to the next.