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IRVINE, CA—The share of low-down-payment loans was 25% in 2014, down from 37% in 2006 before the housing price bubble burst, according to a report from RealtyTrac. The firm says since 2009, the share of buyers using low down payments to purchase a home has dropped every year compared to the previous year.

RealtyTrac analyzed the size of down payments on nearly 20 million purchase loans for single-family homes and condos nationwide from 2004 through 2014 and found that the share of buyers putting down 3% or less dropped to its lowest level during the last decade. In 2014, 25% of buyers using conventional or FHA loans put less than 3% down when purchasing a home, down from 27% in 2013 and down from a peak of 46% in 2009, when a first-time homebuyer tax credit stimulated purchases by first-time homebuyers, who are more likely to utilize low-down-payment loans. The share of low-down-payment loans was at 37% in 2006, dropping in 2007 and 2008 before jumping again in 2009 and then dropping every year since then.

When asked why buyer share of low-down-payment loans continues to decline, Daren Blomquist, VP of RealtyTrac, tells GlobeSt.com, “The short answer is lending standards are much tighter. So, even though there are a myriad of low-down-payment loan options available in theory, the income and documentation required to qualify for those loans is much tighter than it was before the financial crisis in 2008. In addition, when the market did start recovering in 2012, it was dominated by cash buyers, pushing those low-down-payment buyers to the back of the line in bidding wars. And lastly, there has been a shift in attitude toward homeownership, especially from the Millennials, who represent the next crop of first-time buyers who would be using those loan down payment loans. This generation is not in a rush to become homeowners, is more conservative financially and may not want to take advantage of those low-down-payment home loans even if they can qualify for them on paper.”

RealtyTrac also reports the weighted average down payment percentage has held fairly stead between 13% and 16% over the last decade. The average down payment percentage reached an 11-year high of 15.6% in 2013, falling to 15.4% in 2014, while the average down payment percentage was at its 11-year low in 2009, when it was 12.9%.

As GlobeSt.com reported earlier this month, at least one down-payment program is available in all US counties, and 87% of single-family homes and condos would qualify for one available in the county where they are located, according to a report from RealtyTrac based on a joint analysis with Down Payment Resource. For the report, RealtyTrac looked at 2,290 down-payment programs from DPR's homeownership program.

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