Down payments are down nearly 10%, even as mortgage rates and house prices climb, a new report has indicated.
The report from LendingTree shows down payment percentages for 30-year conventional fixed rate purchase mortgages have dropped 9.4% since May 2011. LendingTree chief executive Doug Lenda said banks are beginning to "normalize" their standards as the housing market recovers.
"As the housing market begins to improve, lenders are beginning to loosen their guidelines to more normalized standards and approve loans with lower down payments,” Lebda said.
The report shows the national average down payment is now 16.1%. While states such as New Jersey, California and New York still have average down payments at or near 20%, states such as Mississippi, West Virginia and Alabama are now seeing down payments as low as 11.9%.
Lebda said the improving housing market is potentially good news for borrowers.
"Although a good credit score is still important to have, borrowers may have an easier time qualifying for loans after years of tight guidelines, especially as home prices rise and we see fewer homeowners underwater."