Denver, Seattle, New York City, San Francisco, and San Jose are all in a new ranking of the top 10 metros that require the biggest down payments. A new study shows cities that require the biggest and smallest down payments in the 50 largest metros in the U.S.
Virginia Beach, Virginia requires the lowest down payment percentage of all cities ranked at 6.8 percent. This city is home to many U.S. Department of Veterans Affairs home loans, available to active and former members of the military, which do not require down payments. Realtor.com reports that cities with slower population and housing growth often have less homebuying competition, which translates to lower down payments. Cleveland, fourth in the ranking, requires only 8.7 percent down payments.
Lenders prefer those gold standard 20 percent down payments because they ensure that buyers have enough skin in the game—and buyers aspire to them to avoid costly private mortgage insurance, which would allow them to put down less cash on the table. But many buyers also have access to a variety of mortgage programs, such as the Federal Housing Administration loan, which allow those with decent credit scores to put down only 3.5 percent.