Average Down Payment in San Diego, California: 2020 Update

August 27, 2020 | By Brandon Cornett | © 2020, QualifiedMortgage.org

At a glance: Based on our analysis, the average down payment in San Diego would be around $78,485 for all buyers, and about $39,242 for first-time buyers. That’s based on the median home value as of August 2020, and the average down payment amounts made by borrowers.

Home prices across Southern California have risen over the past few years. In fact, they’ve continued to climb during the past seven months, despite the coronavirus pandemic. As a result of this trend, the average down payment in San Diego has increased as well.

The upfront investment will vary depending on the type of loan you use and other factors. Below, we will examine the typical or average down payment in San Diego for some of the most popular loan programs.

Home Prices Have Risen

As a home buyer in San Diego, the first thing you need to know is that house prices have risen over the past year.

The median home price for San Diego County was $628,519, as of August 2020. Within the city itself, the median was $679,568 during that same month.

For the sake of simplicity, we will use an average of these two figures ($654,043) to calculate the average down payment amount in San Diego.

According to the property data company Zillow, the median home price in San Diego rose by around 6% over the past year or so (as of August 2020). Home value appreciation is expected to slow down a bit through the rest of 2020. But a resilient housing market could keep prices climbing throughout the pandemic of 2020 and into 2021.

This trend has a direct influence on the average down payment in San Diego, California. After all, the upfront investment corresponds with the purchase price of the house. When home prices rise, the average or typical down payment climbs along with them.

So let’s take a look at where those averages lie today, as of 2020.

Average Down Payment in San Diego

According to a study conducted by the National Association of REALTORS (NAR), a typical down payment across all home buyers is around 12% of the purchase price. First-time buyers typically put down 6%. Additionally, the FHA loan program allows borrowers to make a down payment as low as 3.5%.

Those are the metrics we will use to analyze the average down payment in San Diego across different loan types and purchasing scenarios. We’ll also use the average home price provided by Zillow, as mentioned above:

  • 12% DP — The average down payment in San Diego for all home buyers in 2020 would be around $78,485. That’s based on the 12% down payment amount identified in the NAR survey, and a median home value of $654,043.
  • 6% DP — The average down payment among first-time home buyers in San Diego would probably be closer to $39,242, as of Q3 2020.
  • 3.5% DP — The average down payment for borrowers who use the FHA loan program would come to around $22,891. That’s based on the minimum required investment for FHA loans, which is 3.5% of the purchase price or appraised home value.

Conventional Loans Offer 3% Down Payment

The minimum required down payment for a conventional mortgage loan has declined over the past few years. Today, Freddie Mac and Fannie Mae will purchase mortgage loans from lenders with a loan-to-value ratio up to 97%.

This allows lenders to offer home loans to borrowers with a down payment as low as 3%. Again, this is for a conventional mortgage loan, which is one that is not insured by the federal government. The term “conventional” distinguishes these “regular” mortgage products from government-backed programs like FHA and VA.

Using this 3% figure, we can also calculate the minimum down payment for an average-priced home in San Diego, with a conventional loan. It would come to around $19,621.

Of course, this real estate market covers a fairly broad pricing spectrum. The size of your down payment will rise or fall accordingly, depending on whether you buy a more a less expensive home.

Using Your Money, Or Someone Else’s

It’s possible to buy a home in San Diego with down payment funds provided by someone else. Almost all of the mortgage loan programs available today allow for “gift” money.

An important caveat — the money provided must truly be a gift. In other words, you can’t use an interpersonal loan to cover your down payment. The person providing the money must sign a statement that they do not expect any form of repayment.

Disclaimer: This article looks at the average down payment in San Diego as of 2020. This article is provided for educational purposes and may not apply to your specific financing situation. When you apply for a loan, be sure to ask the lender about their minimum required down payment and acceptable sources for funds.