National Association of Realtors reveals serious home-buying problem

There is a handful of questions I’ve encountered numerous times in my decade of reporting on mortgages, one of the most popular ones being: “How long does it take to save for a down payment on a house?”

It’s a question that’s difficult to answer quickly and in a way people understand. Because there are so many factors that impact the number of months or years it will take someone to save enough for a down payment.

How expensive are homes in your local real estate market? How much are you able to save each month? How big of a down payment do you want to make — 3%, 5%, 10%, 20%?

As a result, many of the examples we see online make broad assumptions, such as the amount of time it will take to save for a 20% down payment if you’re buying a home at the national average sales price, based on the median household income in the US.

But that’s not how life works. Every homebuyer’s life and financial situation is different — and local housing markets play a huge role in your down payment amount.

So, I breathed a huge sigh of relief when I read a new article by the National Association of Realtors, because it broke down how long it takes to save for a down payment based on where you live.

The National Association of Realtors’ methodology for down payment data

To generate more tailored information about down payments, the National Association of Realtors (NAR) evaluated Home Mortgage Disclosure Act (HMDA) data.

The HMDA requires many mortgage lenders to report information about the loans they approve. The NAR assessed HMDA data from over 180 housing markets in the US.

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The NAR took the down payment homebuyers made in each area, then factored in the median household income for each market. Finally, it worked on the assumption that households could save 15% of its income each year for a down payment.

Yes, the NAR still had to make some broad assumptions. But the organization worked to find more accurate numbers by narrowing down how much people saved for a down payment and the median income in each region’s housing market rather than using national data.

Where you can save for a down payment the fastest

Let’s start with the good news. The NAR found that sections of the industrial Midwest could save for a down payment the fastest at just two or three years. The metro areas it listed were Peoria and Springfield, Illinois; Davenport, Iowa, and Toledo and Canton, Ohio.

Two to three years is a feasible timeframe for many Americans.

The next batch of metro areas falls between four and six years. These include Charlotte, Columbus, Indianapolis, Kansas City, Minneapolis, and Raleigh.

Atlanta, Austin, Dallas, and Houston are in the five-to-six-year range, and the data shows that it takes six years to save for a down payment in Washington, DC.

It takes much longer to save for a down payment in most cities

Now for the not-so-good news. It takes more than six years to save for a down payment in many parts of the country.

According to the HMDA data, there’s a group of cities that require seven years to save for a down payment, and most are in the Sun Belt. These include Denver, Nashville, Orlando, and Phoenix.

“That’s still not easy, but it’s half the time of the most expensive markets,” wrote Nadia Evangelou, senior economist and director of real estate research at the NAR.

It’s probably not surprising that the most expensive markets are in California. The city with the longest timeframe is San Jose, where it takes around 15 years to save for a down payment.

A decade and a half — that’s an alarming amount of time. Not only are San Jose home prices notoriously high, but HMDA data shows that the typical San Jose buyer puts down 24% — far above the minimum of 3% that most lenders allow, and even more than the 20% required for borrowers to avoid private mortgage insurance (PMI).

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Why do San Jose residents make such large down payments? It’s likely because, due to the high home costs, many have to apply for jumbo loans with mortgage lenders.

Jumbo loans mean larger down payments

Conforming conventional loans, or what we often think of as “regular mortgages,” accept down payments as low as 3%, and there’s a limit to how much you can borrow with one of these loans. In Santa Clara County, where San Jose is located, the conforming loan limit is $1,249,125 in 2026.

So, if you need to borrow more than $1,249,125 in San Jose — and since HMDA data shows the median San Jose home value is $1.57 million, this is not unlikely — you’ll need a jumbo loan. Mortgage lenders require higher down payments for jumbo mortgages, often 20% or more.

It takes about 14 years to save for a down payment in Los Angeles and San Luis Obispo. You’ll need 12 years in Salinas, San Diego, San Francisco, and Santa Barbara. All of these are also high-cost areas that might require borrowers to get jumbo loans with larger down payments.

“For buyers with the flexibility to choose among major metros, the difference between a 12-year market and a 5-year market is 7 years,” wrote Evangelou. “This can also mean 7 years of rent payments that could have been building equity; 7 years of accumulated homeownership wealth that are missing.”

Tips for saving more for a down payment

“So, the down payment clock is ticking differently depending on where you stand,” wrote Evangelou. “Knowing which clock you’re on is the first step to doing something about it.”

Now that you know which clock you’re on, what next step do you want to take in saving for a down payment faster? You can cut spending and rework your budget, but here are some options that could provide faster, more substantial results.

Apply for down payment assistance. Many mortgage lenders offer DPA programs through the state or local government. Others, such as Bank of America and Wells Fargo, offer their own grants that you don’t have to repay.Ask for a down payment gift. Obviously, not everyone has family members with the means and willingness to give them money toward a down payment. But if you do, they should submit an official gift letter to your lender stating what their relationship is with you, the amount they’re giving you, and confirmation that the money is a gift — not a loan.Shop with mortgage lenders. By stacking several lenders against each other, you can find the best down payment assistance program that you qualify for. If you need a jumbo loan, this process also helps you find the lender requiring the lowest down payment for these larger loans.

Related: Zillow predicts home values, housing market change

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