Buyers bringing less cash to the closing table

The median down payment sank to its lowest level since 2009, averaging 9 percent for home buyers this year, according to housing data by the National Association of Realtors.

First-time homebuyers’ median down payment was 4 percent and repeat buyers averaged a 13 percent down payment, according to the housing data.

“First-time buyers historically make small down payments, but repeat buyers like to put down 20 percent if they can to avoid paying mortgage insurance,” said Paul Bishop research specialist with NAR. “The general loss in home value since the peak of the housing boom means many repeat buyers in recent years had to make smaller down payments. Fortunately, prices have turned up this year and are showing sustained increases so we’re on the road to a recovery in home equity.”

Lenders have tightened their underwriting standards following the housing crash. During the housing boom, nearly half of first-time buyers had no down payment at all. But when prices dropped, many home owners did not have enough equity in their homes to carry the loss and foreclosures soared. From 2010-2011, the median down payment was 11 percent.

Many first-time home buyers-46 percent-have since turned to an FHA mortgage, which offers low down payments. Meanwhile, 10 percent have used the VA program that has no down payment requirements.