It’s not surprising “zero-down mortgages are making a comeback,” as CNN recently declared. After all, home prices skyrocketed during the pandemic-fueled housing boom and have continued to do so since, recently hitting their ninth all-time high within the past year—only making down payments more costly, and somewhat unrealistic for a lot of people.
Think about it like this: In March 2020, the average home value in California was more than $572,000. Today, it’s a little more than $786,000. Twenty percent is traditionally the magic number when it comes to down payments, so it would cost $114,400 for that initial value, from four years ago, and $157,200 for the latter. The state’s median household income is only $91,550, which may sound reasonable, but not so much compared to a typical down payment. Of course, you can sometimes put down 10% or 5%—in which case, a down payment would cost $78,600 or $39,300, respectively, for the average home in California today. It’s better, but still not doable for everyone. So what about a 0% down payment?
