Finance
The average down payment for the typical US home is now over $127,750: Zillow
The average down payment is closer to 35% now, instead of the typical 20%. (iStock )
Every aspect of homebuying has gotten more expensive in the years since the COVID-19 pandemic. Home prices have been hitting new record highs for most months and mortgage rates are still hovering in the high 6% range. All these factors have added up to pricey down payments. The average down payment needed needed for a median-income family to afford a typical home reached $127,750, according to Zillow.
Instead of the typical 20% suggested by many lenders for conventional mortgages, prospective buyers are now saddled with a 35.4% down payment in order to make an average home affordable. This down payment is necessary for homes valued at about $360,000.
The down payment needed in today’s housing market is in stark contrast to five years ago when buyers could put down nothing and still be able to afford a median-priced home.
“Saving enough is a tall task without outside help — a gift from family or perhaps a stock windfall,” Zillow Chief Economist Skylar Olsen said. “To make the finances work, some folks are making a big move across the country, co-buying or buying a home with an extra room to rent out. Down payment assistance is another great resource that is too often overlooked.”
Saving for a $127,750 down payment is no small feat. It would take a household with an average income nearly 12 years to save, and that’s assuming a 10% monthly savings rate with at least a 4% annual return.
Just 10 of the country’s 50 biggest housing markets have buying options that require 20% down or less. Pittsburgh is one of the more affordable markets. Buyers in the city can often secure a home without any down payment.
On the other end of the spectrum, most markets in California are unaffordable for average buyers. In San Jose, households with median incomes often need to put down more than $1.3 million to secure a mortgage on a typical home, according to Zillow.
If you think you’re ready to shop around for a home loan, consider using Credible to help you easily compare interest rates from multiple lenders without affecting your credit score.
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Average monthly housing payments drop $115 below highest record
Although current buyers are struggling with high down payments, homeowners are seeing mortgage payments drop on average. In the four weeks ending July 14, the average house payment was $2,722, $115 lower than the all-time high, Redfin reported.
Thanks to dropping mortgage rates, buyers and variable-rate mortgage borrowers are paying slightly less in monthly payments. For example, a buyer with a $3,000 monthly budget can afford a $450,000 home at a 6.8% rate. That’s an additional $25,000 in buying power compared to April when the same buyer could have bought a $425,000 home at a 7.5% rate.
Many sellers are tired of waiting for mortgage rates to drop more significantly, so they’re begining to list their homes on the market. This has led to a 6.4% increase in listings, one of the highest levels in nearly four years, lessening some of the pressure on buyers. How the market will look moving forward remains uncertain, however.
“Now that it’s looking increasingly likely the Fed will cut interest rates by the end of the year, some house hunters believe mortgage rates will fall more and are waiting for that to happen before they buy,” Redfin economic research lead Chen Zhao said.
“But they may be waiting in vain; it’s unlikely mortgage rates will drop much lower in the next few months, as markets are already pricing in the expectation of a rate cut in September, followed by several more at the end of 2024 and into 2025,” Zhao said. “In fact, now may be the right time for house hunters to get serious about making offers before prices increase even more and they lose some power. Plus, there are more homes to choose from, and many listings are growing stale, giving buyers an opportunity to negotiate.”
If you’re looking to purchase a home, you can check out Credible to find the best mortgage rate for your financial situation by comparing multiple lenders at once.
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Homeowners insurance companies ask for increase in rates in a few states
One of the home expenses that continues to trouble consumers is homeowners insurance. States throughout the country are seeing major homeowners insurance premium increases.
California has been facing a particularly difficult home insurance crisis in the last few years, largely due to damaging wildfires that have caused insurance claims to skyrocket. Insurance companies are struggling to handle this sudden influx of claims.
State Farm recently requested the largest increase in rates California has seen yet. State Farm General, which is the company’s California branch, just submitted a request to raise rates for owners of single-family homes and condos, as well as for renters. The increase would potentially raise rates by 30% for homeowners, 36% for condo owners and 52% for renters.
Allstate is also asking for a home insurance rise in California this year. The company is hoping for an average raise of 34.1% across the state, down slightly from the initial 39.6% increase they wanted last year.
Higher repair costs and more frequent severe weather are the main reasons Allstate is asking for the increase. Paired with legal system abuses, these issues are causing the company to struggle to meet demand.
With different coverage amounts, it’s important to shop around to find the right home insurance plan that fits your needs. Visit Credible to start the process and maximize the value you gain from your homeowner’s policy.
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Cybersecurity and enterprise software stocks have been market dogs in 2026, with fears that AI will wipe out a wide range of companies in the enterprise space dominating the narrative. But they snapped a brutal losing streak this past week, joining in the broader market rally that saw all losses from the U.S.-Iran war regained by the Dow Jones Industrial Average and S&P 500.
Cybersecurity has been “a victim of some of the AI-related headlines,” Christian Magoon, Amplify ETFs CEO, said on this week’s “ETF Edge.”
It wasn’t just niche cybersecurity names. Take Microsoft, for example, which was recently down close to 20% for the year. Its shares surged last week by 13%.
A big driver of the pummeling in software stocks was a rotation within tech by investors to AI infrastructure and semiconductors and some other names in large-cap tech, Magoon said, and since cybersecurity stocks and ETFs are heavily weighted towards software companies, they were left behind even as those businesses continue to grow on a fundamental basis.
But Wall Street now has become more bullish with the stocks at lower levels. Brent Thill, Jefferies tech analyst, said last week that the worst may be over for software stocks. “I think that this concept that software is dead, and then Anthropic and OpenAI are going to kill the entire industry, is just over-exaggerated,” he said on CNBC’s “Money Movers” on Wednesday.
“Big Short” investor Michael Burry wrote in a Substack post on Wednesday that he is becoming bullish about software stocks after the recent selloff. “Software stocks remain interesting because of accelerated extreme declines last week arising from a reflexive positive feedback loop between falling software stocks and changes in the market for their bank debt,” he wrote.
The Global X Cybersecurity ETF (BUG), is down about 12% since the beginning of the year, with top holdings including Palo Alto Networks, Fortinet, Akamai Technologies and CrowdStrike. But BUG was up 12% last week. The First Trust NASDAQ Cybersecurity ETF (CIBR) is down 6% for the year, but up 9% in the past week.
Piper Sandler analyst Rob Owens reiterated an “overweight” rating on Palo Alto Networks which helped the stock pop 7% — it is now down roughly 6% on the year. Its peers saw similar moves, including CrowdStrike.
Performance of Global X cybersecurity ETF versus S&P 500 over past one-year period.
Magoon said expectations may have become too high in cybersecurity, and with a crowding effect among investors, solid results were not enough to to push stocks higher. But the down-and-then-back-up 2026 for the sector is also a reminder that when stocks fall sharply in a short period of time, opportunity may knock.
“Once you’re down over 10% in some of these subsectors, you start to see the contrarians start to say, ‘well, maybe I’ll take a look at this,'” Magoon said.
He said AI does add both opportunity and uncertainty to the cybersecurity equation, increasing demand but also introducing new competition. But he added, “I think the dip is good to buy in an AI-driven world,” specifically because the risks to companies may lead to more M&A in cyber names that benefits the stocks.
For now, investors may look for opportunity on the margins rather than rush back into beaten-up tech names. “I think investors are still going to remain underweight software,” Thill said.
But Magoon advises investors to at least take the reminder to keep an eye on niches in the market during pronounced downturns. “The best-performing are often the least bought and do the best over the next 12 months versus late-in-the-game piling on,” he said.
While that may have been a mindset that worked against the last investors into cybersecurity and enterprise software in mid-2025 when the negative sentiment started building, at least for now, it’s started working for the stocks in the sector again.
Meanwhile, this year’s biggest winner is also a good example of what can be an extended trade in either a bullish or bearish direction. Last year, institutional ownership of energy was at multi-year lows, Magoon said, referencing Bank of America data. “Reverse sentiment can be a great indicator,” he said.
But he cautioned that any selective buying of stocks that have dipped does have to contend with the risk that there is a potentially bigger drawdown in the market yet to come in 2026. That is because midterm election years historically have been marked by large drawdowns. “If you think it is bad right now, it could get a lot worse,” Magoon said. But he added that there’s a silver-lining in that data, too, for the patient investor. The market has posted very strong 12-month returns after midterm election drawdowns end. So, for investors with a longer-term time horizon and no need for short-term liquidity, Magoon said, “stick in there.”
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New innovation in the exchange-traded fund industry could come at a cost to investors during extreme conditions.
According to MFS Investment Management’s Jamie Harrison, ETFs involved in increasingly complex derivatives and less transparent markets may be in uncharted territory when it comes to violent downturns.
“Those would be something that you’d want to keep an eye on as volatility ramps up,” the firm’s head of ETF capital markets told CNBC’s “ETF Edge” this week. “As innovation continues to increase at a rapid pace within the ETF wrapper, [it’s] definitely something that we advise our clients to be really front-footed about… Lack of transparency could absolutely be an issue if we’re going to start seeing some deep sell-offs.”
His firm has been around since 1924 and is known for inventing the open-end mutual fund. Last year, ETF.com named MFS Investment Management as the best new ETF issuer.
“It’s important to do due diligence on the portfolio,” he said. “Having a firm that has deep partnerships, deep bench of subject matter experts that plays with the A-team in terms of the Street and liquidity providers available [are] super important.”
Liquidity as the real issue?
Harrison suggested the real issue is liquidity, particularly during a steep sell-off.
“We’ve all seen the news and the headlines around potential private credit ETFs. That picture becomes much more murky,” he added. “It’s up to advisors, to investors [and] to clients to really dig in and look under the hood and engage with their issuers.”
He noted investors will have to ask some tough questions.
“What does this look like in a 20% drawdown? How does this liquidity facility work? Am I going to be able to get in? Am I going to be able to get out? And if I’m able to get out, am I able to get out at a price that’s tight to NAV [net asset value], and what’s the infrastructure at your shop in terms of managing that consideration for me,” said Harrison.
Amplify ETFs’ Christian Magoon is also concerned about these newer ETF strategies could weather a monster drawdown. He listed private credit as a red flag.
“If your ETF owns private credit, I think it’s worth taking a look at, kind of what the standards are around liquidity and how that ETF is trading, because that should be a bit of a mismatch between the trading pace of ETFs and the underlying asset,” the firm’s CEO said in the same interview.
Magoon also highlighted potential issues surrounding equity-linked notes. The notes provide fixed income security while offering potentially higher returns linked to stocks or equity indexes.
“Those could potentially be in stress due to redemptions and the underlying credit risk. That’s another kind of unique derivative,” Magoon said. “I would very closely look at any ETF that has equity-linked notes should we get into a major drawdown or there be a contagion in private credit or something related to the banking system.”
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