Forget 20% down: Hilton Head has one of the top 10 average down payments in the U.S.
The golden percentage home buyers often hear is 20% — a number widely considered the ideal down payment for most loan types and lenders.
In Hilton Head, home buyers are making down payments larger than most of the United States, according to one website.
With an average down payment of 23.7% of the homes’ price, Hilton Head has the 10th-highest average home down payment in the U.S., according to realtor.com, and the highest in South Carolina.
For single-family home sales in the U.S. the average down payment is more than 14% of the purchase price, up from nearly 11% in 2019, according to an article on the site.
The large amount of vacation homes in Hilton Head might lead to higher average down payments, according to Beaufort Lending owner Benjamin Gecy. Gecy has been a Beaufort mortgage broker for 25 years.
“The more money you put down, the less risk it is for the bank because if they default on it, they’ve got a higher chance of getting all of their money back without losing anything,” Gecy said. “Investment property, second homes, condos, those are all higher risk assets for banks, and they require more down payment money.”
The list of highest down payments on realtor.com mostly included other vacation destinations including The Villages in Florida at No. 1 and Coeur d’Alene, in Idaho at No. 2.
Florence, South Carolina is listed as No. 6 on the list of lowest down payments. No other South Carolina cities made either list.
Higher average down payments could also be due to people selling their homes, then using that money to retire to Hilton Head, according to Movement Mortgage Loan officer Jim Hess.
“They’re selling another home and then they’re buying your home down here,” Hess said. “They’re potentially using the equity from somewhere else and bringing it down here. They want those payments as low as they can possibly have so they can retire down here [in] comfort.”
Paying more money up front means that mortgage payments will be lower.
While the average down payment may be high and even preferred for sellers, it is not necessary, according to Gecy.
“It doesn’t matter after you’re under contract whether you put down 50%, 5%, or do 100% financing,” he said. “They’re just looking for you to perform on the contract.”
This story was originally published November 13, 2022 at 5:00 AM with the headline "Forget 20% down: Hilton Head has one of the top 10 average down payments in the U.S.."
