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How Much Down Payment To Win A Home With Multiple Offers?

March 1, 2022 | By Mendy Rimler

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It's no secret that in today's housing market, buyers are facing stiff competition. According to the National Association of Realtors, a record number of homes sold in 2021 were sold above the asking price.


If you're looking to buy a home in Houston and find yourself in a bidding war, you may be wondering how much down payment you need to increase your chances of winning. In this blog post, we'll take a look at what sellers care about most when it comes to down payments and offer some advice on how to make your offer more attractive.

What is a Typical Down Payment?

A down payment is the portion of the purchase price that you pay upfront when you buy a home. The down payment is often one of the biggest obstacles to buying a home, especially for first-time buyers.


When it comes to down payments, there is no "typical" amount. It depends on the price of the home you're buying and your financial situation. However, many lenders require a down payment of at least 20% to qualify for a mortgage.


According to the U.S. National Home Price Index, between 2019 and 2020, the median down payment for all buyers was 12 percent. However, in the first three months of 2021, 48% of home buyers made a down payment of at least 20% of the home value.


Additionally, according to Zillow's 2020 Consumer Housing Trends Report, 28% of buyers said that they paid for their home in full without a mortgage. This is known as a cash offer. In 2021, as the housing market in Houston and other areas remained scorching hot, that share grew to about a third (32%).

Can a Higher Down Payment Sway a Seller with Multiple Offers?

With sellers anticipating multiple offers, eager homebuyers are wondering what they can do to improve their chances. Thus, when you are in the market to buy a home, it is important to know how much down payment you will need to be competitive. 


In a hot housing market like Houston, you may find yourself in a bidding war for your dream home. In order to win, it can be helpful to put more money down than the asking price. Offering a higher down payment on a home is one way to make your offer more attractive, but not the only way. 


When it comes down to it, sellers care about two things: the amount of money they will receive and the speed of the sale.


A higher down payment doesn’t necessarily mean a larger payout for the seller, but it could slow down the sale process. In some cases, a buyer with a smaller down payment may be able to close on the home faster than a buyer with a large down payment.


Therefore, many sellers don't actually care about how much money the down payment is. They just want the sale to close quickly and without any headaches.

How Can I Make My Down Payment More Attractive?

If you're looking to make your down payment more attractive to a seller, there are a few things you can do.


- Pay in cash: This may be the best option if you're able to pay for the home in full. It will show the seller that you're serious about buying and that you have the funds available to purchase the property.


- Get pre-approved for a mortgage: A pre-approval letter from a lender will show the seller that you're serious about buying and that you have the financial backing to do so.


- Waive your inspection contingency: If you're not worried about getting a home inspection, you can waive this contingency and show the seller that you're willing to take on any potential problems with the property without asking them to reduce the home price or make repairs.


- Offer to cover closing costs. This can be a much better use for your extra cash instead of increasing your down payment. It’s a great way to show the seller that you're serious about buying, can close quickly, and most importantly it takes some financial pressure off them. 

Bottom Line on How Much Down Payment to Win a Home in Houston

If you're in a bidding war for a home, remember that the down payment is just one part of your offer. You'll also need to consider other factors such as price, contingencies, and closing costs. 


Because when it comes down to it, a higher down payment can help improve your chances of winning a bidding war, but it's not the only factor that sellers care about. Be sure to put your best foot forward and make a strong offer on the home you want. 

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