The 20% down payment may now be a thing of the past. 

A homebuyer who earns the median U.S. household income would need to make a down payment of 34.5%, or almost $127,750, to comfortably afford the monthly mortgage payments for an average home, valued at $360,000, according to a new Zillow report. 

That’s a significant shift from five years ago when mortgage rates were at 4%, and homes were valued at 50% less than they are today, making it possible for someone earning the median income to afford a home’s mortgage payments even with no down payment.

The shift highlights how the pandemic fueled a red-hot housing market, while the subsequent increase in mortgage rates has tempered its pace. Buyers and sellers have moved to the sidelines with high mortgage rates and for those ready to dive in, competition is stiff with inventory unable to keep up with demand.

The down payment required for a typical home in Houston, valued at $310,707, is $76,825 or 24.7%, which would take 7.9 years to save. The calculations are based on a household earning the median U.S. income, estimated at $74,580 in 2022, saving 10% of income with a 4% rate of return.

Skylar Olsen, chief economist at Zillow, said down payments have always been important, but they are even more so right now. 

“With so few available, buyers may have to wait even longer for the right home to hit the market, especially now that buyers can afford less,” she said. “Mortgage rate movements during that time could make the difference between affording that home and not.” 

Olsen went on to say that saving enough money is challenging without some help — such as a gift from family or unexpected financial gains like a stock windfall. 

“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,” she said. “Down payment assistance is another great resource that is too often overlooked.”