Many Home Buyers Put No Money Down

More than 4 in 10 first-time U.S. home buyers put no money down on their purchases last year, a trade group said Tuesday in a report that highlighted Americans’ reliance on the nontraditional financing that economists worry has stretched consumers too far.

The National Assn. of Realtors, in a survey of home buyers, said that 43% of first-time buyers financed 100% of their purchase and that an additional 50% financed 71% to 99% of their home.

The group’s president, Tom Stevens, said he was not concerned about the percentage of people putting no money down on their home purchases.

“I think that’s just a reflection of what we’ve been seeing in terms of the options that first-time home buyers have,” Stevens said.

“I think if the number was higher than that I would be concerned.”

Stevens said he could not provide comparable data for previous periods, but he suspected that the number of first-time buyers putting no money down had risen.

The Realtors’ report comes as a five-year rally in the U.S. housing market shows signs of sustained cooling after shattering all construction and sales records and sending prices up more than 55% on average nationwide.

Some of that strength has been sustained by growing use of nontraditional mortgages that give home buyers the ability to afford ever-more expensive houses even though household income has not risen as quickly. Those loans, such as products that allow low down payments or no down payment, are seen as riskier than the traditional 30-year fixed-rate mortgage.

Regulators and some economists worry that as interest rates rise, borrowers may find themselves unable to make payments.