According to American Financing’s Mortgages in America Survey 53 percent of those responding believed that a 10 percent down payment was ideal. Nationwide, the average down payment in the second quarter of 2017 was 7.3 percent. San Francisco and San Jose homebuyers averaged down payments of over 20 percent, the highest in the country.

American Finance points out that lenders typically charge higher mortgage insurance premiums to borrowers who make smaller down payments so that those putting down 10 percent may actually pay more in the long run.

Of course, Bay Area homebuyers are competing with those who can afford to purchase with all cash (estimated to be 26 percent below $1 million and 46 percent above $3 million).

A new study by the New York Federal Reserve states that changes in down payment requirements have considerable more influence over home buyers’ willingness to purchase than changes in interest rates. For example, lowering a down payment from 20 percent to 5 percent, increases the willingness to buy – or ability, in many cases – by as much as 15 percent among buyers and an even greater 40 percent among renters. Conversely, lowering the rates on a 30-year fixed-rate loan increased the willingness to purchase a home by only 5 percent.

On the other hand, lower down payment requirements has little effect among buyers who already have a home with substantial equity or with renters who have substantial savings. In this case, lower interest rates are key, as this is what will save these groups more money.