1 in 4 Buyers Using Fed Money for Down Payment

SEATTLE –  Almost one in four (24%) of first-time homebuyers took money received via government stimulus payments and added it to their savings for a down payment on a home, according to a report released by Redfin. It was the second-most common way of accumulating money for a down payment after saving directly from paychecks.

The report is based on a commissioned survey of 1,500 U.S. residents planning to buy or sell a home in the next 12 months, fielded by research technology company Lucid from Dec. 10 to 13, 2021. The report focuses on 215 respondents who said they were buying their first home in the next year and were then asked: “How did you accumulate the money you need for a down payment?”

“There was a fair amount of economic uncertainty at the beginning of the pandemic, and many people initially lost their jobs due to widespread lockdowns,” says Redfin Chief Economist Daryl Fairweather. “But plenty of Americans, particularly those who are in a position to buy a home, are now in a better financial position than before. Stimulus payments provided a lot of Americans … extra money in their pockets. Some people were also able to save more money than usual because they spent less on things like traveling, eating out and paying back student loans.”

In 2021, the average American family with children received $6,660 in stimulus money, including direct checks and through the expanded child tax credit. However, not all buyers who added stimulus money to their down payment used the entire amount. Many said they used most of the funds for everyday essentials.

Other ways respondents reported collecting money for down payments include selling investments in cryptocurrency (12%) and cash gifts from family (12%).