What Are Buyers Really Putting Down for a Mortgage?

Ask the Realtors, the Builders, even the Housing Reporters, and they'll all tell you that the biggest impediments to housing's recovery are higher credit underwriting standards.

Mortgage application
Mortgage application

Down payments are a big part of that, as most mortgage market experts will say you can't get those great low rates today without putting down at least 20 percent, and more if you need a jumbo loan.

That's whya new report from LendingTree listing the states with the highest and lowest average mortgage down payments was so surprising to me. It wasn't the states, but the cash down.

New Jersey came in with the highest average, but that average was just 13.76 percent, according to LendingTree. North Dakota boasts the lowest average at 12.29 percent. Still both are well below the 20 percent we all complain about.

Granted FHA (Federal Housing Administration) loans, which due to the government insurance, require very low down payments, and while they rose to a very large share of the market during the worst years of the housing crash, they have since fallen back to an approximately 20 percent share of originations today.

Fannie Mae and Freddie Mac require at least 10 percent down, but then you have to pay private mortgage insurance to get the best rates.

"The reality is when you put less than 20 percent down, you have to pay for some kind of insurance to protect the lender from the higher risk that you'll default...but private mortgage insurers these days aren't always willing to do business with low down payments," notes a LendingTree spokesman.

If average down payments are this low, it raises concern over proposed mortgage industry regulation that would require a 20 percent down payment for a lender to be able to securitize and sell a loan fully into the marketplace. Lenders, like LendingTree, don't like it.

"If Federal regulators were to adopt the proposed 20 percent down payment requirement, a majority of borrowers wouldn’t be able to meet the standard given the findings in this report," said Doug Lebda, founder and CEO of LendingTree.

But what if the average that LendingTree is reporting, isn't what it appears to be?

"What we know is that 20-25 percent of mortgages nationwide carry down payments of 3.5 percent or less (FHA or VA) while most of the rest carry down payments of 20 percent or more (Fannie, Freddie and jumbo)," notes Guy Cecala of Inside Mortgage Finance. "So an average of 12 or 14 percent is not impossible, but it doesn't really mean that a lot of people are actually getting mortgages with those "average" down payments."

Don't you just hate it when real math gets in the way of a good lobby?

Questions? Comments? RealtyCheck@cnbc.comAnd follow me on Twitter @Diana_Olick