Down Payment On A House: How Much Do You Need? Your down payment can significantly reduce the amount you owe to the lender, the amount of interest you pay over the life of the loan, and your monthly mortgage payment.
- The down payment impacts your mortgage type, the amount of your loan, and the loan’s terms and conditions.
- A larger down payment will give you a lower loan-to-value ratio, or LTV, and you may qualify for lower interest rates.
- The average first-time home buyer pays 6% upfront and finances the balance.
- Down payments commonly range from 3% to 20% of the purchase price.
Down Payment On A House: How Much Do You Need?
What is a down payment on a house?
A house down payment is the upfront cash you put down toward the home’s purchase price. The minimum down payment percentage depends on factors such as the mortgage program, your credit score and the lender. The down payment is usually paid at the closing meeting.
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Since this initial money helps offset some of the mortgage lender’s risk, it can improve your chances of mortgage loan approval. Additionally, the amount you put down contributes to your home’s equity.
Down payment example:
| Home price | Down payment | Monthly principal and interest | Monthly PMI | Total monthly payment |
|---|---|---|---|---|
| $375,000 | $11,250 (5%) | $2,299 | $342 | $2,641 |
| $375,000 | $37,500 (10%) | $2,133 | $219 | $2,352 |
| $375,000 | $56,250 (15%) | $2,014 | $89 | $2,103 |
| $375,000 | $75,000 (20%) | $1,896 | $0 | $1,896 |
What is the typical down payment on a house?
All home buyers: 15%
First-time home buyers: 8%
Repeat home buyers: 19%
Median down payment on a house (in dollars):
What do those percentages mean in real money? Let’s do some math. The median existing-home sales price in September 2023 was $394,300, according to the NAR. Using that price as an example, here’s what those median down payment percentages look like:
8% down (first-time buyers): $31,544.
15% down (all buyers): $59,145.
19% down (repeat buyers): $74,917.
If these numbers seem steep, remember the amounts will be lower for a house below this price point. After all, plenty of people — especially first-time home buyers — are house-hunting below the $400,000 mark.
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Here’s what those median down payment percentages look like for a house that costs $250,000, about the median price for a home in Pittsburgh (according to Realtor.com).
8% down (first-time buyers): $20,000.
15% down (all buyers): $37,500.
19% down (repeat buyers): $47,500.
Minimum down payment requirements:
| Loan Type | Down Payment Minimum |
|---|---|
| Conventional conforming loan | 3 percent |
| Jumbo loans | 10 percent |
| FHA loan | 3.5 percent |
| VA loan | Zero percent |
| USDA loan | Zero percent |
| Second homes and investment properties | 10 – 25 percent |
Conventional mortgages: As low as 3% down payment
Some conventional mortgages, such as HomeReady and Home Possible, require as little as 3% down, provided you meet certain income limits. Conventional loans are not backed by the government, but they follow the down payment guidelines set by the government-sponsored enterprises — or GSEs — Fannie Mae and Freddie Mac.
Jumbo loan: 10 percent down payment
Jumbo loans are a specific type of conventional loan that (as their name implies) are for big sums — so big they don’t conform to the standards set by the Federal Housing Finance Agency (FHFA). In 2024, that means any conventional loan that exceeds $766,550 in most markets — though high-cost areas have higher limits, up to $1,149,825. Because of their size, jumbo loans typically require 10 percent down or more.
FHA loan: 3.5 percent down payment
For a Federal Housing Administration (FHA) loan, the minimum down payment is 3.5 percent with a credit score of at least 580. If you have a credit score between 500 and 579, you can still get approved, but you’ll need a 10 percent down payment.
With an FHA loan, you’ll be required to pay MIP. This comes in two forms: an upfront MIP paid at closing that’s 1.75 percent of the loan amount, and an annual MIP added to your monthly mortgage payment. The annual MIP is based on the size of your down payment, loan amount and loan term
If you put down 10 percent or more, this annual MIP can be removed after 11 years. With a smaller down payment, it will be part of your payment for the life of the loan.
VA and USDA loans: 0% down payment
Guaranteed by the U.S. Department of Veterans Affairs, VA loans usually do not require a down payment. VA loans are for current and veteran military service members and eligible surviving spouses.
USDA loans, backed by the U.S. Department of Agriculture’s Rural Development program, also have no down payment requirement. USDA loans are for rural and suburban home buyers who meet the program’s income limits and other requirements.
How to choose the best down payment amount:
Putting a large down payment comes with plenty of perks, but it’s not necessarily the best decision for every homebuyer. Consider these pros and cons:
Pros of a bigger down payment:
Smaller monthly payments: Making a bigger down payment upfront translates to smaller mortgage payments each month. Consider the difference between 3 percent down and 20 percent down on a $400,000 home. With a 30-year loan at a fixed 6 percent interest rate, Bankrate’s down payment calculator shows that the bigger down payment translates to a monthly mortgage payment savings of around $400.
Lower lifetime interest charges: Those smaller monthly payments add up to significant savings in the long run. In that $400,000 home example, a 20 percent down payment would save more than $78,000 over the course of a 30-year mortgage.
Potentially better terms: Lenders like to see larger down payments. By putting more of your own money into the transaction, you’re borrowing less of theirs, which can put you in the running for the lowest rates possible.
Ability to skip PMI: If your down payment is 20 percent on a conventional loan, you won’t have to deal with the additional monthly fee of mortgage insurance.
Cons of a bigger down payment:
Potential to stretch your savings too thin: If you’re draining nearly all your savings to make a bigger down payment, you’re putting yourself in a precarious position as a new homeowner when an emergency cost or home repair inevitably pops up.
The need for more time to save: You might be tempted to keep saving up money to make a bigger down payment, but that strategy can backfire. While you’re trying to cut every expense, home prices might still be rising at a pace you can’t keep up with.
The Bottom Line:
Your down payment on a home purchase impacts your mortgage type, the amount of your loan, and the loan’s terms and conditions. A larger down payment will give you a lower loan-to-value ratio, or LTV, may qualify for a lower interest rate, and not require PMI. Down payments commonly range from 3% to 20% of the purchase price.
