Average down payment on a house: What you need to know
For many aspiring homeowners, the thought of needing a large down payment can make homebuying feel out of reach. The common belief that a 20% down payment is required can often overshadow the excitement of purchasing a home. However, this perception doesn’t necessarily reflect the reality of most buyers today.
In this article, we’ll explore average down payments, how they vary by loan type and what you need to know to prepare for buying a home.
What is a typical down payment on a house?
According to data from the National Association of REALTORS®, the median down payment in 2024 was 18%. However, that fell to 9% for first-time home buyers.ec-jpmc-does-not-offer-usda-loans So, why do so many consumers believe the typical down payment is 20%? This common misconception may be due to something called private mortgage insurance (PMI).
When taking out a conventional loan, lenders may require borrowers who put less than 20% down to pay for insurance that protects the lender in case of default. PMI is designed to counterbalance the risk presented by lower down payments and larger loans. Lenders may require PMI until the loan-to-value ratio (LTV) of your mortgage reaches 80% (meaning you've paid off 20% of the total loan or have 20% equity in your home).
Because PMI adds costs on top of routine mortgage payments, some buyers aim to put at least 20% down up front to avoid PMI altogether. While avoiding PMI can save you money, putting down less than 20% is common and often more feasible for many buyers. But the minimum down payment itself will depend on the type of loan you choose.
Minimum down payment by loan type
Mortgage loans come in a variety of types, catering to borrowers with different needs and unique financial situations. The down payment required for each type of loan can vary significantly, affecting the overall affordability and monthly payments.
Understanding these requirements can help you decide which loan type is best suited for your financial situation. Note that each person’s down payment will differ based on their circumstances, but there are some required minimums for borrowers to keep in mind:
| Mortgage type | Minimum down payment | How to qualify |
|---|---|---|
| Conventional loans | As low as 3% | Down payments will vary depending on your credit score and debt-to-income (DTI) ratio. Buyers who choose to put down less than 20% typically must carry PMI. |
| Federal Housing Administration (FHA loans) | As low as 3.5% | Buyers interested in VA loans must be service members, veterans or a surviving spouse. |
| Department of Veterans Affairs mortgage (VA loans) | As low as 0% | Buyers with a credit score of 580 or higher can typically secure a low down payment. A 10% down payment will typically be required if your credit score is between 500 and 579. |
| U.S. Department of Agriculture mortgage (USDA loans)ec-jpmc-does-not-offer-usda-loans | As low as 0%ec-average-down-single-house | USDA loans are only available to buyers in designated rural and suburban areas. |
| Jumbo loans | 10%–30% | Jumbo loans typically require a higher credit score than conventional loans due to the lender’s increased risk. |
How do down payments affect your mortgage?
Larger down payments can reduce the amount you need to borrow, which can lower your monthly payments and decrease the total amount of interest you’ll pay over the life of the loan. A lower LTV ratio can also result in a better interest rate, saving you money in the long run.
Smaller down payments can make homeownership more accessible, especially for first-time buyers or those with less savings. However, they often lead to higher monthly mortgage payments and additional costs, such as PMI. It’s essential to weigh the benefits of lower upfront costs against the potential for higher long-term expenses.
To get a better idea of how different down payment amounts can impact your mortgage, let’s look at some examples:
| Down payment percentage | Home price | Down payment amount | Loan amount | Interest rate | Monthly payment for a fixed 30-year mortgageec-average-down-payment-on-a-house-principal-interest |
|---|---|---|---|---|---|
| 3% down payment | $300,000 | $9,000 | $291,000 | 7.010% | ~$1,815 |
| 10% down payment | $300,000 | $30,000 | $270,000 | 6.837% | ~$1,706 |
| 20% down payment | $300,000 | $60,000 | $240,000 | 6.778% | ~$1,536 |
| 30% down payment | $300,000 | $90,000 | $210,000 | 6.553% | ~$1,310 |
As you can see from the table, the more money you put down, the smaller your monthly mortgage payment will be. Credit score, lender and loan type will all factor into your interest rate. However, once you choose a lender and loan, putting more down should lower your interest rate. Both of these benefits can help you save thousands of dollars over the repayment period of your loan. By understanding how down payment size impacts both monthly costs and long-term savings, you can make more informed decisions about what works best for you.
In summary
People may put less down for their down payments than you think. The median for first-time homebuyers was less than 10% in 2024.ec-average-down-payment-on-a-house-nar-realtor In fact, many conventional mortgages require as little as 3% down up front, meaning you may be able to start building equity sooner than expected.
Whether you’re a first-time buyer looking to keep costs low or a repeat buyer aiming for a larger investment, there are down payment options that can work for you. To learn more about different types of financing and how to get closer to owning your dream home, apply for a mortgage loan today.
