How Much is a Down Payment on a House? A 2024 Guide to Minimums & Averages

For most home buyers, a down payment is between 3% and 20% of the home's purchase price. However, the exact amount depends heavily on the mortgage loan program. While a 20% down payment is ideal to avoid Private Mortgage Insurance (PMI)—a policy that protects the lender if you default—it is not a requirement. In fact, a 2022 survey found that 58% of buyers put down less than 20%. Government-backed loans like VA and USDA loans even allow for 0% down payments for eligible borrowers.

What is a Down Payment?

A down payment is the initial, upfront cash payment you make towards the purchase price of a home. It is typically combined with a mortgage loan to cover the total cost. Down payments are expressed as a percentage of the home's price. For example, on a $300,000 home, a 10% down payment would be $30,000, with the remaining $270,000 financed through a mortgage.

Do You Have to Put 20% Down on a House?

No, a 20% down payment is not mandatory. While it offers significant benefits, many buyers opt for a lower amount. The advantages of putting down 20% include:

• Lower monthly payments due to a smaller loan amount.
• Better interest rates and loan terms from lenders.
• No PMI on conventional loans, saving you money monthly.
• More immediate equity in your home.
• A stronger offer in competitive markets.

To illustrate, on a $350,000 home with a 5% interest rate, a 20% down payment ($70,000) results in a monthly principal and interest payment that is over $700 less than with a 5% down payment ($17,500).

What is the Minimum Down Payment for a House?

The minimum down payment is determined by your loan type and the property's purpose. The most common loan, a conventional loan, requires a minimum of 3% for qualified first-time or low-income buyers; otherwise, 5% is standard. The table below outlines common minimums for a primary residence.

Note: Minimums can vary by lender, credit score, and location.

How Much Should You Put Down on a House?

There is no single correct answer. The median buyer puts down 10-19%, but 16% of buyers put down just 3-5%. Based on our experience assessment, your decision should balance your savings timeline with your goal of homeownership. While a larger down payment reduces long-term costs, depleting your savings may not be prudent. Consider these factors:

• Total Cash to Close: You will need additional funds for closing costs, which include title insurance and prorated taxes.
• Emergency Fund: Maintain a cash reserve for unexpected home maintenance and repairs.
• Down Payment Assistance: You may qualify for state or local programs that provide grants or second mortgages to help with the down payment.

How Do Most People Save for a Down Payment?

According to industry data, 63% of buyers save over time, while 46% use proceeds from the sale of a previous home. Other common methods include financial gifts from family, side hustles, and selling investments.

When and How is the Down Payment Paid?

The full down payment is due at the closing of your home purchase. The title or closing agent will collect this sum, along with your closing costs. Your earnest money deposit—the good-faith payment made with your offer—will be credited toward the total down payment amount at closing.

In conclusion, the right down payment amount is a personal financial decision. While aiming for 20% is beneficial, numerous low-down-payment programs make homeownership accessible sooner. The key is to choose a down payment that aligns with your budget without compromising your financial security for ongoing homeownership expenses.