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

The typical down payment on a house is between 3% and 20%, but a 20% down payment is not a requirement for most buyers. In fact, over half of recent buyers put down less than 20%, utilizing loan programs with minimums as low as 3% or even 0%. The right amount for you depends on your loan type, financial situation, and homeownership goals, with a larger down payment primarily serving to lower your monthly mortgage payment and avoid additional fees.

What is a Down Payment? A down payment is the initial, upfront cash payment you make toward the purchase price of a home. It is expressed as a percentage of the total sale price. For example, on a $300,000 home, a 10% down payment would be $30,000. The remaining balance is financed through a mortgage loan. The down payment demonstrates your financial commitment to the lender and immediately establishes your equity (your financial ownership stake) in the property.

Do You Need a 20% Down Payment to Buy a House? No, you do not need a 20% down payment. While it is a common benchmark, a 2022 industry survey indicated that 58% of buyers put down less than 20%. The primary advantage of a 20% down payment on a conventional loan is the avoidance of Private Mortgage Insurance (PMI), which is an additional fee that protects the lender if you default. A larger down payment also results in a lower loan amount, which translates to lower monthly payments and less interest paid over the life of the loan.

What is the Minimum Down Payment for a House? The minimum down payment is determined by the type of mortgage loan you secure. Government-backed loans offer the lowest barriers to entry, while jumbo loans (which exceed conforming loan limits) require more.

*Note: 3% minimums are often for first-time or low-income buyers in specific programs.

How Much Should You Put Down on a House? There is no single correct answer. While the median buyer puts down 10-19%, your decision should balance your savings goals with market conditions. Based on our experience assessment, consider these factors before deciding:

• Total Cash to Close: Your down payment is only one part of the cash you'll need. You must also budget for closing costs, which typically range from 2% to 5% of the home's price.
• Emergency and Maintenance Fund: Homeownership comes with unexpected repairs. It is often wiser to make a smaller down payment and retain a robust cash reserve for maintenance.
• Down Payment Assistance (DPA): Many state and local programs offer grants or favorable loans to help eligible buyers with their down payment.

How Do Most People Save for a Down Payment? The majority of buyers save over time through disciplined budgeting. Common strategies include setting up automatic transfers to a savings account, using windfalls like tax refunds, or taking on a side job. Other sources can include gifts from family (with proper documentation) and proceeds from the sale of a previous home.

When is the Down Payment Due? The full down payment is due at the closing of your home purchase. The title or escrow agent will coordinate the collection of your funds, which will include your earnest money deposit (the initial good-faith deposit) being credited toward the total down payment amount.

Practical Advice for Determining Your Down Payment Use an online down payment calculator to see how different amounts affect your monthly payment. Focus on a sustainable payment that allows you to comfortably manage your budget while keeping funds available for other goals and emergencies. Explore all loan options with your mortgage lender, as a lower-down-payment program may be the most strategic path to homeownership for you.