If you’re preparing to buy your first home, you’ve probably heard a lot about down payments. But how much do you really need to save? While many people assume a 20% down payment is required, the reality is often much different—especially for first-time home buyers.
In this guide, we’ll explain what the average down payment on a house looks like, why it matters, and how you can plan for one that fits your financial situation. Understanding this crucial step can make your home-buying journey much smoother and more achievable.
What Is the Average Down Payment on a House?
The average down payment on a house varies depending on whether you’re a first-time homebuyer or a repeat buyer. According to data from the National Association of REALTORS® (2023):
- First-Time Buyers: Typically put down around 8% of the home price.
- Repeat Buyers: Usually provide a down payment of approximately 19% of the purchase price.
Your down payment amount can differ significantly based on factors like your home’s purchase price, loan type, and local housing market conditions.
Why Down Payments Matter
A down payment is essential because it demonstrates your ability to save and invest in a property. Additionally, it helps determine the terms of your mortgage, including:
- Interest Rates: Higher down payments often result in lower interest rates.
- Private Mortgage Insurance (PMI): Conventional loans with less than 20% down require PMI, increasing monthly costs.
- Loan Approval Chances: Meeting minimum down payment requirements can be a deciding factor for mortgage approval.
Median Down Payment by State
The median down payment varies significantly across states:
- Highest Medians: Hawaii and California, both above $100,000.
- High Medians: Washington, Colorado, and Massachusetts, each above $90,000.
- Lowest Medians: Iowa, Ohio, and Michigan, around $35,000.
These variations reflect local housing markets and average home prices, so where you plan to buy matters.
Minimum Down Payment Requirements by Loan Type
The type of loan you choose plays a significant role in determining your minimum down payment. Here’s a breakdown:
| Home Loan Type | Minimum Down Payment |
| Conventional Loan | 3% for first-time buyers, 5% for repeat buyers |
| VA Loan | 0% (Available to eligible veterans and service members) |
| USDA Loan | 0% (For qualified rural or suburban areas) |
| FHA Loan | 3.5% (Credit score of 580+), 10% (Credit score between 500-579) |
If you have a credit score below 620, conventional loans may require a higher down payment. Also, remember that private mortgage insurance (PMI) is required if your down payment is below 20%.
Conventional Loans
- The most common mortgage option.
- Requires Private Mortgage Insurance (PMI) if your down payment is below 20%.
- PMI can be canceled once you reach 20% equity in your home.
VA Loans
- Available for current and former military members, National Guard, and qualifying spouses.
- No down payment required.
- Usually offers competitive interest rates.
USDA Loans
- Designed for rural and suburban homebuyers.
- No down payment needed.
- Rocket Mortgage® does not offer USDA loans.
FHA Loans
- More accessible for borrowers with lower credit scores.
- Requires a down payment of 3.5% with a credit score of 580 or higher.
- If your credit score is between 500–579, a 10% down payment is required.
How Much Should You Save for a Down Payment?
It’s all about finding the balance between what you can afford and what you want to pay monthly. Here’s a glance at how down payment percentages translate to real money:
| Home Purchase Price | 3% Down Payment | 10% Down Payment | 20% Down Payment |
| $200,000 | $6,000 | $20,000 | $40,000 |
| $400,000 | $12,000 | $40,000 | $80,000 |
| $600,000 | $18,000 | $60,000 | $120,000 |
| $800,000 | $24,000 | $80,000 | $160,000 |
| $1,000,000 | $30,000 | $100,000 | $200,000 |
Is It Better to Put 20% Down on a House?
The myth that you must have 20% down is largely outdated. However, there are benefits to reaching this threshold:
Pros of a 20% Down Payment:
- No PMI: Avoiding Private Mortgage Insurance can save you thousands over time.
- Better Interest Rates: Lenders often offer lower rates with larger down payments.
- Lower Monthly Payments: Your overall loan amount is smaller, reducing monthly expenses.
- Reduced Interest: Paying less interest over the life of the loan.
Cons of a 20% Down Payment:
- Takes Longer to Save: For many first-time buyers, saving 20% of a home’s purchase price is difficult.
- Reduced Liquidity: Using all your savings for a down payment can leave you unprepared for emergencies or repairs.
- Missed Opportunities: Waiting to save 20% may cause you to miss out on a good market or a dream home.
Can You Buy a House with No Down Payment?
Yes! Certain loan programs allow eligible buyers to purchase homes with zero down payment, including:
- VA Loans: Available to qualified veterans, active-duty service members, and eligible spouses.
- USDA Loans: For properties in designated rural or suburban areas.
Down Payment Assistance Programs
If you’re struggling to save enough for a down payment, you may qualify for down payment assistance programs. These programs provide:
- Grants and Loans: To help cover down payments and sometimes closing costs.
- Reduced Interest Rates: Making monthly payments more affordable.
- Local Programs: Specific states or municipalities may offer assistance to first-time buyers.
FAQs About Down Payments
1. What is the minimum down payment for a conventional loan?
The minimum is 3% for first-time buyers and 5% for repeat buyers.
2. Can you avoid PMI without putting 20% down?
Yes, some lenders offer options like lender-paid PMI or piggyback loans to avoid PMI without a full 20% down payment.
3. How does a larger down payment affect mortgage rates?
Larger down payments generally lead to lower interest rates and reduced monthly payments.
4. Are there down payment assistance programs for first-time buyers?
Absolutely! Many programs help first-time buyers cover down payments and closing costs.
The Bottom Line: What’s the Right Down Payment for You?
The average down payment on a house depends on your situation. As a first-time home buyer, you can put down as little as 3% with a conventional loan, or even 0% if you qualify for a VA or USDA loan.
Consider your financial health, loan type, and market conditions before deciding how much to put down. Ready to take the next step? Explore your mortgage options today and find the best plan that fits your needs.