A down payment is a percentage of a home’s purchase price that you pay upfront when buying a home. The average down payment on a house depends on several factors, including the home loan type and the borrower’s financial situation.
As a general rule, a larger down payment can reduce how much you owe to a lender. It can also save you money in interest charges and lower your monthly payment amount. But while many people believe that you must put down 20% to buy a house, it is possible to get a mortgage loan with a smaller down payment.
Here’s everything you need to know about down payment requirements by mortgage type and how to start saving up.
What is the average down payment?
The average down payment on a house is 13%, or $26,000, according to Realtor.com. This is an increase of more than 2% from the average down payment amount of 10.7% in 2020.
It’s worth noting that the typical down payment on a house varies based on several factors, such as:
- Property location
- Buyer’s age
- Buyer’s income
- Home loan type
- Home value
Down payment amounts: State by state
The average down payment varies by state. Here’s a look at last year’s state-by-state down payment data — from the highest amount to the lowest — from Optimal Blue, a mortgage data and technology company. As you can see, California had the highest average down payment amount, while Mississippi had the lowest.
Down payment requirements by mortgage type
Down payment requirements mainly depend on the type of home loan you get. Typically, you’ll need to put down at least 3% of the home price to qualify for a mortgage. Some lenders may have stricter requirements, however, so it’s important to shop around and compare your options before choosing one.
If you’re thinking about buying a house but don’t have money for a down payment, you may want to consider a zero-down mortgage like a USDA or a VA loan. These loans do not require a down payment, but you’ll need to meet other criteria to qualify.
Here are the different types of mortgages and their typical minimum down payment requirements:
How much should a down payment be?
There are several factors to consider when determining a down payment amount. Both a smaller and a larger down payment can be beneficial in different ways.
Generally, a larger down payment means you don’t need to take out as large of a loan. This could make it easier to qualify for a mortgage. It could also lower your monthly payment amount and reduce how much total interest you pay over the life of the loan. If you put at least 20% down on a conventional mortgage, you could also avoid paying private mortgage insurance (PMI).
A larger down payment also means having more equity in your home right after purchasing it. This could be beneficial if you need to use that equity for something like home improvements or debt consolidation later.
With a smaller down payment, you could buy a home much sooner than if you were to wait until you saved up more money. A smaller down payment might also be a good option if you need some extra cash for home repairs, maintenance, or closing costs.
Everyone’s financial situation and goals are different. You should carefully consider yours when making this decision.
Down payment examples
Figuring out how much to put down on a house is an essential part of the home-buying process. Here is how much a $500,000, 30-year fixed-rate mortgage might cost based on different down payment amounts*:
[*Keep in mind that these calculations do not include other fees, such as insurance premiums, property taxes, or PMI.]
How to save up for a down payment
For many people, the prospect of saving up for a down payment can feel overwhelming. But that’s why it’s important to approach it in stages. Here are some of the best ways to build your down payment fund, starting now:
- Make a savings plan: Saving up for a big expense — like a down payment for a house — can take months or even years. Start by determining your homebuying budget, expected down payment amount, and when you want to buy. This can help you understand how much you’ll need to save each month.
- Choose a home loan type: Since down payment requirements vary by home loan type, you should weigh your options. With a conventional loan, for example, you might only need a 3% down payment. On a $350,000 loan, that’d be $10,500.
- Determine how much you can save each month: In June 2024, the average person had around 4.3% of their income left after paying for all other monthly expenses. If you earn $5,000 a month, that means you have $215 left for your down payment fund. If your goal is to save $10,500 (3% down on a $350,000 house), you could accomplish this goal in roughly four years. And if you increase your savings goal, you could buy a house even sooner.
- Pay off other debts: Although it might delay homeownership, eliminating your debts can free up more cash each month. This can make it easier to save up for a down payment.
- Reduce your expenses: Review your budget and cut unnecessary expenses. For some, this could mean canceling certain monthly subscriptions. For others, it might mean getting a roommate to cut down on rent.
- Increase your income: Ask for more hours at work or a raise. Or take on a side gig to boost your monthly income. Any extra money can go toward paying off your debts or saving up for a down payment.
- Automate your savings: It’s OK to start small, but automating your savings is a great way to keep you on track when saving up for something big. Connect your checking and savings accounts. Then, set up automatic transfers on a cadence of your choosing (each time you get paid, monthly, etc.).
- Look into down payment assistance programs: There are certain programs available to help people — especially first-time homebuyers — purchase a home. These come in many forms, such as down payment assistance programs and closing cost assistance programs.
Down payment FAQs
Is a 20% down payment realistic?
This depends on your financial situation, homebuying timeline, and how much the property costs. Putting down 20% or more could save you money in terms of PMI payments and interest. But if you’re not comfortable with such a large down payment, you may qualify for a mortgage with a smaller one.
What is a typical down payment on a house?
The typical down payment on a house in 2024 is $26,000, or 13%.
How much is a down payment on a $500K house?
A 20% down payment on a $500,000 house is $100,000. A 10% down payment on that same house would be $50,000. And a 3% down payment is $15,000.
How much house can I afford?
To determine how much house you can afford, start by looking at your current income and expenses. See if there’s any wiggle room in your budget and determine how comfortable you are with your current bills.
Then, use an online mortgage calculator to estimate your monthly mortgage payment. To get this calculation, you’ll typically need to provide your annual income, monthly debt load, down payment amount, loan term, and interest rate. For a more precise estimate, include any expected taxes and fees.
What is considered a high down payment?
In many cases, a high down payment is anything above 20% of the home purchase price. However, since the average homebuyer puts down 13%, anything higher than that may be considered high.
