How Much Is a Down Payment on a House?

How much you’re required to put down on a house is determined by the type of loan you get, but it generally ranges from 3% to 20% of the purchase price of the home. Beyond lender requirements, it can be financially beneficial to increase your down payment to reduce the amount of your monthly mortgage payment. Offers with larger down payments can be more appealing to home sellers who are looking for buyers with a low risk of financing issues that could delay the sale — or worse, have it fall through.

What is a down payment on a house?

The down payment on a house is a portion of the price of a home that’s paid in cash. The balance of the purchase price is usually paid by a loan you secure from a lender and pay back in a monthly mortgage payment. Down payments are expressed as a percentage of the total purchase price. The percentage you’re required to pay is dictated by the terms of your loan. Note that not all home buyers with financing are required to produce a down payment, but the majority of them are.

How much should I put down on a house?

The ideal down payment amount is 20% of the purchase price of the home. Paying 20% upfront can:

  • reduce your monthly mortgage payments
  • eliminate costly private mortgage insurance (PMI)
  • reduce interest rates
  • improve the competitive nature of your offer

When trying to decide how much you should put down on a home, play around with a mortgage calculator to determine an amount that works best for your finances. As you explore, remember that in addition to your down payment, you’ll have some other upfront costs you’ll need to pay at closing, collectively called your escrow funds. It can include your closing costs, prorated taxes, title fees and more.

20% down reduces your mortgage payment

The more money you pay upfront, the less you have to borrow from the lender, and the lower your monthly payment will be.

Example: Let’s say you buy a $300,000 home at a fixed rate of 4.25%.  The following payment scenarios exclude additional fees and costs such as taxes and insurance.

  • With a 20% down payment ($60,000), you’d borrow $240,000, and your monthly payment would be $1,548.
  • With a 5% down payment ($15,000), you’d borrow $285,000, and your monthly payment would be $1,950.

20% down eliminates private mortgage insurance (PMI)

When you put 20% down, that means you own 20% of your home. This allows you to avoid paying PMI, which is a monthly charge that’s rolled into your mortgage payment to protect the lender from what they see as a riskier loan.

Example: If you buy the same $300,000 home noted above, with 5% down, your PMI payments each month would be $181 until your equity reaches 20% of the home, or you refinance into a loan without PMI.

Example savings on a $350,000 home, assuming a 5% interest rate on a 30-year fixed mortgage

20% down improves mortgage rates

Buyers purchasing with a 20% down payment can often get better interest rates. A higher down payment is considered a sign that you’re financially stable, and thus a less risky borrower in the eyes of your lender. Overall, your risk is determined by three key factors: your debt-to-income ratio, your credit score and your loan-to-value ratio. The more money you put down as part of your down payment, the stronger your loan-to-value ratio.

For example, if you borrow $240,000 on a home that’s worth $300,000, like our example above, you have a loan-to-value (LTV) ratio of 80%, or $240,000 divided by $300,000. The lower the percentage, the better.

20% down makes your offer more appealing to the seller

In a competitive market, a larger down payment can make your offer more appealing to a seller. This is because they’ll likely feel more confident that you won’t have financing issues at closing that could cause the sale to fail.

What is the average down payment on a house?

The typical down payment on a mortgaged home in 2021 was 10-19% of the purchase price of the home. While 20% is the traditional down payment amount, 59% of buyers put down less than 20%, according to theZillow Group Consumer Housing Trends Report 2021.

Here’s a breakdown of down payment percentages from buyers who reported purchasing a homes with a mortgage in 2021:

  • 18% of buyers have a down payment of more than 20%
  • 20% of buyers have a down payment of 20%
  • 24% of buyers have a down payment of 10-19%
  • 13% of buyers have a down payment of 6-9%
  • 12% of buyers have a down payment of 3-5%
  • 10% of buyers have a down payment of less than 3%
  • 4% of buyers don’t remember the size of their down payment

Younger buyers are more likely to purchase a home with less than 20% down. Sixty-three percent of Gen Z and Millennial buyers make a down payment of less than 20%. And 64% of Gen Xers do the same. Far fewer Boomers and Silent Generation buyers put down less than 20% down, just 41%.

What is the minimum down payment for a house?

The minimum down payment for a house depends on the loan you’re using to finance the purchase. Some people may be able to qualify for loans with 0% down, but loans with 3% down or 3.5% down are common. Lower down payment loans, including the 3.5% FHA loan, are designed to make homeownership more attainable for first-time buyers.

Keep in mind that even if you finance with a loan that allows a lower down payment, you’ll usually still have to pay closing costs out of pocket. There are a few 0% down loan types that will roll all costs into the mortgage, but they can be hard to come by.

  • Conventional loan minimum down payment: 3%
  • FHA loan minimum down payment: 3.5%
  • VA loan minimum down payment: 0%
  • USDA loan minimum down payment: 0%

What are the zero-down payment mortgage options?

For most zero-down payment home loans, there are certain criteria buyers have to meet, and many people don’t qualify. Certain groups like health care workers, educators, protectors, veterans and households with disabled members can qualify for specific programs. Requirements vary, but many of these programs are available to first-time buyers or those who haven’t owned a home for at least the past three years. The home they’re buying usually has to be their primary residence, too.

Down Payment Assistance (DPA) programs: These programs are often offered by state, county, or city governments that provide DPA support in the form of a grant or a second mortgage to cover the cost of their down payment, sometimes with benefits such as zero percent interest and deferred payments. These programs are usually run by government agencies or nonprofits, although there are lenders out there that do offer DPA loan programs.

Below-market first mortgages: Also known as first-time home buyer programs, these are below-market interest rates with reduced closing costs or fees. They’re typically funded by state housing finance agencies as a way to help lower upfront and ongoing costs for some first-time buyers.

Tax credit or mortgage credit certificate (MCC): The MCC is a tax credit that allows certain first-time home buyers to offset a portion of their mortgage interest, up to $2,000 per year, which also helps buyers qualify for a loan because it counts toward monthly income.

For more information about down payment options, read about the benefits and find resources in the Mortgage Learning Center.

How to save for a down payment on a house

Saving enough for a down payment can be one of the biggest hurdles to homeownership. Zillow research from 2021 found that for renters making the median U.S. renter income of $3,855 per month and putting 2.4% (or about $92/month) of their income into savings (the median rate for renters), it will take 7 years to save for a 5% down payment on today’s typical starter home, priced at $148,527. 

Most buyers save the traditional way, tucking away a little money from each paycheck. Others may need to make some kind of financial sacrifice to buy their home.

how the average home buyer sources their down payment

Saving strategies

Minimize your life: Take a look at your spending and belongings with a critical eye. Do you have unused belongings you could sell? Perhaps empty out that storage unit to avoid the monthly charge?

Spend less: Try cutting back on indulgences like dining out, cable TV or coffee shop beverages. Consider postponing or canceling vacation plans to save for your big purchase.

Earn more: Start a side hustle, taking on extra shifts at work or reducing time off.

Ask for help: Buyers also ask friends and family for assistance, even using birthday cash or wedding money as part of their down payment. Forty-two percent of buyers with a mortgage report using a gift or a loan from friends and/or family for their down payment, accounting for 13% of the average mortgage buyer’s down payment.

Discover more creative ways to save for a down payment.

First-time home buyer down payments

According to the Zillow Group Consumer Housing Trends Report 2021, about a third of all home buyers (37%) are first-time buyers. While most repeat buyers can apply the equity from the home they’re selling to purchase a new home, it can be more challenging for first-time home buyers to get the money they need to secure a down payment.

This may be why using gifts or loans from friends and/or family is more common among first-time mortgage buyers. 

Down payment gift rules

If you’re planning on using gifted money as part or all of your down payment, it’s important to realize that there are restrictions and documentation requirements.

First, your lender will need to know the source of your down payment money. Expect your lender to evaluate your past 3+ months of banking activity. Keep a paper trail of any large transfers so you can accurately account for any deposits that occur during this time period.

Your lender will also want to confirm that the money you’ve been gifted is in fact a gift. Make sure it isn’t a loan from a friend or family member that’s expected to be paid back. Additional loans affect your debt-to-income ratio and potentially make you a riskier borrower. Here are the things your lender will look for:

Relationship of gifter: Generally, gift money needs to come from a family member, spouse or partner.

Down payment gift letter: Lenders will often require that the donor write a letter that clarifies your relationship with the gifter. It should also document the amount of the gift, confirms contact information, and documents the address of the property.

Gift money loan requirements: Not all loan types will allow you to make a down payment with 100% gift funds. This is especially true if the home will not be a primary residence. Check with your lender to confirm the minimum borrower contribution from your personal funds for the home you plan to buy.

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