First-Time Home Buyers And Down Payments: 73% Of Buyers Put Down Less Than You Think

This article was originally written in early 2022. Select data has been updated as it's become available. Last updated for a product disclaimer.

First-time home buyers hear plenty of tips and advice, and it can be difficult to differentiate myth from fact. One of those old home buying legends surrounds the 20% down payment. While it’s often believed that a 20% down payment is required to buy a home, there are loans that require as little as 3% down. According to The National Association of REALTORS^® (NAR), 35% of buyers believe they need 16% – 20% saved for a down payment, and 10% of buyers believe they need more than 20% saved. But do these beliefs match up with what first-time home buyers actually put down to buy a home? Data shows the answer is no.  

Rocket Mortgage^® analyzed data from the 2021 U.S. Census American Housing Survey and found the majority of American first-time home buyers don’t put 20% down – not even close. While 35% of buyers may believe they need 16% – 20% down, only 16% of first-time buyers actually made a down payment that was in that range. Meanwhile, almost a quarter put down just 3% - 5%.

So, what is the breakdown for how much first-time home buyers in America actually chip in for a down payment?

According to our analysis, the majority (73%) of first-time buyers put 15% or less down.

This data proves that it’s very common to buy a house with less than 20%, and a down payment doesn’t have to stand in the way of one’s dream of homeownership. How much you need for a down payment will depend on the type of mortgage you’ve applied for, among other factors.

It’s eye-opening to see where first-time buyers are putting bigger down payments and where they’re putting down less to purchase a home.

In our analysis of the American Housing Survey, we looked at the down payments of buyers in the fifteen largest metropolitan areas. We found that 44% of first-time home buyers in the San Francisco metro area put 16% – 20% down for a home purchase. First-time buyers in other metropolitan areas like Los Angeles (28%) and New York (29%) also put 16% – 20% down. All three of these metropolitan areas are some of the most expensive cities in the U.S., which means those can be some hefty down payments.

Let’s consider some examples from two California metro areas – San Francisco and Los Angeles. The median home price in San Francisco as of August 2023 was $1,152,191. If first-time home buyers in San Francisco put down 16% – 20% today, that would be $184,351 – $230,438 down. In Los Angeles, the median home price is $962,995, meaning first-time buyers making a 16% – 20% down payment now would be looking at $154,079 – $192,599 down.

While a 16% – 20% down payment was a popular option in some metro areas, buyers in most of this study’s metropolitan areas typically put 3% – 5% down for their first home. Let's see what that would look like in a few metro areas according to their August 2023 median home prices:

When we take a look at down payments by the homeowner’s age, we found that first-time buyers aged 25 and under were nearly twice as likely to buy a home with no money down than other age groups.

Out of the first-time home buyers in our analysis, nearly half were 45 years old or older. Of this group, 15% put no money down on their first property. Putting 0% down for a home isn’t something new. In fact, according to our report, we found that first-time buyers have been leveraging affordable options that make it possible enter the housing market for the last 20 years. These options may include loans that do not require a down payment, like VA and USDA loans. Rocket Mortgage® does not currently offer USDA loans.

It’s important to note here that the older first-time buyers could have moved into their first home years ago and are still living in that same home. The year first time home buyers purchased the home may influence their down payment as well.

We found that first-time buyers who moved in during the early 2000s, and are still living in the same home, most commonly put down 6% – 10%. Fast forward to the last decade, and the most common range among first-time buyers has shifted to be 3% – 5%.

Luckily, for today’s first-time home buyers, more and more programs and resources have become available to help them enter the housing market.

For example, first-time home buyers to take advantage of down payment assistance and other first-time home buyer programs that encourage low or zero-down payment loans. When considering these programs, it’s important for buyers to understand that not all lenders accept all programs. Speaking to a Home Loan Expert will help them determine what programs are accepted by the lender.

Some lenders may have their own programs, too. Rocket Mortgage encourages homeownership with the ONE+ program, which allows buyers to buy a house with as little as 1% down.¹ It also provides a 2% grant, potentially starting home buyers out with 3% equity in their home.

A down payment doesn’t have to be a barrier to homeownership. Not only can eligible buyers purchase a home with a down payment as low as 0%, but they may be able to use government and lender programs for first-time buyers to contribute a down payment. No matter their age, where they live or the current housing market conditions, first-time home buyers have resources at their disposal to finance the home of their dreams.

¹ Client will be required to pay a 1% down payment, with the ability to pay a maximum of 3%, and Rocket Mortgage will cover an additional 2% of the client’s purchase price as a down payment, or $2,000. Maximum grant amount is $7,000. Offer valid on primary residence, conventional loan products only. Maximum loan amount of $350,000. Cost of mortgage insurance premium passed through to client effective January 2, 2024. Offer valid only for home buyers when qualifying income is less than or equal to 80% area median income based on county where property is located. Not available with any other discounts or promotions and cannot be retroactively applied to previously closed loans or loans that have a locked rate. This is not a commitment to lend. Rocket Mortgage reserves the right to cancel/modify this offer at any time. Additional restrictions/conditions may apply. 

We analyzed data from the 2021 U.S. Census American Housing Survey to explore common down payment ranges for primary residences among first-time home buyers. All data is weighted using weights provided by the American Housing Survey.