What Is The Average Down Payment On A House?

*As of July 6, 2020, Rocket Mortgage^® is no longer accepting USDA loan applications.

One of your top priorities when buying a house is probably having enough cash on hand to meet the down payment requirement. You may wonder how much you need to save for a down payment, or if buying a home without one is possible.

Let’s look at the typical down payment requirement for different loan types. We’ll also discuss the average amount buyers pay upfront so you can get an idea of what to expect on your journey toward homeownership.

Minimum down payment requirements differ depending on the type of loan you choose. Here are the major types of loan programs and the down payment requirement for each.

• Conventional loan: Conventional loans are most often but not always conforming loans, and they’re considered the most common type of mortgage option. The minimum down payment requirement for a conventional mortgage loan is 3% for first time home buyers or 5% for other buyers. However, your lender might require that you put a larger percentage down if you have a credit score lower than 620 or significant Conventional loans with a down payment of less than 20% will result in having to pay private mortgage insurance (PMI).
• Department of Veterans Affairs (VA) loan: A VA loan is a government-backed loan available to eligible current and former members of the Armed Forces and the National Guard, along with surviving spouses, who meet certain eligibility criteria. You can buy a home with no money down if you qualify for a VA loan.
• S. Department of Agriculture (USDA) loan: A USDA loan is a government-backed loan that you can use to buy a home in a qualified rural or suburban area. Like a VA loan, a USDA loan allows you to buy a home with no money down. Rocket Mortgage® doesn’t offer USDA loans at this time.
• Federal Housing Administration (FHA) loan: An FHA loan is a government-backed loan with more relaxed financial and credit score requirements than a conventional loan. You can buy a home with a credit score of 500 or higher but to put only 5% down at closing, you’ll need a credit score of 580 or higher. With a credit score in the 500 – 579 range, you’ll need a down payment of 10%. If you’re looking for a low down payment loan option, see if you qualify for an FHA loan.

The average first-time buyer pays about 6% of the home price for their down payment, while repeat buyers put down 17%, according to data from the National Association of REALTORS^® in late 2022. The median home sale price in the U.S. was $416,100 as of Q2 in 2023. That means if you make a down payment of 6% – 17% on a house priced at the median U.S. sale price ($416,100 as of mid-2023), you can expect to put roughly $25,000 to $71,000 down. However, your down payment on a house may not be the average down payment on a house. Down payment amounts vary drastically depending on the home’s purchase price, your loan type and the current state of the housing market.

Let’s look at some typical down payment figures based on the following purchase prices.

Keep in mind that there’s no right or wrong answer for how much you need to have as a down payment to buy a house.

Factors to consider when deciding how much to put down on a new home include:

• The minimum down payment requirement for your loan type
• The amount you have in savings
• The condition of your new home and how much you need to spend on repairs
• How close you are to retirement
• Your total debts (including credit card debt, student loans and auto loans)

If you can’t afford your down payment, you may qualify for down payment assistance. Down payment assistance programs help relieve many home buyers of this large upfront cost of buying a house. Many down payment assistance programs and grants also help cover closing costs, which may include a home appraisal fee, loan origination fee and homeowners insurance.    

Larger down payments can seem like a high priority because they typically result in paying less interest over time and eliminating private mortgage insurance (PMI) fees on a conventional loan (assuming the down payment amounts to at least 20% of the purchase price).

It’s essential, however, to analyze your financial situation to determine whether a large down payment is a good option for you. Waiting until you have enough savings for a large down payment could lead you to spend more money in the meantime.

You could end up paying more in rent, for example, than you would save by eliminating PMI and reducing the amount of interest you pay. You could also end up missing an ideal moment to make a move in a hot housing market.

Getting approved for a mortgage will reveal the kind of terms that the down payment you plan to make will qualify you for. 

The myth of the 20% down payment comes from the PMI requirement. PMI is a type of mortgage insurance that conventional loan lenders often require for their own protection in the unfortunate event that a borrower ends up defaulting on their home loan. Most lenders require that you pay for PMI if you bring a down payment of less than 20% to the closing table.

While you’ll need to pay private mortgage insurance if you have a lower down payment amount, you can request to cancel your PMI once you reach 20% equity in your home on a conventional loan. In reality, you can get a mortgage with as little as 1% down with a 2% equity grant from Rocket Mortgage^®.¹

Pros Of A 20% Down Payment

Eliminating PMI from the start isn’t the only benefit to putting 20% down on your loan. Other advantages include:

• Access to a lower interest rate
• A smaller loan amount
• Lower monthly mortgage payments
• Less interest owed over the life of the loan

You can save thousands of dollars over time by reducing the amount of money you borrow and the interest you pay on the mortgage loan.

Cons Of A 20% Down Payment

Making a 20% down payment on a house can also come with a few downsides. The potential disadvantages of putting 20% down include:

• The amount of time needed to save for a large down payment
• Less money to pay for potential home repairs, new furniture and other necessities
• The possibility of depleting your savings or emergency fund

Consider your loan requirements, financial situation and individual preferences when deciding how much you need for a house down payment.

As noted earlier, the typical down payment for first-time home buyers in America is about 6% of the purchase price. However, buying a home with as little as zero down is possible for USDA and VA borrowers, and others can put as little as 3% or 3.5% down.

The down payment that’s right for you will depend on your individual circumstances and needs. When you’re ready to begin the home buying process, start your application online with Rocket Mortgage. We’ll help you understand the true cost of your mortgage and identify the best loan options for you.

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.