What People Actually Put Down When They Buy a Home
Down payments range from 3% to 20% of the home price, depending on the loan type and your financial situation
There is no single "average" down payment because it depends on what kind of loan you get. A conventional loan (the most common type) typically requires 5% to 20% down. An FHA loan, which is designed for first-time buyers and people with lower credit scores, often requires 3.5% down. A VA loan (for military members and veterans) can require 0% down. USDA loans in rural areas can also require 0% down.
The down payment is the money you bring to closing. The rest of the home price is borrowed through a mortgage. A larger down payment means a smaller loan, lower monthly payments, and often a better interest rate. A smaller down payment means you borrow more, pay more interest over time, and usually pay a monthly insurance fee called private mortgage insurance (PMI) until you have paid down enough of the loan.
What you can actually put down depends on three things: how much cash you have saved, what loan program you may have access to for, and what the lender will accept. Those are separate questions with separate answers.
Key Takeaways
- Conventional loans typically require 5% to 20% down, while FHA loans require 3.5% down and VA or USDA loans can require 0% down.
- Putting down less than 20% on a conventional loan means you will pay private mortgage insurance (PMI) as part of your monthly payment until you reach 20% equity.
- Down payment assistance programs exist through state housing agencies, nonprofits, and some employers, and they may cover part or all of your down payment.
- Your down payment amount affects your interest rate, monthly payment, and total cost of the loan, so the choice between 3% and 10% can mean tens of thousands of dollars over 30 years.
How down payment size affects your monthly payment and interest rate
A larger down payment lowers your monthly mortgage payment because you are borrowing less money. It also usually lowers your interest rate because the lender sees you as lower risk — you have already saved money and you are putting more of your own cash at stake.
The difference between a 3% down payment and a 10% down payment on a $300,000 home is $21,000 in cash upfront. That same difference typically lowers your interest rate by 0.25% to 0.5%, which saves you $50 to $100 per month over 30 years. Add in the PMI you avoid by putting down more, and the total savings can reach $200 to $300 per month. Over 30 years, that is $72,000 to $108,000.
However, putting down a larger amount means waiting longer to save, which means delaying your home purchase and missing out on building equity. That is a real trade-off. A financial advisor or mortgage lender can show you the numbers for your specific situation.
Down payment assistance programs that may cover part of your down payment
Many states, counties, and cities run down payment assistance programs. These are usually run by the state housing finance agency or a nonprofit partner. Some programs give you a grant (money you do not repay), some give you a loan at 0% interest, and some do both.
Common programs include state first-time homebuyer programs, which often cover 3% to 10% of the down payment for people buying their first home. Some programs are income-based, meaning you must earn below a certain amount. Others are geography-based, meaning the home must be in a specific county or neighborhood. A few are tied to your job — some employers, school districts, and hospitals offer down payment help to employees.
The fastest way to find what exists in your area is to contact your state housing finance agency directly or search online for "[your state] down payment assistance." You can also call 211 (a free referral line) and ask what programs serve your county. Programs change their rules and funding year to year, so calling is faster than reading old websites.
What lenders look at when deciding how much you can borrow
Your lender will not let you put down whatever you want. They will look at your debt-to-income ratio, which is the total of all your monthly debt payments divided by your gross monthly income. Most lenders want this ratio to be 43% or lower, though some will go to 50% if you have strong credit and savings.
They will also look at your credit score, your employment history, and how much cash you have left after the down payment and closing costs. If you have saved $50,000 but need $40,000 for the down payment and $8,000 for closing costs, you have only $2,000 left. Many lenders want to see at least two months of mortgage payments in reserve, so they may tell you that you cannot borrow as much as you thought.
This is why it is worth talking to a lender before you start house hunting. They can tell you the maximum loan amount you may have access to for, which tells you the maximum home price you can afford at different down payment levels. That number is more useful than any general average.
Closing costs are separate from your down payment
Your down payment is not the only money you need at closing. You also pay closing costs, which typically run 2% to 5% of the loan amount. These cover the appraisal, title search, title insurance, attorney fees, recording fees, and the lender's origination fee.
On a $300,000 home with a $30,000 down payment (10%), your loan is $270,000. Closing costs at 3% would be $8,100. So your total cash needed is $38,100, not $30,000. Some down payment assistance programs cover closing costs too, and some do not. Ask before you apply.
A few lenders will roll closing costs into the loan, meaning you do not pay them upfront. This raises your monthly payment and the total interest you pay, but it lowers the cash you need at closing. This is an option worth discussing with your lender if you are short on cash.
How to decide between saving for a larger down payment and buying sooner with a smaller one
Waiting to save 20% down means you avoid PMI and get a better interest rate. But it also means you are not building equity in a home, and home prices may rise while you save. If homes in your area are appreciating 5% per year and you wait two years to save an extra 10% down, you may end up paying more total dollars even with the better rate.
Buying sooner with 3% or 5% down means you start building equity immediately and you lock in today's price. You will pay PMI, but you can refinance later to remove it once you have 20% equity. The math depends on local home prices, interest rates, and how long you plan to stay in the home.
A mortgage lender can run both scenarios for you: the cost of buying now with 5% down versus waiting two years and buying with 15% down. That comparison is more useful than any national average.
Special loan programs with lower or zero down payment requirements
FHA loans require 3.5% down and accept credit scores as low as 580. They charge mortgage insurance for the life of the loan, which raises your monthly payment, but they are designed for people who cannot save a large down payment.
VA loans are for military members, veterans, and surviving spouses. They require 0% down and do not charge PMI. If you are may be able to access, this is the most powerful down payment program available.
USDA loans are for homes in rural areas and require 0% down. They are available to people with moderate incomes who cannot get a conventional loan. Like FHA loans, they charge mortgage insurance.
Conventional loans with low down payments (3% to 5%) are offered by most major lenders and require PMI until you reach 20% equity. They typically have stricter credit and income requirements than FHA loans.
Each program has different rules about what kind of home you can buy, where it must be located, and what your income can be. A mortgage broker can tell you which programs you actually may have access to for in about 15 minutes.
Frequently Asked Questions
Can I borrow money from family for my down payment?
Yes, but the lender needs to know about it. If your family is giving you the money as a gift (not a loan you will repay), the lender will ask for a signed gift letter stating that no repayment is expected. If it is a loan, you must document it and include the monthly payment in your debt-to-income ratio, which may lower how much you can borrow.
What happens if I put down less than 3%?
Most conventional loans require at least 3% down. FHA loans require 3.5%. If you have less than 3% saved, you need a VA loan, USDA loan, or a down payment assistance program. Some nonprofits also offer grants for very small down payments, though these are less common and often have income limits.
Can I use a 401(k) or IRA to pay for my down payment?
You can withdraw from a traditional IRA without penalty if you are a first-time homebuyer (up to $10,000 lifetime). A 401(k) withdrawal is more complicated and usually triggers taxes and penalties. Talk to a tax professional before withdrawing retirement money, because the tax bill can be large.
Does a larger down payment mean I will definitely get approved for a mortgage?
No. A larger down payment helps, but lenders also look at your credit score, income, employment history, and existing debt. You can have $100,000 saved and still be denied if your debt-to-income ratio is too high or your credit score is too low. Getting pre-approved by a lender tells you what you actually may have access to for.
What is the difference between being pre-approved and pre-may have access to?
Pre-may have access to means a lender has done a quick review of your finances and given you an estimate of how much you might borrow. Pre-approved means they have verified your income, credit, and assets and committed to lending you a specific amount. Pre-approval is what you need before making an offer on a home.