What Most People Actually Put Down When They Buy a Home
The most common down payment is between 10 and 20 percent of the home's price
When you buy a home, you pay a portion of the price upfront—that is your down payment. The rest comes from a mortgage loan. Most buyers put down somewhere between 10 and 20 percent of what the house costs. A buyer purchasing a $300,000 home with a 15 percent down payment would put $45,000 down and borrow $255,000.
The exact percentage varies by the buyer's situation, the type of loan, and what the lender requires. Some buyers put down 3 percent. Others put down 25 or 30 percent. The amount you put down affects your monthly payment, how much interest you pay over time, and whether you have to pay mortgage insurance.
Key Takeaways
- Down payments typically range from 10 to 20 percent of the home price, though some loans allow as little as 3 percent.
- A larger down payment lowers your monthly mortgage payment and may eliminate the need for mortgage insurance.
- Putting down less than 20 percent usually means you will pay private mortgage insurance (PMI) until you build enough equity.
- Your credit score, savings, and the type of loan you choose all influence how much down payment a lender will require.
- Down payment assistance programs exist through state housing agencies, nonprofits, and some employers, though they have income and location limits.
Why lenders care about the size of your down payment
From a lender's perspective, your down payment is a sign of commitment and financial stability. The more of your own money you put into the purchase, the less risky the loan looks. If you default on the mortgage, the lender can sell the home to recover their money. A larger down payment means the home's value is more likely to cover what you still owe.
This is why lenders typically require a minimum down payment—often 3 to 5 percent for conventional loans. Government-backed loans like FHA loans may allow down payments as low as 3.5 percent. VA loans (for military members and veterans) sometimes require zero down payment. The lower your down payment, the stricter the lender's other requirements usually are: a higher credit score, lower debt, or proof of stable income.
How your down payment affects your monthly payment and total cost
The down payment you make directly reduces the amount you borrow. Borrow less, and your monthly mortgage payment is lower. On a $300,000 home at current interest rates, the difference between a 10 percent down payment ($30,000) and a 20 percent down payment ($60,000) can mean $150 to $200 less per month.
Over the life of a 30-year loan, that difference adds up. You also pay less interest overall when you borrow less. However, putting down a larger amount means having less cash available for other needs—closing costs, home repairs, emergencies, or daily living. The right down payment for you depends on balancing a lower monthly payment against keeping enough money in reserve.
Private mortgage insurance (PMI) and the 20 percent threshold
If you put down less than 20 percent, lenders typically require you to pay private mortgage insurance (PMI). This is an insurance policy that protects the lender if you stop paying the mortgage. You pay the premium as part of your monthly mortgage payment—usually between 0.5 and 1.5 percent of the loan amount per year, though the exact rate depends on your credit score and down payment size.
PMI is not permanent. Once you have paid down the loan enough that you own 20 percent of the home's value (called 20 percent equity), you can request that PMI be removed. This happens automatically on some loans once you reach that point. On others, you have to ask your lender. The time it takes depends on how quickly you pay down the principal and whether the home's value rises.
What down payment amounts look like across different loan types
| Loan Type | Typical Down Payment Range | Notes |
|---|---|---|
| Conventional (non-government) | 3–25 percent | Minimum often 3–5 percent; 20 percent avoids PMI |
| FHA (Federal Housing Administration) | 3.5 percent minimum | Requires mortgage insurance regardless of down payment |
| VA (Veterans Affairs) | 0 percent | Available to military members and veterans; no PMI required |
| USDA (rural loans) | 0 percent | For homes in may be able to access rural areas; no PMI required |
Where down payment money comes from and what lenders accept
Lenders want to know where your down payment comes from. They typically accept savings accounts, checking accounts, and money market accounts. Some accept gifts from family members—though you usually have to document that it is a gift, not a loan you will have to repay. Lenders are cautious about large deposits that appear suddenly, because they want to verify the money is legitimate and not borrowed.
Retirement accounts like 401(k)s and IRAs can sometimes be tapped for down payment funds, though this usually means paying taxes and penalties. Some employers offer down payment assistance as part of their benefits. State housing finance agencies, nonprofits, and community development organizations also run down payment assistance programs. These programs vary widely by location and have income limits, so checking with your local housing authority or searching your state's housing agency website is the first step.
The trade-off between down payment size and financial security
A larger down payment sounds better on paper—lower monthly payments, no PMI, less interest paid over time. But it also means less cash in your pocket after closing. If your furnace breaks, your car needs repair, or you lose income, having reserves matters. Financial advisors often suggest keeping three to six months of living expenses in savings separate from your down payment.
The right down payment is the one that lets you afford the monthly payment comfortably while keeping an emergency fund intact. For some people, that is 20 percent. For others, it is 5 or 10 percent, with the understanding that they will pay PMI for a few years. There is no single correct answer—it depends on your income, expenses, job stability, and what else you need the money for.
Frequently Asked Questions
Can I get a mortgage with less than 3 percent down?
Some programs allow zero down, including VA loans for veterans and USDA loans for rural properties. Conventional loans rarely go below 3 percent. If you have limited savings, exploring government-backed loans or down payment assistance programs in your area may open options that conventional lenders do not offer.
Does a bigger down payment always mean a better deal?
Not necessarily. A larger down payment lowers your monthly payment and eliminates PMI, but it also reduces your liquid savings. If you put down 30 percent and then face an emergency, you may end up borrowing at higher rates elsewhere. The best down payment balances a manageable monthly payment with keeping enough cash in reserve.
What happens if I cannot save 20 percent?
You can still buy a home with 5, 10, or even 3 percent down. You will pay PMI, which adds to your monthly cost, but PMI is temporary and can be removed once you build equity. Many first-time buyers use this route. Over time, as you pay down the loan and the home appreciates, you reach 20 percent equity and PMI drops off.
Can I use a gift for my down payment?
Yes. Most lenders accept gifts from family members, but you will need a signed letter from the gift-giver stating it is a gift, not a loan. The lender will verify the money came from the gift-giver's account. Gifts from employers or nonprofits (down payment assistance) have different documentation requirements—ask your lender what they need.
Does my credit score affect how much down payment I need?
Yes. Borrowers with higher credit scores often may have access to for lower down payment requirements and better interest rates. A score below 620 may disqualify you from conventional loans entirely, pushing you toward FHA loans, which allow 3.5 percent down. Improving your credit before applying can expand your options and lower your costs.