The median down payment is between 6 and 7 percent, but that number hides two separate markets

First-time buyers put down roughly 6 percent of the home price on average. Repeat buyers—people selling one house and buying another—put down closer to 20 percent. The difference matters because it changes which loans you can get, what your monthly payment looks like, and whether you pay mortgage insurance.

These are median figures, which means half of buyers put down less and half put down more. A buyer in one state or price range may face very different realities than a buyer elsewhere. The down payment you see advertised—3 percent, 5 percent, 10 percent—is the minimum the lender will accept, not what most people actually pay.

Your actual down payment depends on three things: how much cash you have saved, what loan program you may have access to for, and what the seller's market looks like in your area. A hot seller's market may push you to put down more to make your offer competitive. A buyer's market may let you get away with the minimum.

Key Takeaways

  • First-time buyers typically put down 6 to 7 percent; repeat buyers put down around 20 percent.
  • Putting down less than 20 percent means you will pay private mortgage insurance (PMI) on top of your regular payment until you build enough equity.
  • Down payment minimums vary by loan type: conventional loans often require 3 to 5 percent, FHA loans 3.5 percent, VA loans zero percent if you may have access to.
  • The down payment you can afford and the down payment that makes financial sense are not always the same—a larger down payment lowers your monthly cost but ties up cash you might need elsewhere.

Why the down payment matters beyond the number itself

The down payment is not just about how much money you hand over at closing. It determines your loan-to-value ratio, which is the size of your loan compared to the home's price. That ratio decides whether you pay mortgage insurance, what interest rate you get offered, and how much risk the lender thinks they are taking.

If you put down 20 percent, you borrow 80 percent. Most lenders will not require mortgage insurance at that level. If you put down 5 percent, you borrow 95 percent, and the lender will charge you PMI—usually between 0.5 and 1.5 percent of your loan amount per year, added to your monthly payment. That insurance protects the lender, not you, and it stays on your loan until you reach 20 percent equity or refinance.

A smaller down payment gets you into a home faster and keeps more cash in your pocket for emergencies, repairs, or other goals. A larger down payment cuts your monthly payment, saves you thousands in interest over time, and avoids PMI entirely. The right choice depends on your situation, not on what other buyers are doing.

How down payment minimums differ by loan type

Conventional loans—mortgages not backed by a government agency—typically require 3 to 5 percent down from first-time buyers, though some lenders go as low as 3 percent. Repeat buyers sometimes may have access to for lower rates or better terms with the same down payment.

FHA loans, backed by the Federal Housing Administration, allow 3.5 percent down and are designed for first-time buyers or people with lower credit scores. The tradeoff is that FHA loans require mortgage insurance no matter how much you put down—it stays on the loan for the full 30 years if you put down less than 10 percent, or for at least 11 years if you put down 10 percent or more.

VA loans, available to military members and veterans, allow zero percent down. USDA loans, for rural properties, also allow zero down if you meet income limits. State and local first-time buyer programs sometimes offer down payment assistance or grants that reduce the amount you need to save.

What changes the down payment you actually make

Your savings are the obvious limit—you can only put down what you have. But three other factors often matter more in practice.

Market conditions shift what sellers expect. In a seller's market where homes sell fast and multiple offers come in, sellers may reject offers with low down payments because they signal less committed buyers. In a buyer's market, the minimum down payment is often enough. Your real estate agent can tell you what is typical in your neighborhood right now.

The home price changes the math. A 5 percent down payment on a $200,000 home is $10,000. On a $500,000 home, it is $25,000. Some buyers can afford the percentage but not the dollar amount, so they end up putting down more than they planned or looking at cheaper homes.

Your credit score and income affect which programs you may have access to for and what interest rate you get. A stronger financial profile may let you put down 3 percent and still get a competitive rate. A weaker one may require 5 or 10 percent, or may not may have access to for certain programs at all.

The cost of mortgage insurance and when it ends

If you put down less than 20 percent on a conventional loan, you pay PMI. The cost varies by lender, loan amount, and credit score, but typically runs 0.5 to 1.5 percent of your loan per year. On a $300,000 loan, that is $1,500 to $4,500 per year, or $125 to $375 per month.

PMI ends automatically once you reach 20 percent equity in the home—either through paying down the loan or through the home appreciating in value. You can also request removal once you hit that threshold, though the lender may require an appraisal to confirm the home's current value. Some lenders will remove it sooner if you make extra payments.

FHA mortgage insurance works differently and lasts longer. On FHA loans with less than 10 percent down, the insurance premium stays for the life of the loan. On FHA loans with 10 percent or more down, it lasts at least 11 years. This is one reason some buyers choose conventional loans even with a slightly higher interest rate.

Down payment assistance and where to find it

Many states and cities offer down payment assistance programs that provide grants or forgivable loans to first-time buyers. These are not loans you repay—they are money given to you to reduce the amount you need to save. may be able to access usually depends on income, credit score, and the price of the home you are buying.

Some programs are run by housing finance agencies, others by nonprofits, and some by individual lenders. A mortgage broker or loan officer can tell you what programs exist in your state. Your city or county housing authority may also have a list. These programs change frequently and some run out of funding, so timing matters.

Employer assistance is another source. Some large employers offer down payment help as part of their benefits package. If you work for a major corporation or government agency, ask your HR department whether this is available.

The difference between putting down more and investing the difference

A common question: should you save up for a 20 percent down payment, or buy sooner with 5 percent down and invest the rest? The answer depends on mortgage rates, investment returns, and your comfort with debt.

If mortgage rates are low (under 4 percent) and you believe you can earn more in the stock market over time, putting down 5 percent and investing the difference may build more wealth. But this assumes you actually invest the money and do not spend it. It also means carrying PMI costs and higher monthly payments for years.

If you are uncomfortable with debt, prefer lower monthly payments, or do not trust yourself to invest consistently, putting down more makes sense even if the math says otherwise. The best down payment is the one that lets you sleep at night and still have cash left for emergencies.

Frequently Asked Questions

Is 20 percent down really necessary?

No. Most buyers put down less. Twenty percent is the threshold where mortgage insurance stops, but you can buy with 3 to 5 percent down on conventional loans or 3.5 percent on FHA loans. You will pay PMI, but you will own a home sooner.

Can I use a gift for my down payment?

Yes, most lenders allow gift money from family members. You will need a signed letter from the gift-giver stating the money is a gift, not a loan, and that they do not expect repayment. The lender will verify the funds are in your account before closing.

What if I do not have enough saved for the minimum down payment?

Look into down payment assistance programs in your state or city, ask your employer whether they offer help, or consider waiting a few more months to save. Some first-time buyer programs also allow you to count sweat equity (repairs you make yourself) toward the down payment.

Does a bigger down payment always mean a better interest rate?

Usually, but not always. A 20 percent down payment removes PMI risk, which often gets you a lower rate. But your credit score, income, and the current market matter too. A buyer with excellent credit and 10 percent down may get a better rate than someone with fair credit and 20 percent down.

What happens if the home value drops after I buy?

If you put down 20 percent and the home loses value, you still own 20 percent equity. If you put down 5 percent and the home loses value, you could end up owing more than the home is worth—a situation called being underwater. This is rare in stable markets but more common in areas with volatile prices.