The typical down payment is between 10 and 20 percent of the home's purchase price, though the range is wider than that in practice.
Most conventional loans—the kind backed by Fannie Mae or Freddie Mac—require a minimum of 3 percent down. FHA loans, which are insured by the Federal Housing Administration, allow as little as 3.5 percent. VA loans for military members and some USDA loans for rural properties require zero down. But what buyers actually put down varies significantly by age, location, credit score, and whether they are buying their first home or a subsequent one.
The 20 percent figure you hear often is not a requirement; it is a threshold that eliminates the need for mortgage insurance. When you put down less than 20 percent on a conventional loan, you pay private mortgage insurance (PMI), which protects the lender if you default. That insurance costs money—typically 0.5 to 1.5 percent of the loan amount per year, added to your monthly payment. The lower your down payment, the higher your PMI rate usually is.
First-time buyers tend to put down less than repeat buyers. Data from the National Association of Realtors shows first-time buyers average around 6 to 7 percent down, while repeat buyers average closer to 15 to 20 percent. The difference reflects both savings accumulated over time and the equity from a previous home sale.
Key Takeaways
- Conventional loans require a minimum of 3 percent down, but most lenders prefer 10 to 20 percent to avoid mortgage insurance costs.
- First-time buyers typically put down 6 to 7 percent, while buyers purchasing a second or later home average 15 to 20 percent.
- Putting down less than 20 percent on a conventional loan triggers private mortgage insurance, which adds to your monthly payment until you reach 20 percent equity.
- FHA loans allow 3.5 percent down and require mortgage insurance for the life of the loan, while VA and USDA loans may require zero down.
- Your credit score, debt-to-income ratio, and savings affect both the down payment amount you can afford and the interest rate you receive.
How down payment size affects your monthly payment and total cost
A smaller down payment means a larger loan amount, which increases your monthly mortgage payment. On a $300,000 home, putting down 3 percent ($9,000) instead of 20 percent ($60,000) means borrowing an extra $51,000. At current interest rates, that difference translates to roughly $300 to $400 more per month in principal and interest alone, plus the cost of mortgage insurance.
Mortgage insurance is not permanent on conventional loans. Once your loan balance falls to 80 percent of the home's original purchase price—through a combination of payments and home appreciation—you can request to have PMI removed. This typically takes 8 to 12 years if you make regular payments, though it happens faster if your home appreciates significantly or you make extra principal payments.
The total cost difference between a 3 percent and 20 percent down payment over the life of a 30-year loan can exceed $100,000 when you factor in the higher interest rate you may receive with a smaller down payment, the cost of mortgage insurance, and the additional interest on the larger loan balance. However, the trade-off is that a smaller down payment lets you buy sooner and frees up cash for other needs—emergencies, home repairs, or investments.
Down payment requirements by loan type
Different loan programs set different minimums, and each carries different costs. Conventional loans start at 3 percent down but charge mortgage insurance until you reach 20 percent equity. FHA loans allow 3.5 percent down but require mortgage insurance for the entire life of the loan, making them more expensive over time if you plan to stay in the home for decades. VA and USDA loans eliminate the down payment requirement entirely for may be able to access borrowers, though USDA loans still require mortgage insurance.
The choice between loan types depends on your situation. If you have a military background, a VA loan is almost always the cheapest option. If you are buying in a rural area and meet income limits, a USDA loan offers zero down with no down payment mortgage insurance. If you have limited savings and a lower credit score, FHA may be your only option, even though the lifetime mortgage insurance cost is higher.
| Loan Type | Minimum Down Payment | Mortgage Insurance Required |
|---|---|---|
| Conventional (Fannie Mae/Freddie Mac) | 3 percent | Yes, if down payment is less than 20 percent |
| FHA | 3.5 percent | Yes, for the life of the loan |
| VA | 0 percent | No |
| USDA | 0 percent (in may be able to access rural areas) | Yes, for the life of the loan |
Why lenders care about your down payment percentage
From a lender's perspective, your down payment is your financial commitment to the purchase. The more of your own money you put down, the more you have to lose if you default, which makes you a lower-risk borrower. A 20 percent down payment signals stability and savings discipline, which is why it qualifies for better interest rates and no mortgage insurance.
Lenders also use down payment size to calculate loan-to-value ratio (LTV). A 3 percent down payment means a 97 percent LTV—the lender is financing 97 percent of the home's value. At that ratio, the lender's risk is high, so they charge higher interest rates and require mortgage insurance. A 20 percent down payment means an 80 percent LTV, which is the threshold where mortgage insurance disappears on conventional loans.
Your credit score and debt-to-income ratio matter alongside down payment size. A buyer with a 620 credit score and a 50 percent debt-to-income ratio may be approved for only 3 percent down, while a buyer with a 750 score and 35 percent debt-to-income might may have access to for 5 percent down with a better rate. Down payment alone does not determine approval; it is one factor in the lender's overall risk assessment.
Regional and demographic variation in down payment amounts
Down payment amounts vary by region and buyer demographics. In high-cost markets like California, New York, and Massachusetts, median home prices are so high that even a 10 percent down payment requires substantial savings. Buyers in these areas often put down less than the national average because the absolute dollar amount of a 20 percent down payment exceeds what most people have saved.
Younger buyers (under 35) average lower down payments than older buyers, partly because they have had less time to accumulate savings and partly because they are more likely to be first-time buyers. Buyers over 55 average higher down payments, often because they are selling a previous home and using the proceeds, or because they have accumulated more wealth over time.
Household income also correlates with down payment size. Buyers earning over $100,000 per year average higher down payments than those earning $50,000 to $75,000, though this reflects both ability to save and access to family gifts or loans for down payments, which are common in higher-income households.
Down payment assistance programs and gifts
Many buyers use sources other than their own savings for down payments. Family gifts account for a significant portion of down payments, particularly for first-time buyers. Lenders allow gift funds as long as the giver signs a statement confirming the money is a gift, not a loan that must be repaid.
Some employers, nonprofits, and government programs offer down payment assistance. These vary widely by location and employer. A few states and cities run programs that match down payment savings or provide grants, though these are not universal. Your lender can tell you whether assistance programs exist in your area, though you will need to research them separately—lenders do not always volunteer this information.
Down payment assistance typically comes with strings: income limits, first-time buyer requirements, or restrictions on the type of property you can buy. Some programs require you to complete a homebuyer education course. Others forgive a portion of the assistance if you stay in the home for a set number of years.
What happens if you cannot save a 20 percent down payment
Most buyers do not put down 20 percent, so not having that amount should not stop you from buying if you are otherwise ready. A 10 percent down payment is achievable for many buyers and keeps mortgage insurance costs lower than a 3 percent down payment. If 10 percent is still out of reach, 3 to 5 percent down is a real option on conventional loans, though your monthly payment will be higher due to mortgage insurance.
The trade-off is always the same: a smaller down payment lets you buy sooner but costs more over time. Whether that trade-off makes sense depends on your situation. If you are paying rent and could build equity instead, a 3 percent down payment might be worth the extra cost. If you are uncertain about staying in the area or your job is unstable, waiting to save more might be wiser.
FHA loans are another path if you have limited savings. The 3.5 percent minimum is lower than conventional loans, and FHA is more forgiving of lower credit scores and higher debt-to-income ratios. The trade-off is that FHA mortgage insurance is permanent—you pay it for the life of the loan, not just until you reach 20 percent equity. Run the numbers on both conventional and FHA options before deciding.
Frequently Asked Questions
Is 20 percent down payment required to buy a house?
No. Conventional loans require a minimum of 3 percent down, and FHA loans allow 3.5 percent. The 20 percent figure is a threshold where mortgage insurance is no longer required, but it is not mandatory. Most buyers put down less than 20 percent.
What is the average down payment for first-time home buyers?
First-time buyers typically put down 6 to 7 percent of the purchase price. This is lower than repeat buyers, who average 15 to 20 percent, because first-time buyers have had less time to save and do not have equity from a previous home sale to use.
How much does mortgage insurance cost if I put down less than 20 percent?
Mortgage insurance on conventional loans typically costs 0.5 to 1.5 percent of the loan amount per year, added to your monthly payment. The exact rate depends on your down payment size, credit score, and loan type. It can be removed once your loan balance reaches 80 percent of the home's original purchase price.
Can I use a gift for my down payment?
Yes. Lenders allow gift funds from family members as long as the giver signs a statement confirming it is a gift, not a loan. The gift counts toward your down payment, though some lenders require you to have some of your own funds in the deal as well.
What is the difference between a 3 percent and 10 percent down payment over 30 years?
On a $300,000 home, the difference in total cost—including mortgage insurance, interest, and principal—can exceed $50,000 over 30 years. The 10 percent down payment results in lower monthly payments and less total interest paid, but requires $27,000 more upfront than the 3 percent option.