What’s The Average Down Payment On A House?

You might have heard that you’ll need a 20% down payment to obtain a mortgage and buy a home. But that isn’t true. The average down payment when buying a house can vary widely depending on factors such as location, the price of the home, the type of mortgage you're getting and your financial situation.

A down payment is a lump-sum amount of money that a buyer pays upfront when purchasing a large-ticket item, typically a house or a car. It is an initial payment made when something is bought on credit.

Average Down Payment By State

This table shows the average down payment by state:

Down Payment Requirements By Loan Type

Here is an overview of the different types of mortgage loans and what the different down payment requirements are for each loan:

Conventional Loans

A conventional loan is one that’s offered by a private lender and isn’t backed by a government agency. Conventional loans tend to come with stricter lending requirements, and you will need to make a down payment.

In most cases, you’ll need a down payment as low as 3% to take out a conventional loan. If you’re buying a $350,000 home, that means you’ll need a $10,500 down payment. But if your down payment is less than 20% you’ll be required to purchase private mortgage insurance (PMI).

FHA Loans

The Federal Housing Administration backs FHA loans. If you have a credit score of at least 580 or higher, you can qualify with a down payment as low as 3.5%. You might even be able to get an FHA loan with a bankruptcy or other financial issue on your record.

VA Loans

A VA loan is backed by the Department of Veteran Affairs (VA), and it helps veterans, active duty service members and qualified spouses access affordable mortgages. These loans come with flexible credit requirements, and you’re not required to make a down payment. And the VA doesn’t require borrowers to purchase PMI.

USDA Loans

A USDA loan is a government-backed loan that helps low-income borrowers purchase homes in designated rural areas. There are no down payment requirements with USDA loans. These loans also offer lower interest rates than other government-backed programs and no traditional PMI insurance required. Not all lenders offer these loans. For example, our sister company, Rocket Mortgage® doesn’t currently offer USDA loans.

Jumbo Loans

A jumbo loan is a type of conventional loan that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). To get approved, you’ll need a credit score of 680 or above and a very low debt-to-income (DTI) ratio. Jumbo loans are designed for higher-priced homes, often in more expensive real estate markets.

Average Down Payment By Age Group

According to the National Association of REALTORS^® (NAR), the average down payment on a home is 13%. This table shows the average down payment by age group when buying a house:

Down Payment Amount By Purchase Price

The following table can be used to calculate how much a down payment would be depending on the purchase price of the home and the percentage you are paying.

As you can see, it’s easier for older borrowers to make a down payment that’s 20% or higher. This may be because most older borrowers have already owned several homes and can use the equity in their current home as a down payment.

Saving For A Down Payment

Many people may not have enough at the moment for a down payment on a house, but there are many ways to save for a down payment. According to NAR, 13% of borrowers found it to be the most difficult part of the home buying process. However, it’s the most challenging for younger borrowers — this figure rose to 27% for borrowers from the age of 23 to 31.

Use A First-Time Home Buyer Program

There is a lot to think about when buying a house. First-time home buyer programs are mortgage loans and incentives that help people buy homes. If you qualify for a first-time home buyer program, you may be able to avoid a down payment altogether. Check to see what programs are available in your state, or if there are any programs available for your profession. Remember, too, not all lenders except all programs. It’s best to speak to a loan expert to determine what loans are accepted by your lender.

Consider Government-Sponsored Home Loans

Government-sponsored home loans are mortgage programs backed by various government agencies. Circumstances make it difficult for some people to qualify for conventional mortgages. Government-sponsored loans are a good option if you can’t afford a down payment. Veterans may want to investigate VA loans, while low-income borrowers may qualify for an FHA loan.

Speak With Your Lender

It’s a good idea to reach out to a lender to review your loan options. Let the lender know that you can’t afford a large down payment on a house and ask them what their recommendations are. They may be able to suggest loans you were not aware of.

Wait To Purchase Your Dream Home

There are many loan options available for low-income borrowers, but if money is too tight, you may want to wait to buy a house. Instead, you could rent or live with family while you save up money for your home purchase. By opening a high-yield savings account, you can earn a little bit of interest as you save up the needed funds.

Next, set up a budget that accounts for the various expenses you’ll incur as a homeowner. Doing this will help you understand how much your cost-of-living expenses will increase. You’ll go into homeownership more prepared to meet the financial demands.

Down Payment FAQs

Here are a few answers to commonly asked questions about the average down payment of a house:

Should you put 20% down on a house?

Many first-time home buyers think they must put down a 20% down payment on a house. But as you can see, that isn’t that case.

And many loans come with low down payment options. For instance, FHA loans come with down payment requirements as low as 3.5%. And if you take out a VA or USDA loan, there are no down payment requirements.

The down payment on a house depends on the purchase price. A good down payment on a house can vary depending on your financial situation, goals and the lending options available to you. Typically, mortgage lenders want you to put 20% down on a home purchase because it lowers their lending risk. However, most borrowers make a down payment that is far less than that, and many loans come with low down payment options.

Does a down payment include closing costs?

No, a down payment will not include your closing costs. A down payment is an upfront sum you pay to secure the mortgage for your home. Closing costs are the fees, taxes and expenses required to process your home loan.

When you buy a home, you should be prepared to make a down payment and pay closing costs. However, there are ways to reduce your closing costs. For instance, you could negotiate with the seller to have them pay a portion of the closing costs.

What’s a normal down payment on a home?

One of the first things on your mind when buying a house is probably the down payment requirement. A down payment on a home can vary widely depending on the location, the type of mortgage loan and individual buyer circumstances. It’s best to speak with a loan expert and/or financial advisor if you’re unsure what will work best for you.

The Bottom Line

There are resources that you can use to buy a home for the right price with the mortgage that is right for you.

Conduct your own research on the previously mentioned loan types to find one that best fits your needs and, when you’re ready, start a mortgage application today.