Down Payment on a Home: How Much Do You Actually Need?
Down payments on homes can vary widely, which might make it hard to understand how much you’ll need to save. However, if you’re ready to buy a home, there are some minimum down payment guidelines to follow. Here’s what you need to know before making a down payment on a home.
What is a down payment?
A down payment is money that you pay upfront toward a home purchase. It also represents your initial ownership stake in the home. Typically, it’s expressed as a percentage of the total purchase price. For example, a 10% down payment on a $400,000 house would be $40,000.
When you’re ready to buy a house, you’ll likely need to make a down payment. Your lender will then help you finance the remainder of the purchase price in the form of a mortgage loan.
There are a few loan programs that make it possible to buy a home with no money down, however, which we’ll cover later.
Do you need to make a 20% down payment on a home?
While making a 20% down payment used to be considered the gold standard for buying a home, these days, it’s really just a benchmark that lenders use to determine if you need mortgage insurance. As a rule of thumb, if you put down less than 20% on a conventional loan, lenders will require you to carry private mortgage insurance (PMI).
Fortunately, you don’t need to make that large of a down payment to buy a home in today’s market. The average down payment in 2023 was only 8% for first-time homebuyers, according to data from the National Association of Realtors (NAR). For repeat buyers, the average was 19%.
Minimum down payment requirements by loan program
Homebuyers may confuse how much they should put down on a house with the minimum requirements set by lenders. The table below offers a brief look at the minimum amount required for each loan program.
| Loan program | Minimum down payment |
|---|---|
| Conventional loan | 3% |
| FHA loan | 3.5% with a 580+ credit score 10% with a 500 to 579 credit score |
| VA loan | 0% |
| USDA loan | 0% |
| Jumbo loans | 5% to 20% |
Conventional loans: 3% down payment
Some conventional loan programs, such as the Fannie Mae HomeReady® loan and Freddie Mac Home Possible® loan, allow for down payments as low as 3%, provided you meet certain income limits.
You’ll also need a slightly higher credit score. The HomeReady loan requires a minimum 620 score, while the Home Possible loan asks for at least a 660 score.
Don’t know your credit score? Get your free score on LendingTree Spring today.FHA loans: 3.5% down payment
You can pay as little as 3.5% down with a loan backed by the Federal Housing Administration (FHA) — if you have at least a 580 credit score. The down payment minimum on an FHA loan jumps to 10% if your credit score is between 500 and 579.
See today’s FHA loan rates and compare top lenders.
VA loans: 0% down payment
Eligible military service members, veterans and surviving spouses can get a loan guaranteed by the U.S. Department of Veterans Affairs (VA) with 0% down. While there’s no required minimum credit score for a VA loan, many lenders may impose their own qualifying criteria.
See today’s VA loan rates and compare top lenders.
USDA loans: 0% down payment
The U.S. Department of Agriculture (USDA) offers 0% down payment home loans to eligible low- and moderate-income homebuyers in designated rural areas. There’s no minimum credit score required for a USDA loan, but most lenders expect to see at least a 640 score.
View the USDA loan map to see if you are in a qualifying rural area.
Jumbo loans: 5% to 20% down payment (Varies by lender)
Jumbo loans are loans that are larger than the conforming loan limits set by the Federal Housing Finance Agency (FHFA). Because of their size, these loans can’t be guaranteed by Fannie Mae and Freddie Mac, the two agencies that provide funding for most mortgage lenders.
As a result, these loans are often considered riskier for lenders, so you’ll often need a larger down payment to be approved.
See today’s jumbo loan rates and compare top lenders.
Pros and cons of making a large down payment
Like any financial decision, making a large down payment has its advantages and disadvantages. Here’s a look at what to consider before you commit.
No PMI: Lenders only require buyers to pay for PMI when they put down less than 20%. Lower monthly payments: When you put more money down, you're borrowing less, which translates into lower monthly payments. Lower interest charges: Since you're borrowing less to buy your home, you'll pay lower interest charges over the life of the loan. Additionally, lenders may give you a better interest rate since they’ll see you as a less risky borrower. More equity: Your home equity is the portion of your home that you own outright. It’s measured by your home's current value minus the amount you owe on your mortgage. The more equity you have, the more you can leverage this asset. | Less cash on hand: Making a larger down payment often means you'll have less money available to make repairs or meet other financial goals, like building an emergency fund or covering necessary home repairs. Longer time to save: Putting down 20% often means that your savings goal is fairly large. As a result, it can take longer to become a homeowner than if you made a smaller down payment. Long-term benefits: Many of the benefits of making a larger down payment are meant to help you out in the long term. If you're not planning on living in the home for a while, you may not benefit as much. |
How much should you put down on a house?
Unfortunately, there is no one-size-fits-all answer to how much your down payment should be. It will depend on the specifics of your financial situation. After all, while there are many benefits to making a larger down payment, paying too much upfront for a home could leave you feeling house-poor and unable to contribute to your other financial goals.
It’s important to play around with different down payment scenarios until you land on the one that feels most comfortable for you. If you’re just getting started exploring the path to homeownership, our home affordability calculator can help you decide what down payment may be right for you.
Other considerations to help determine your down payment size
- Keep some savings on hand: Try to avoid depleting your savings to cover your down payment. It’s a good idea to keep some cash on hand to cover emergency expenses, as well as the ongoing costs of homeownership, such as maintenance and repairs.
- Plan for closing costs: Closing costs account for an additional 2% to 6% of the loan amount, so it’s also important to ensure that you have enough saved to cover these expenses as well as your down payment.
- Shop around for the best rate: Gathering loan estimates from multiple lenders can help you save money over time. LendingTree data suggests that shopping around could help you save more than $84,000 over the life of a 30-year loan.
- Explore down payment assistance (DPA) programs: You may find that your state or county offers some DPA programs to help cover your down payment and closing costs. Check with your local housing finance agency for more information.
Ready to get started? Browse current mortgage rates and compare our list of the best mortgage lenders today.Frequently asked questions
There is no such thing as a typical down payment. But, the average down payment on a house was 8% for first-time homebuyers and 19% for repeat homebuyers in 2023, according to the National Association of Realtors (NAR).
Depending on which loan program you choose, you may not need to put any money down on a $300,000 house. Otherwise, your minimum down payment is likely to range between 3% ($9,000) and 3.5% ($10,500).
It’s possible to buy a house with no money down at all, thanks to some government-backed loan programs. In particular, VA loans and USDA loans don’t have down payment requirements.