If you're thinking about buying a home, you've probably spent more than a few sleepless nights wondering how much cash you'll need upfront. I get it. When I first started helping people navigate the mortgage process, the down payment question came up in practically every conversation.
A down payment is the chunk of money you pay upfront when buying a house. The difference between the home's purchase price and what you're borrowing through your mortgage.
So if you're buying a $400,000 house and you put down $40,000, you're making a 10% down payment. Your mortgage loan covers the remaining $360,000.
According to data from the National Association of REALTORS® released in late 2024, first-time home buyers made a median down payment of 9% in 2024. That's actually the highest percentage for first-timers since 1997, which might sound discouraging.
But here's the thing. Repeat buyers are putting down significantly more. The median for them was 23% in 2024. Why? Repeat buyers often have equity from selling their previous home. They can roll that into their next purchase.
Real estate data firm ATTOM reported that the median down payment nationwide hit $62,000 in July 2025. According to Redfin's data from June 2024, the typical down payment was $67,500, representing about 18.6% of the purchase price.
Down payment amounts vary wildly by location. In San Jose, California, the typical down payment was $451,500. Meanwhile, in Virginia Beach, Virginia, it was just $9,195.
Conventional loans aren't backed by any government program. If you're a first-time home buyer with a credit score of 620 or higher, you might qualify with just 3% down. That's $9,000 on a $300,000 home.
However, many lenders will want you to put down at least 5% . It depends on your income, existing debts, credit score.
Here's the catch: if you put down less than 20%, you'll need to pay private mortgage insurance (PMI). This protects the lender if you default. PMI typically costs between 0.5% and 1% of your loan amount annually.
The good news? PMI isn't forever. Once you've built up 20% equity in your home, you can request that your lender cancel it. Most lenders automatically cancel PMI once you hit 22% equity.
Federal Housing Administration loans are designed to help people who might not qualify for conventional financing. They're popular with first-time buyers because the credit requirements are more flexible.
FHA loans also require mortgage insurance, but it works differently. You'll pay an upfront mortgage insurance premium (usually 1.75% of the loan amount) that can be rolled into your loan. Then you'll pay an annual premium split into monthly installments. Unlike conventional PMI, FHA mortgage insurance typically lasts for the life of the loan.
Here's one of the best deals in the mortgage world: if you're eligible for a VA loan through the U.S. Department of Veterans Affairs, you can buy a home with absolutely no down payment.
VA loans are available to active-duty service members, veterans, and some surviving spouses. Beyond the no-down-payment benefit, VA loans also don't require mortgage insurance.
Eligibility depends on factors like your length of service and reason for discharge.
The U.S. Department of Agriculture offers loans with no down payment requirement for homes in eligible rural and suburban areas. USDA's definition of "rural" is pretty broad. It includes many suburban communities.
To qualify, your household income needs to fall within certain limits for your area, and the property must be in a USDA-approved location.
Conventional loans with less than 20% down require PMI. FHA loans require mortgage insurance regardless of down payment. VA loans have no mortgage insurance requirement.
This shows you don't need massive amounts saved. At AmeriSave, we work with buyers at all down payment levels.
This is your main home. Primary residences get the most favorable terms. You can use any of the loan types mentioned above, with down payments ranging from 0% for VA and USDA loans to 3% or 3.5% for conventional and FHA loans.
Buying a second home comes with stricter requirements. For conventional loans on a second home, you're looking at a minimum 10% down payment. There are restrictions on what counts as a second home. You can't rent it out for more than 180 days per year.
You can't use FHA, VA, or USDA loans for a second home.
Planning to buy a rental property? Investment properties have the strictest down payment requirements. In most cases, you'll need to put down 20% to 25% on a conventional loan.
There's a bit of flexibility if your credit score is excellent. With a score above 720, some lenders might allow a 15% down payment on an investment property. But most investors I've worked with end up putting down the full 20% or more.
Let me address something that trips up a lot of buyers. The idea that you must put 20% down to buy a house. This belief stops people from exploring homeownership.
Very few buyers actually put 20% down anymore. According to the National Association of REALTORS®, the median down payment across all buyers in 2024 was 18%.
Where did this 20% rule come from? It's the threshold at which you avoid paying PMI on a conventional loan.
No PMI. By avoiding PMI, you'll save anywhere from $50 to several hundred dollars per month.
Lower interest rates. Lenders often offer better rates to borrowers who put more money down.
Lower monthly payments. Borrow less, pay less each month.
Competitive advantage. Sellers often prefer offers with larger down payments. Instant equity. You're starting out with 20% ownership in your home.
Opportunity cost. Let's say you're saving $1,000 per month to build up a 20% down payment. On a $400,000 home, that's $80,000, which would take you nearly seven years.
Wait, let me clarify that. During those seven years, what happens to home prices? If prices increase by just 3% annually, that $400,000 home becomes a $478,000 home. Now your 20% down payment needs to be $95,600 instead of $80,000.
Meanwhile, you've been paying rent. If you were paying $2,000 monthly in rent, that's $168,000 gone over seven years.
Depleted emergency fund. If saving for a 20% down payment means draining your emergency savings, you're putting yourself in a vulnerable position.
Less money for immediate home needs. Every home needs something. If you've poured every available dollar into your down payment, you won't have the funds to address issues when they come up.
First-time home buyers in 2024 made a median down payment of 9%, according to the National Association of REALTORS®. On the median home price of around $400,000, that's about $36,000.
Some buyers are putting down much less. 3% to 5% is common. At AmeriSave, we help first-time buyers purchase homes with down payments well under 10%.
I remember one client from last year who was convinced she needed $80,000 saved before she could even think about buying. She'd been saving for five years and was only at $42,000. When I showed her she could qualify with an FHA loan at 3.5% down (about $14,000 on the $400,000 homes she was looking at), she almost cried. She closed on her house three months later.
Repeat buyers are putting down about 23% on average. Most repeat buyers are selling a previous home. If you bought a house seven years ago for $300,000, made your mortgage payments, and saw moderate appreciation, you might have $100,000 or more in equity.
Ages 22-30: Median around 6-8%
Ages 31-40: Median around 10%
Ages 41-55: Median around 13%
Ages 56-65: Median around 18%
Ages 66-74: Median around 23%
The pattern makes sense. Younger buyers have less time to save.
Where you're buying makes an enormous difference. According to 2024 ATTOM data, median down payments by state ranged from $190,000 in Hawaii to $13,000 in Mississippi.
There are over 2,000 down payment assistance (DPA) programs operating across the United States, according to HUD resources.
The goal is simple. Make homeownership attainable for people who are mortgage-ready but don't have enough saved.
Grants: These are gifts of money you never have to pay back. Grant amounts typically range from $3,000 to $15,000, though some programs offer more.
Illinois launched a program in 2025 offering up to $10,000, per Illinois Housing Development Authority. California's MyHome Assistance Program provides up to 3% of the home's purchase price , according to California Housing Finance Agency.
Forgivable loans: These are structured as second mortgages with 0% interest. After you've lived in the home for a set number of years (typically 5-10), the loan is completely forgiven.
Deferred-payment loans: Similar to forgivable loans, these charge little or no interest and don't require monthly payments. You'll need to repay them when you sell, refinance, or the loan term ends.
Matched savings programs: These programs match the money you save. You might deposit $5,000, and the program matches it with another $5,000.
Tax credits: Some states issue Mortgage Credit Certificates (MCCs) that reduce your federal income tax, per IRS guidelines.
Most DPA programs are designed for first-time home buyers. Common requirements include:
Income limits based on area median income. In expensive markets, you might qualify with a household income of $100,000 or more.
Credit requirements. You'll generally need a score in the 620-640 range.
Home buyer education. Most programs require completing a course (usually 6-8 hours, often available online).
Primary residence requirement. The home must be your primary residence.
Speaking of home buyer education, this reminds me of my Master’s of Social Work (MSW) classes. We were discussing financial literacy last semester, and the professor mentioned how down payment assistance programs are underutilized because people simply don't know they exist. It's a classic information gap problem. The resources are there, but they're not reaching the people who need them most. Anyway, where was I? Right, DPA requirements.
Geographic restrictions. Some programs are limited to specific counties or cities.
Home price limits. There's usually a maximum purchase price.
Your state housing finance agency. Every state has one.
HUD's website. The U.S. Department of Housing and Urban Development maintains a state-by-state directory.
Your lender. We can help connect you with available assistance programs.
Down Payment Resource. This private company offers a searchable database.
Your county or city website. Local governments often run their own programs.
If you're saving $1,000 per month in a high-yield account earning 4.5% APY, after three years you'd have about $38,400. That includes roughly $2,400 in interest earnings.
Set up automatic transfers from your checking account to your dedicated down payment savings account. Start with whatever amount feels manageable.
Commit to putting all windfalls directly into your down payment fund. Tax refunds, work bonuses, birthday money.
Many loan programs allow you to use gift money from family members toward your down payment. You'll need proper documentation showing the money is truly a gift, but lenders work with gift funds all the time.
Financial advisors generally recommend keeping 3-6 months of living expenses in an easily accessible emergency fund. If making a 20% down payment would leave you with less than 2 months of expenses saved, that's probably not a wise move.
Think about it. If you put every available dollar into your down payment and then your car's transmission dies two months after closing, you're in a tough spot.
A better approach might be putting down 10% instead of 20%, keeping a healthy emergency fund intact, and accepting PMI temporarily.
If you're carrying high-interest debt (credit cards at 18%, personal loans at 12%), it might make more sense to knock that out before maximizing your down payment.
Run the numbers. If you have $10,000 in credit card debt at 18% interest, paying off that debt saves you $1,800 per year.
Leaving yourself with no financial cushion after closing is risky. Keep at least a few thousand dollars in savings beyond what you need for the down payment and closing costs.
Your lender will verify your financial situation right up until closing. If you finance a new car or charge $5,000 on credit cards for furniture, that could jeopardize your loan approval. Wait until after closing.
Your down payment is only part of the upfront money you'll need. Closing costs typically run 2-5% of the home price. On a $400,000 home, you might need $8,000-20,000 for closing costs.
Many eligible buyers simply don't know these programs exist. If you're a first-time buyer or haven't owned a home in three years, spend an hour researching what's available.
This misconception keeps people renting for years longer than necessary.
As of April 2025, the average 30-year fixed mortgage rate was 6.62%, according to Freddie Mac.
At 3.5% rate: $1,796 monthly
At 6.5% rate: $2,528 monthly
Difference: $732 more per month
Figure out your target timeline. Six months? Two years?
Calculate your target down payment. Based on homes in your price range, what dollar amount are you aiming for?
Check your credit score. If it's below 620, focus on improving it.
Open a high-yield savings account.
Research down payment assistance programs.
Get preapproved. We offer online preapproval that helps you understand your options.
Talk to a mortgage loan expert.
What you need depends on your loan type, the property you're buying, your credit profile, and your financial situation.
20% down isn't required to buy a house in 2025. Many first-time buyers are successfully purchasing homes with 3-10% down. With over 2,000 assistance programs available and multiple low-down-payment loan options, homeownership is more accessible than many people realize.
Be realistic about what you can afford monthly. Balance your down payment goal with other financial priorities. The right down payment for you is one that gets you into a home you can afford without leaving you financially vulnerable.
It depends on your loan type. With a conventional loan, you might put down as little as 3% ($9,000), though 5-10% is more common. An FHA loan requires 3.5% ($10,500) minimum. If you qualify for a VA or USDA loan, you could buy with $0 down. The median first-time buyer in 2024 put down 9%, which would be $27,000 on a $300,000 home. The exact amount depends on your credit score, the lender's requirements, and your overall financial profile.
Yes. With a conventional loan and decent credit (typically 620 or higher), 5% down is a realistic option. You'll need to pay PMI until you reach 20% equity, but many buyers find this worthwhile compared to waiting years to save a larger down payment. The PMI typically costs between 0.5% to 1% of your loan amount annually. Once you've built up enough equity through payments and appreciation, you can request to have the PMI removed.
For a conventional loan with 3% down, you'll typically need a credit score of at least 620, though 640 or higher gives you better odds. FHA loans are more flexible. You can qualify for their 3.5% down payment with a score as low as 580, and some lenders will go down to 500 (though you'd need 10% down with a score in the 500-579 range). Your credit score also affects your interest rate.
PMI typically costs between 0.5% and 1% of your loan amount annually, divided into monthly payments. On a $300,000 loan, that's $125-250 per month. While that's not nothing, it's often worth paying temporarily rather than waiting several more years to save a 20% down payment while home prices potentially rise. You can get PMI removed once you hit 20% equity. The calculation comes down to opportunity cost.
Your down payment is the portion of the home's purchase price you're paying upfront. It represents your initial equity. Closing costs are the fees associated with finalizing the mortgage and home purchase. These include appraisal fees, title insurance, loan origination fees, attorney fees, credit report charges, prepaid property taxes, and homeowners insurance. Closing costs typically run 2-5% of the home price and are paid separately from your down payment.
You can borrow from your 401(k) or take a hardship withdrawal, though there are significant considerations. 401(k) loans must typically be repaid within 5 years, and if you leave your job, you usually need to repay the full amount quickly. Hardship withdrawals come with taxes and a 10% penalty if you're under 59½. IRAs offer more flexibility. First-time buyers can withdraw up to $10,000 penalty-free (though you'll still owe income tax), and both spouses can do this.
For most down payment assistance programs, you're considered a first-time home buyer if you haven't owned a home in the past three years. So yes, if you owned a house 10 years ago but have been renting since, you'd qualify for most first-time buyer programs. This three-year rule is standard across most state and federal programs.
Yes, if you qualify for a VA loan (available to eligible veterans and active-duty service members) or a USDA loan (for eligible rural and suburban properties, with income restrictions). VA loans are one of the best deals available. They require no down payment and no mortgage insurance. USDA loans also require no down payment, though they do have an annual fee similar to mortgage insurance.
According to industry data, it took the average home buyer about three years to save for a down payment in recent years. However, this varies based on your target down payment percentage, the home price in your market, your income, and your ability to save. If you're saving $1,000 monthly for a 5% down payment on a $400,000 home ($20,000), it would take you 20 months.
For conventional loans, you'll pay PMI until you reach 20% equity. FHA loans require mortgage insurance for the life of the loan (with some exceptions). VA loans don't require mortgage insurance regardless of down payment. A smaller down payment means borrowing more, which increases your monthly payment. However, it also means you can buy sooner and start building equity rather than continuing to pay rent.
This depends on your complete financial picture. If you have a comfortable emergency fund (3-6 months of expenses), minimal high-interest debt, and steady income, putting more down can save you money. However, if a larger down payment would leave you without an emergency fund, or if you're carrying high-interest debt, it's often smarter to put down less and keep money accessible.
Not directly. Seller contributions toward a down payment aren't allowed under most loan programs. However, sellers can contribute toward your closing costs, which frees up more of your cash for the down payment. For conventional loans with less than 10% down, sellers can contribute up to 3% of the purchase price. For conventional loans with 10% or more down, they can contribute up to 6%.
Trying to time the market perfectly is nearly impossible. While lower rates would be nice, waiting could mean home prices continue rising, potentially offsetting any rate benefit. There's also the rent factor. Every month you wait is another month of rent payments rather than building equity. Many experts suggest "marry the house, date the rate." You can always refinance to a lower rate later if rates drop.
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