What Is the Average Down Payment for a Home?

February 18, 2021
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Saving for a Down Payment: What You Need to Know

One of the biggest challenges to buying a home is saving for the down payment. This payment affects how much house you can afford, the types of loans available to you, and how long it may take to become a homeowner. So, what is a typical down payment for homebuyers? Let’s break it down.

What Is a Down Payment?

A down payment is the portion of the home’s value that you pay upfront. You finance the rest with a mortgage. Most lenders ask for 20% for a conventional mortgage, but some programs allow smaller down payments if other requirements are met.

Lenders require a down payment to ensure buyers are financially committed. Additionally, it lowers the risk of default.

Average Down Payment Amounts

According to the National Association of Realtors:

Overall, homebuyers put down an average of 12% in 2019.
First-time buyers typically put down 6%.
Experienced buyers averaged 16%, often using proceeds from selling a previous home.

Furthermore, 60% of buyers saved money for their down payment, while 38% relied on funds from selling a home. These strategies often help reduce the loan amount needed.

Down Payment Requirements by Loan Type

The minimum down payment depends on the type of loan:

Conventional loan: Minimum 3%. You must pay PMI until you reach 20% equity. With 20% or more, PMI is not required.
VA loan: No down payment. Available to veterans, active-duty military, and National Guard members.
USDA loan: No down payment. You must buy in a qualifying rural or suburban area.
FHA loan: Minimum 3.5%. Mortgage insurance is usually required for the life of the loan, even after reaching 20% equity.