What’s the Average Down Payment on a House?



Down Payment Requirement by Loan Type

FHA Loan

3.5% with 580 score (10% down with 500-579 score)

USDA Loan

No down payment

VA Loan

No down payment

203k Loan

3.5%

Conventional Loan

5% - 20%

Conventional 97 Loan

3%

HomeReady Loan

3%

Home Possible Loan

3%

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What is a Down Payment?

A down payment is the amount of upfront cash a borrower puts towards the purchase of a home. It is expressed as a percentage of the purchase price; the remaining amount is financed.

For example, if you buy a $200,000 home and need a 5% down payment, you will need $10,000 down. The other $190,000 will come from the lender.

Your down payment affects your mortgage payment. The more money you bring to the table means you’ll be financing less and have a lower monthly payment.

What is the Average Down Payment?

The amount of money to put down on a house will depend on several factors, such as the home’s price and the type of home loan you qualify for.

Gone are the days of needing to have at least a 20% down payment to get approved for a mortgage.

There are special programs that offer low and no down payment at all. Conventional and Jumbo loans could require a down payment as high as 20% or more.

The last data pulled from 2019 shows that the average down payment on a house was about $14,000, or 6% of the purchase price.

Down Payment Requirements by Mortgage Type

FHA Loans

Credit Score

Down Payment

500-579 credit score

10% down payment

580+ credit score

3.5% down payment

FHA home loans are Government-backed mortgages that are insured by the Federal Housing Administration.

FHA loans are especially popular with first-time buyers because of their low credit score and down payment requirements.

A borrower can qualify for an FHA loan with a credit score as low as 500 and 10% down. If you have at least a 580 credit score, you can qualify with just 3.5% down.

Conventional 97 Loans

A conventional 97 mortgage is a special type of loan program from Fannie Mae that was made to compete with FHA loans. They require a low down payment of just 3%.

Because it is a conventional loan, the other requirements are a little more strict than FHA loans. You must speak to a loan officer to see if they offer the 3% down payment program.

Home Possible and HomeReady Loans

Fannie Mae and Freddie Mac created the HomeReady and Home Possible loan programs for low-income first-time homebuyers. They require just 3% down, even lower than an FHA loan.

Both loan programs have a minimum credit score requirements of 620 and have income limits.

203k Loans

An FHA 203k loan is a type of home renovation loan that lets you also finance repairs that need to be done to the property.

With a 3.5% down payment, you can get a loan for the property plus up to $35,000 to make renovations or repairs.

Most of the requirements to qualify are the regular FHA loan, except you’ll need at least a 640 credit score to be eligible.

Conventional Loans

Conventional loans are mortgages that are not backed by the Government. They are issued by private lenders and later sold to Fannie Mae or Freddie Mac.

Conventional loans usually require between a 5%-20% down payment. A benefit of using a conforming loan is that PMI is not required if you put at least 20% down.

Zero Down Payment Mortgage Programs

VA Loans

If you’re a veteran, you can qualify for a VA home loan with no down payment. Not only do VA loans offer 100% financing, but mortgage insurance is not needed, saving borrowers thousands of dollars per year.

While VA mortgage loans do not have a down payment, there is an up-front VA funding fee of 1.75% of the loan amount. Usually, this fee can be rolled into the mortgage.

USDA Loans

The U.S. Department of Agriculture created the USDA loan program to help low-income homebuyers in rural areas qualify for a home loan.

The USDA housing program offers 100% financing and the lowest mortgage insurance rate available of just 0.35%.

To be eligible, your household income cannot exceed 115% of the average household income in your area, and the property must be in a USDA eligible location.

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Where Your Down Payment can Come From

  • You’re not allowed to use a loan for your down payment. It must come from your savings account, 401k, or investment account.
  • Some mortgage programs allow the down payment to be a gift from a friend or family member.
  • To avoid PMI without 20% down, consider an 80/10/10 piggyback mortgage. A piggyback loan is a separate loan, one for 80%, one for 10%, and a 10% down payment.

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Down Payment Assistance Programs

There may be down payment assistance programs you qualify for. There are first-time homebuyer programs and grants available as well. You can check on your local city or county government website.

State and Federal homebuyer programs can be found on the HUD website.

2020 First-Time Homebuyer Assistance Programs

Good Neighbor Next Door Program (GNND)

  • Sells HUD-owned homes for 50% off to teachers, police officers, and EMT's

  • $100 down payment

HUD Homes

  • Buy foreclosed HUD real estate owned (REO) properties from the HUD Home Store website

Homeownership for public housing residents

Provides vouchers to first-time homebuyers to use towards purchasing a home 

First-Time Homebuyers

Typically homebuyers have less money saved up when buying their first home.

46% of first-time homebuyers use an FHA loan to purchase a home.

The average down payment for first-time buyers using an FHA loan was $6,640, 3.5% of the purchase price.

Pros and Cons of a Large Down Payment

Pros and Cons of Using a Large Down Payment

Pros

Cons

No private mortgage insurance (PMI) with at least 20% down

Less money in savings

Lower monthly mortgage payment

First-time homebuyers have to wait longer to buy while saving for a large down payment

Pay less interest over the life of the loan

Less money you can invest and get compound interest

Housing Expenses to Plan for

When you buy a home, the down payment isn’t the only expense you need to budget for. There are a few other expenses you need to consider.

Use our home affordability calculator to see how much home you can afford.

Closing Costs

Closing costs are not to be confused with a down payment. Closing costs are fees charged by the lender for processing and issuing a loan to a borrower.

Various fees are included in these costs ranging from the origination fee to a charge for pulling your credit report and processing your loan application.

The average closing costs are between 2%-5% of the loan amount. The amount you will pay depends on various factors, including the price of the home, location, and even your credit score.

Mortgage Insurance

Most mortgages require borrowers to carry mortgage insurance on the loan. Insurance protects the lender in the event a borrower defaults on a loan.

The mortgage insurance premium (PMI) is usually between 0.35% – 1% of the loan amount annually.

If you use a conventional mortgage and have at least a 20% down payment, you do not have to carry PMI.

FHA loans require a mortgage insurance premium regardless of how much money you put down. However, the amount of your down payment does affect the FHA MIP rate and the length of time you will be required to have it.

Property Taxes

Property taxes are assessed by your local city and is based on your home’s value. The tax rate varies from state to state and is usually between 1% – 2.5% of the assessed value each year.

Earnest Money

When your home offer is accepted and you’re under contract, you’ll need to pay an earnest money deposit to the seller. Earnest money basically shows that you’re serious and will be holding up your end of the deal.

There is an option period where the earnest money will be refunded. If you back out after the option period, the deposit is usually non-refundable.

How Your Down Payment Affects the Mortgage Insurance Rate

Your mortgage insurance rate will be lower when you use a larger down payment. The lower the loan-to-value ratio is, the lower the risk is for the lender. As a result, mortgage insurance rates go down when you put more money down.

FHA Mortgage Insurance Premium Rates

Loan Amount $625,500 or less 

      Down payment

MIP rate

MIP duration

30-year fixed-rate mortgage

<10%

>10%

0.85%

0.80%

     Life of the loan

11 years

15-year fixed-rate mortgage

>10%

             0.45%
 0.70%
     Life of the loan

11 years

$625,500 Loan Amount or higher

Down payment

MIP rate

MIP duration

30-year fixed-rate mortgage

<10%

>10%

1.05%

1.00%

Life of the loan

11 years

15-year fixed-rate mortgage

<10%

>10%

             0.95%

0.70%

Life of the loan

11 years

The Bottom Line…

While the average down payment on a house is 6% of the purchase price, the amount you’ll need really depends on several factors.

The biggest factor being the type of mortgage loan you use.

You don’t need a 20% downpayment anymore. With the creation of Government-backed mortgages, you can buy a home with low to no money down.

Want to see if you qualify for a no or low down payment mortgage?

Speak to our mortgage lenders today