How Much Is a Down Payment for a House?
Thinking about buying a house? Before you shop for that welcome mat, consider one key factor: your down payment. This is the upfront cash you need to put toward a home’s purchase price to secure a mortgage in most (but not all) cases.
You may have heard 20% is the magic number for a house down payment, but that’s not always necessary. The minimum required down payment depends on a number of factors, including the home price and loan type. Some government-backed loans don’t require a down payment at all.
- A 20% down payment is often the standard, but the median down payment in 2024 was 18% among all homebuyers. Among first-time homebuyers, it was just 9%.
- The minimum down payment depends not just on a property’s purchase price but also on your chosen loan type. Some loans — such as VA and USDA — require no minimum down payment.
- Your down payment amount can significantly impact your monthly payments and the total interest you pay over the life of your mortgage.
What’s the average down payment on a house?
The median down payment in 2024 was 18% among all homebuyers, according to the National Association of Realtors (NAR). That works out to about $74,000 for a home priced at the national median of $410,800.
But saving up to 20% of a home’s price can feel daunting, and you don’t always need that much cash at the ready in order to secure a mortgage. Among first-time homebuyers, the median down payment in 2024 was significantly lower — just 9%, or about $37,000, on a $410,800 home.
Minimum down payment requirements by loan type
The minimum down payment required depends on the loan type you’re looking to secure. It also depends on the type of property you intend to purchase — a primary residence, second home or rental property.
| Primary residence | Second home | Rental property | |
|---|---|---|---|
| Conventional | 3% | 10% | 20% |
| FHA | 3.5% | N/A | N/A |
| VA | 0% | N/A | N/A |
| USDA | 0% | N/A | N/A |
Just when you think you’ve covered your down payment, there’s another cost to account for: closing costs. Also due on your closing date, these funds cover costs associated with the mortgage process as well as home inspections, homeowners association transfers and other fees.
So, how much are closing costs? They generally range between 2% and 6% of your loan amount. The good news: Even though closing costs are charged to you, you may not have to pay them out of pocket. In some cases, the home seller or lender may pay the costs on your behalf — or a friend or relative can gift you the funds to cover them.
How your down payment affects your mortgage
While a minimum down payment opens the door to your new property, a larger down payment can pay off significantly over time. The bigger the down payment, the smaller your loan — and the less interest you’ll pay over time. Also, if you don’t put down at least 20% on a conventional loan, you’ll pay private mortgage insurance (PMI), which increases your monthly mortgage payment.
How big of a payoff do you get from a larger down payment? We break it down below in an example assuming a 30-year mortgage on a $450,000 house with a 6.75% interest rate. Loan A represents a buyer who puts down just 5%, while Loan B represents a buyer who puts down 20%.
| Loan A | Loan B | |
|---|---|---|
| Down payment amount | $22,500 | $90,000 |
| Loan amount | $427,500 | $360,000 |
| Interest rate | 6.75% | 6.75% |
| Monthly P&I payment | $2,772.76 | $2,334.95 |
| Total interest paid | $570,692.47 | $480,583.13 |
A bigger down payment clearly makes a big difference. The homebuyer who put down 20% saves $437.81 each month and $90,109.34 in total interest paid over the life of the loan compared to the homebuyer who put down 5%.
Best ways to save for a down payment
- Create a budget. Take a close look at your budget to see where you can trim expenses to funnel more money into savings. Consider things like swapping out takeout for dinners at home, exercising outside in lieu of your gym membership and cancelling seldom-used subscriptions. Automate your savings to make sure the funds consistently go toward your down payment.
- Increase your income. Can you start a side hustle? Maybe it’s time to look for a higher-paying job or sell things you no longer need. Any extra amount coming in can help you reach your goals.
- Manage your debt. If you have significant debt, you may want to consider a debt consolidation loan or personal loan. This can help reduce your monthly payments and add extra funds to your down payment savings.
- Ask for gifts. Family members or close friends may be willing to gift you a portion or all of your down payment. If they agree, you’ll need a gift letter affirming that it’s a gift and not a loan.
- Consider down payment assistance. Down payment assistance programs can help cover some or all of your down payment and closing costs. Many — though not all — are designed for first-time homebuyers, and in some cases, you don’t need to repay the assistance you receive.
Frequently asked questions
How much of a down payment you’ll need on a $400,000 house depends on the type of loan you secure. For a conventional loan on a primary residence, you’ll need a 3% minimum, which is $12,000 for a $400,000 house. For FHA loans, you’ll need at least a 3.5% down payment ($14,000), and for VA and USDA loans, you may not need a down payment at all.
There are a number of ways to get money for a down payment. Determining how much you need and saving that amount is the most straightforward strategy. You can also consider ways to bring in more income or ask a relative or close friend to gift you money for your down payment. Down payment assistance and first-time homebuyer programs can also help some buyers reach their goals.
No, you don’t need a 20% down payment to buy a home. In fact, some loans don’t require a down payment at all. Just remember, however, the more money you put down, the smaller your loan amount will be, and the more money you’ll save over the life of the loan.
If you’re unable to make a 20% down payment on a conventional loan, you’ll be responsible for paying PMI. This amount is typically added to your monthly mortgage payment — and covers your lender’s losses if you default on the loan. In some cases, if you agree to a higher interest rate, your lender will pay PMI for you.
If you have served in the military, work in health care or live in a rural area, you may qualify for a zero-down loan. If not, you’ll likely need to put down some money up front.
Homebuyer assistance programs can help cover part or all of your down payment. However, you usually have to meet some eligibility criteria to benefit from these programs, such as income limits, a minimum credit score or maximum debt-to-income (DTI) ratio.
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