Coming up with enough cash for a down payment to buy a house can be the single biggest roadblock for prospective home buyers. But how much of a down payment do you really need? That depends on the type of loan, your lender and your priorities. Show The smartest place to shop Compare top mortgages side-by-side, complete with objective reviews from the Nerds. A down payment is the cash you pay upfront to make a large purchase, such as a home. You use a loan to pay the rest of the purchase price over time. Down payments are usually shown as a percentage of the price. A 10% down payment on a $350,000 home would be $35,000. When applying for a mortgage to buy a house, the down payment is your contribution toward the purchase and represents your initial ownership stake in the home. The mortgage lender provides the rest of the money to buy the property. Lenders require a down payment for most mortgages. However, some types of loans backed by the federal government may not require down payments. (More on that below.) Do you need to put 20% down on a house?You may have heard that you need to make a 20% down payment on a home, but that's really just the threshold many lenders use for requiring mortgage insurance on a conventional loan. You don't have to make a 20% down payment to buy a house. In 2021, the typical down payment for first-time home buyers was 7%, according to the National Association of Realtors. The typical down payment was 17% for repeat buyers. Making a lower down payment can get you to your goal of homeownership more quickly. However, a higher down payment brings down the principal (and lifetime interest payments), which might cost you less overall. Weigh the pros and cons to decide what’s best for you. Minimum down payment requirementsThe minimum down payment required for a house varies depending on the type of mortgage you're planning to apply for:
With low- or no-down-payment loans, you pay for the guarantee through fees or mortgage insurance, depending on the program. Benefits of a larger down paymentSaving enough money for a substantial down payment takes time, so a zero- or low-down-payment requirement may speed up your ability to buy a home. But making a larger down payment has advantages, which include:
Getting ready to buy a home? We’ll find you a highly rated lender in just a few minutes. Enter your ZIP code to get started on a personalized lender match. How much should you put down on a house?The right down payment for you depends on your goals and financial situation. While there are plenty of pluses with a larger down payment, putting down too much could leave you strapped for cash after you move in. Conventional mortgages usually require you to pay for private mortgage insurance if you put down less than 20%. Once you start making mortgage payments, you can ask to cancel PMI after you have over 20% equity in your home. Try out some different scenarios to help you better understand how changing the size of your down payment can affect other costs. Other considerations to determine your down paymentYour mortgage payment is just one piece of your overall household budget. With that in mind, here are some other factors to consider when planning for the size of your down payment:
Frequently asked questions How much is a down payment? The amount of your down payment varies depending on the cost of the home and what percentage of the offer price you're making as a payment. Using a down payment calculator can help you easily see down payment amounts and how altering your down payment affects your monthly mortgage payment. What is the purpose of down payments? A down payment allows you to make a large purchase, like buying a house, without having to pay all of the money at once. Instead, you pay a percentage of the purchase price upfront and borrow the rest. The loan balance is repaid over time, spreading the cost into manageable monthly payments. How is a down payment paid? When you buy a house, the down payment is paid on closing day — the day that you actually transfer money and get the keys to your new home. Your down payment will make up the largest chunk of that money, along with other closing costs. Because it's a substantial sum, closing costs are usually paid via a wire transfer or cashier's check. |