What is the average down payment on a house?

Many people are all too eager to start their home search, but the idea of saving up 20% for a down payment seems like an insurmountable task. In fact, 13% of buyers reported that saving for a down payment was the hardest part of the mortgage process in a National Association of Realtors (NAR) survey.

However, just because this “20% rule” has been recommended for years, it doesn’t mean you have to follow it to secure your dream home.

Jason Lerner at George Mason Mortgage explains that traditionally the 20% down payment has been an important number to avoid private mortgage insurance (PMI).

“Mortgage insurance has become much more affordable and, depending on the program and the homebuyer’s qualifications, monthly mortgage insurance now may be tens of dollars instead of hundreds of dollars in the past,” he said.

Additionally, Lerner says that this popular “20% down payment” figure should not keep people from buying a home. He says he has had clients who put off their home search to save this money, only to find themselves in a less desirable position later on.

Find out how much you really need to save to make homeownership a reality — it might be a lot less than you think.

Key insights

• Putting down 20% is not a rule — just a recommendation to avoid PMI.
• VA and USDA loans don’t require any down payment.
• Don’t let saving for a down payment derail you from buying a home.

What is the minimum down payment on a house?

A down payment is required for most types of home loans, with the exception of a few government-backed mortgages. Here’s a look at down payment requirements for some common types of mortgages.

Conventional loans, which are loans not insured by the government, have down payment requirements that are specific to each lender. You’ll have to put at least 3% down, and if you put down less than 20%, you will usually have to pay for PMI. Jumbo loans require a higher down payment because of the larger loan amount and greater degree of risk for the lender.

An FHA loan requires a down payment of as little as 3.5% if you have a credit score of at least 580. If your credit score is from 500 to 579, you have to put down at least 10%.

VA loans, which are available to veterans, current service members and surviving spouses, are available with no down payment. Similarly, USDA loans, designed for low- and moderate-income applicants and properties in rural areas, have no down payment requirement.

» MORE: What does clear to close mean?

What is the typical down payment on a house?

The median down payment on a home from July 2020 to June 2021 was only 13%, according to the NAR survey. However, for buyers ages 23 to 41, the median down payment was between 8% and 10%.

"The trend for several years has been for homebuyers to make smaller down payments. Many of my clients with the ability to make a large down payment are still choosing to make a smaller down payment,” said Lerner.

“Depending upon the program, making a down payment of less than 20% can actually improve the interest rate slightly,” Lerner said. “Rates are determined by risk and because a buyer making less than a 20% down payment will have mortgage insurance, the loan is considered less risky because the mortgage insurance adds an additional layer of protection from a buyer defaulting on their mortgage.”

How much should you put down on a house?

The amount you should put down on a house depends on a variety of factors:

• Your savings
• Your monthly budget for housing expenses
• The type of loan
• Current market conditions
• Current interest rates

Putting down a higher down payment has its advantages: You are borrowing less money, you have lower monthly payments and you pay less interest over the life of the loan. You also reduce the amount of mortgage insurance you owe or avoid it altogether. Another benefit is that sellers may see your offer as more attractive.

But there are also reasons you may not want to put down a large down payment: It might require you to wait longer until you can enter the housing market, or it could deplete your savings that you need for other purposes or emergencies.

» MORE: How to get down payment assistance

Bottom line

Having a 20% down payment isn’t a hard-and-fast rule for buying a home, so homeownership could be closer than you think. Knowing how much extra PMI will cost and which loan types you qualify for can help you figure out how much you need to save before going house hunting.