What is the average down payment on a house?

A down payment is the amount you pay upfront when buying a house. It’s how much you initially pay to commit to ownership. The down payment is subtracted from the selling price of the home to determine how much you borrow. The higher the down payment you make, the less you have to borrow and the less interest you have to pay.

You might have heard of the “20% rule” for making a down payment. Though making a 20% down payment might help you get a better interest rate and avoid mortgage insurance, you can still buy a house with a lower down payment.

According to a 2021 report from the National Association of Realtors, the median down payment for all buyers from the year ending in July 2020 was 12%. ATTOM Data Solutions, a real estate and property data provider, found the median down payment in the third quarter of 2020 was $20,775, or 6.6% of the median sales price.

On a home with a sales price of $300,000, a 6.6% down payment is $19,800, and a 12% down payment is $36,000 — much lower than a 20% payment of $60,000.

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 private mortgage insurance. 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.

What is a typical down payment on a house?

According to survey data from the National Association of Realtors, the median down payment on a home from mid-2019 to mid-2020 was 12%. The percentage was higher as the buyer's age increased: Buyers 22 to 30 years old had the lowest median down payment, at 6%, while buyers 66 to 74 had the highest, at 23%.

Among all buyers, 45% financed at least 90% of the purchase price, and 68% financed at least 80% of the purchase price. Around two-thirds of survey respondents said they used a conventional loan.

ATTOM Data Solutions released data in November 2020 showing the median down payment on financed single-family homes and condos from July through September of 2020 was $20,775, or 6.6% of the median sales price. The report states this number is up from 5% in the previous quarter and 4.7% the previous year.

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 might qualify for lower interest rates from lenders, 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.

Bottom line: Do you have to put 20% down on a house?

It's not necessary to put 20% down, but in some cases it makes the most sense. There are both advantages and disadvantages to putting a 20% down payment on a home. Whether it’s worth it depends on your personal situation and financial goals, as well as some external factors, like market conditions. Speaking with a financial advisor is one way to get advice on how much to put down.

Remember that you don’t need a 20% down payment to get a mortgage; conventional loan down payments start at 3%, and some government-backed loans require no down payment at all.