You may have heard that 20% is the ideal down payment, but that doesn’t mean you must pony up that amount to become a homeowner. In truth, the average down payment on a house is considerably smaller. Currently, the median down payment on a house is 13%, according to data from the National Association of Realtors® (NAR).
Here, you’ll learn more about down payments so you can house-hunt smarter. Some topics to drill down on include the average amount paid by age and in different geographic areas to how you might access help if you can’t come up with 20%. Armed with this intel, you’ll be better prepped to navigate that major rite of passage: purchasing a home.
Table of Contents
Key Points
• The average down payment on a house in the US is around 6-20% of the purchase price.
• The amount of the down payment can vary based on factors like loan type, credit score, and lender requirements.
• A larger down payment can result in lower monthly mortgage payments and potentially better loan terms.
• Down payment assistance programs and gifts from family members can help with affordability.
• It’s important to save and plan for a down payment to achieve homeownership goals.
What’s the Average Down Payment On a House?
In 2022, the average down payment on a house was 13% down
The average down payment nationwide was 13% in 2022, according to the NAR. Given that the most recent Spring 2023 data showed a median price of $388,800 for home sales, that would mean most people are plunking down about $50,544 for a down payment.
This shows that the conventional wisdom that you need 20% down to purchase a home is, to a large extent, untrue. A 20% down payment will lower your mortgage amount and monthly payments vs. a smaller amount, and you will be able to avoid private mortgage insurance (PMI), but it’s not the only game in town.
Average Down Payment by Age
The latest NAR Home Buyers and Sellers Generational Trends Report breaks down by age the percentage of a home that was financed by homebuyers in 2022.
Older buyers tend to use proceeds from the sale of a previous residence to help fund the new home. Buyers 57 to 66 years old, for instance, put a median of 21% down, the NAR report shows.
Most younger buyers depend on savings for their down payment. Buyers ages 23 to 31 put down a median of 8%, and those ages 32 to 41, 10%.
A fortunate 25% of younger Millennial homebuyers received down payment help from a friend or relative.
Percentage of Home Financed
| All buyers | Ages 23-31 | Ages 32-41 | Ages 42-56 | Ages 57-66 | Ages 67-75 | Ages 76-96 | |
|---|---|---|---|---|---|---|---|
| < 50% | 11% | 4% | 6% | 9% | 20% | 25% | 22% |
| 50-59% | 5% | 1% | 2% | 5% | 8% | 12% | 15% |
| 60-69% | 5% | 1% | 3% | 6% | 7% | 9% | 13% | 71-79% | 13% | 8% | 12% | 17% | 16% | 17% | 15% |
| 80-89% | 24% | 27% | 28% | 25% | 22% | 18% | 18% |
| 90-94% | 15% | 21% | 18% | 15% | 8% | 7% | 6% |
| 95-99% | 17% | 28% | 20% | 15% | 9% | 6% | 2% |
| 100% (financed the whole purchase) | 10% | 9% | 11% | 9% | 9% | 7% | 10% |
Average Down Payment by State
Down payments are tied to home prices in any state.
You can look into the cost of living by state for an overview and then find the median home value in a particular state at a given point in time and estimate your down payment.
Redfin, for example, shows a median sales price of $761,300 in California in spring of 2023. A 3% down payment would be $22,839; 10% down, $76,130; and 20% down, $152,260.
California is joined by Hawaii and Colorado on many lists of the most expensive states in which to buy a house.
For example, Hawaii comes out on top with a median home price of $805,775. Three percent down would be $24,173; 10% down, $80,576; and 20%, $161,155.
Mortgages under conforming loan limits are often the most attractive for homeowners because they are backed by Fannie Mae and Freddie Mac. The limit is $726,200 for a one-unit property in most counties and $1,089,300 in high-cost areas, including Hawaii.
A jumbo loan may be used to finance a property exceeding those limits.
The least expensive states in which to buy a home? Mississippi, Kansas, Alabama, and Oklahoma are among them.
You might want to check out housing market trends by city as well if you are interested in finding out where owning a home could be more or less expensive.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Down Payment Requirements by Mortgage Loan Types
There are first-time homebuyer programs and products that can allow for as little as 3% down on a home purchase.
That is the minimum down required for a conventional home loan, a nongovernment loan and the kind favored by most buyers.
However, there are some other loans you might want to consider, if you qualify for them:
• FHA Loans: An FHA loan, acquired through private lenders but guaranteed by the Federal Housing Administration, allows for a 3.5% down payment if the borrower’s credit score is at least 580.
• VA or USDA Loans: A VA loan or USDA loan usually requires no down payment.
A VA loan backed by the Department of Veterans Affairs is for eligible veterans, service members, Reservists, National Guard members, and some surviving spouses. The VA also issues direct loans to Native American veterans or non-Native American veterans married to Native Americans.
A USDA loan backed by the U.S. Department of Agriculture is for households with low to moderate incomes buying homes in eligible rural areas. The USDA also offers direct subsidized loans for households with low and very low incomes. Typically, a credit score of 640 or higher is needed.
For all of the above loan types, the home being purchased must be a primary residence, but a homebuyer can use a conventional or VA loan to purchase a multifamily property with up to four units if one unit will be owner-occupied.
Recommended: How to Afford a Down Payment on Your First Home
Calculate Your Potential Mortgage Based on Down Payment
Curious to see what your potential mortgage would look like based on different down payments?
Start with a home affordability calculator (like the one below) to get a feel for how much you’ll need to put down and other expenses.
Or use this mortgage calculator to estimate how much your mortgage payments would be depending on property value, down payment, interest rate, and repayment term.
Should You Aim for 20% Down?
Should buyers try to put 20% down to get a mortgage loan? Not necessarily. It’s an individual decision. Here are some things to consider:
If Your Down Payment Is at Least 20%
Putting down at least 20% has benefits:
• You won’t have to pay for mortgage insurance: If you put down 20% or more with a conventional loan, you won’t be required to pay for private mortgage insurance (PMI), which protects the lender if you were to stop making payments.
• Your loan terms may be better: Lenders look at an applicant’s credit history, employment stability, income, debt-to-income ratio, and savings. They’ll calculate the loan-to-value ratio, or what percentage of the home’s purchase price will be covered by the mortgage.
Lenders often provide a better rate to borrowers who have an LTV ratio of 80% or lower — in other words, at least a 20% down payment — because they consider them a better risk.
• You have instant equity in the property: You borrowed less than you could have, which translates to a lower mortgage payment, less interest paid over the life of the loan, and the potential later to take out a home equity loan.
Recommended: What Do I Need to Buy a House?
If Your Down Payment Is Less Than 20%
If your down payment will be less than 20%, know that you’ll have plenty of company. Consider these ways to optimize the situation:
• A government loan could be the answer: FHA loans are popular with some first-time buyers because of the lenient credit requirements. Just know that upfront and monthly mortgage insurance premiums (MIP) always accompany FHA loans, and for the life of the loan if the down payment is under 10%. If you put 10% or more down, you’ll pay MIP for 11 years.
• You may be able to improve your loan terms: If you can’t pull together 20% for a down payment, you can still help yourself by showing lenders that you’re a good risk. You’ll likely need a FICO® score of at least 620 for a conventional loan. If you have that and other positive factors, you may qualify for a manageable interest rate or better terms.
• You can eventually cancel PMI: Lenders are required to automatically cancel PMI when the loan balance gets to 78% LTV of the original value of the home. You also can ask your lender to cancel PMI on the date when the principal balance of your mortgage falls to 80% of the original home value.
You may be able to find down payment assistance: City, county, and state down payment assistance programs are out there. They may take the form of grants or second mortgages, some with deferred payments or a forgivable balance.
The Takeaway
What is the average down payment on a house? Currently, it’s about 13% of the home’s purchase price, which usually means mortgage insurance and higher payments for the buyer. But buyers who put less than 20% down on a house unlock the door to homeownership every day. They can be helped along by such options as government loans, down payment assistance, and other programs.
If you’re in the market for a mortgage, SoFi can help. With a SoFi Mortgage Loan, you may be able to put as little as 3% to 5%, enjoy flexible terms, and apply simply and easily online.
See how a SoFi Mortgage can help you become a homeowner.
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