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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.

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.

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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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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No, an employee’s student loan repayment benefit from their employer is not taxed as income now through the end of December. Thanks to the CARES Act, employees can take advantage of up to $5,250 in tax-free student loan payment contributions from their employer.

For employees lucky enough to work for a company that offers a student loan repayment program, the benefits of this perk are clear: Employees get “free money” from their employers to help pay down their student loans.

Employer Student Loan Repayment Benefit and Taxes

Under employer student loan repayment programs, employers help employees pay back their student loans in amounts that vary from company to company. This monetary assistance can be a great help to individuals struggling with student loan debt — and may even ultimately have an impact on the economy. However, prior to 2020, employer contributions were subject to both payroll and income tax, which means that for employees, the benefit wasn’t quite as big as it might first appear.

That changed in early 2020, when the Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded on this financial assistance by making all employer-match contributions up to $5,250 tax-free, exempt from both payroll and income tax.

While the measure implemented in the CARES Act was due to expire in January 2021, the new stimulus bill signed by President Donald Trump in December 2020 has extended that tax-free benefit for another 5 years, with a new expiration of December 31, 2025.

Understanding Employer Match of Student Loan Repayment

What is an employer student loan repayment program? It’s a way for companies to help alleviate their employees’ student loan debt burden by offering them a match (up to $5,250, tax-free) on payments they make toward their student loans every year. Employers make a regular contribution to an employee’s student loan balance, say $100 a month for example, while the employee continues to make regular payments.

In this way, employees can pay down more of their student loan balance and/or interest. Prior to the CARES Act, an employer’s student loan contributions were considered taxable income, but now through the end of 2025, they will be tax-free and fall under the same maximum (up to $5,250), as tuition reimbursement benefits from an employer.

There are a number of services available to companies who are looking to manage this kind of benefit. Just like the companies designed to help HR departments manage other benefits like health care, financial institutions can help assist with student loan repayment plans.

Companies with Student Loan Repayment Benefits

Employer student loan repayment programs are still rather new — only about 17% of companies offer them. However, close to 50% of companies say they plan to offer student loan repayment assistance in the future. To get a sense of what kinds of programs different employers offer, here are several examples of companies who have this incentive in place:

•   In 2019, Chegg, the education technology company best known for online textbook rentals, began offering its employees $1,000 annually toward student loan debt, with an additional equity grant of up to $5,000 annually.

•   Estée Lauder, the cosmetics company, launched their student loan benefit program in 2018 by offering $100 monthly for payback, with a cap of $10,000 total.

•   In 2017, Fidelity, the brokerage firm, began offering up to $5,250 per year in student loan repayment for its employees.

•   Also in 2017, Live Nation, entertainment and events, began contributing $100 monthly to student loans, maxing out at $6,000 in repayment.

•   Penguin Random House, the book publisher, began in 2018 to reimburse up to $1,200 yearly (capped at $9,000) for student loans to full-time employees who have been with the company at least one year.

•   PwC, also in the financial services industry, offers $1,200 annually and up to $10,000 total for student loan payments.

•   SoFi offers one of the more unique employer student loan repayment programs on the market, offering $200 a month in reimbursement with no cap.

Implementing a student loan repayment program with a matching contribution will depend on a company’s size and resources.

But this kind of incentive can appeal to potential new employees. Most companies do not require employees who leave the organization to repay the benefit. Paid out monthly, it can help with the most burdensome student loan payments, which some employees might find more valuable than, say, a year-end bonus.

Save on Student Debt while Saving for Retirement

Helping employees pay down student loan debt, while also still saving for retirement, is a benefit that could really increase the appeal of an employer loan repayment program.

In 2018, the IRS cleared a path for employers to create a different kind of student loan payoff program that could help attract employees. The program was created by Abbott Laboratories, but companies of all sizes could use a similar approach.

The IRS allowed Abbott to help its employees save for retirement and pay down student debt with a new program that allows people who direct a certain amount of their paycheck to pay off student loans to also get a contribution from Abbott for their retirement accounts.

Abbott’s program might inspire more employers to implement similar programs, where the company can make a tax-free contribution to the employee’s 401(k) on the condition the employee makes student loan payments.

The Takeaway

With the recent extension of the rules set forth in the CARES Act, employer student loan repayment contributions up to $5,250 are payroll-tax and income-tax free until December 31, 2025. For individuals whose company offers such a benefit, this makes it more useful than ever before in paying down student loan debt.

Just like a 401(k) retirement match, a company that offers a student loan repayment program is basically offering you extra money. For many employees, even an extra $100 a month could be enough to help them get out of debt faster and feel more confident about their financial security.

To make the most of student loan repayment benefits and pay down loans in the most efficient way possible, it’s always a good idea to evaluate your current payment plan. For some individuals with federal student loans, switching to an income-driven repayment plan or consolidating your loans could make monthly loan payments more manageable.

For individuals with both private and federal student loans, it might make sense to consider refinancing your student loans through a private lender, such as SoFi.

Refinancing combines multiple student loans — federal or private — into a single loan with one monthly payment. It can potentially lower your interest rate or give you access to more favorable loan terms. That said, refinancing with a private lender means forfeiting access to federal loan benefits like income-driven repayment plans, deferment, and public service loan forgiveness. Nonetheless, if your credit score and earnings have improved since graduating from college, refinancing might be a way to pay less in interest with a lower interest rate and a shorter repayment term.

With SoFi, refinancing is fast, easy, and all online. Also, we offer competitive fixed and variable rates.

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SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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