What Is a Down Payment?
A down payment is a portion of the home’s purchase price that you pay upfront, while financing the rest with a mortgage. Lenders typically prefer a 20% down payment for conventional loans, but there are programs available that allow for smaller down payments if other criteria are met. The down payment shows lenders that you are financially committed to owning a home, which reduces their risk.

Average Down Payment Amounts
According to the National Association of Realtors, homebuyers overall put down an average of 12% in recent years. First-time buyers often have smaller down payments, averaging around 6%, while repeat buyers tend to put down more, averaging 16%. Many experienced buyers use funds from selling a previous home, while others save up over time.

Down Payment Requirements by Loan Type

• Conventional Loan: Minimum 3% down. If your down payment is under 20%, you will pay for private mortgage insurance (PMI) until you reach 20% equity.

• VA Loan: No down payment required. Available to veterans, active military, and National Guard members.

• USDA Loan: No down payment required. The property must be in an eligible rural or suburban area.

• FHA Loan: Minimum 3.5% down. Mortgage insurance is typically required for the life of the loan, even after reaching 20% equity.

Tips for Saving for a Down Payment
Even if your loan doesn’t require a large down payment, saving is always a smart move. Consider:

• Setting up automatic monthly contributions to a dedicated savings account

• Taking on a side hustle or extra work temporarily

• Adjusting your spending habits to save more aggressively

Saving more upfront can reduce the amount you need to borrow, lower your monthly payments, and even help you secure better mortgage terms.