April 26, 20246-minute read
Author: Victoria Araj
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*As of July 6, 2020, Rocket Mortgage® is no longer accepting USDA loan applications. One of your top priorities when buying a house is probably having enough cash on hand to meet the down payment requirement. You may wonder how much you need to save for a down payment, or if buying a home without one is possible. Let’s look at the typical down payment requirement for different loan types. We’ll also discuss the average amount buyers pay upfront so you can get an idea of what to expect on your journey toward homeownership.
How Much Should You Put Down On A House?
Minimum down payment requirements differ depending on the type of loan you choose. Here are the major types of loan programs and the down payment requirement for each.
Home Loan Type | Minimum Down Payment |
Conventional loan | 3% |
VA loan | 0% |
USDA loan | 0% |
FHA loan | 3.5% |
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How Much Is The Average Down Payment On A House?
The average first-time buyer pays about 6% of the home price for their down payment, while repeat buyers put down 17%, according to data from the National Association of REALTORS® in late 2022. The median home sale price in the U.S. was $416,100 as of Q2 in 2023. That means if you make a down payment of 6% – 17% on a house priced at the median U.S. sale price ($416,100 as of mid-2023), you can expect to put roughly $25,000 to $71,000 down. However, your down payment on a house may not be the average down payment on a house. Down payment amounts vary drastically depending on the home’s purchase price, your loan type and the current state of the housing market.
Down Payment Amount By Purchase Price: At A Glance
Let’s look at some typical down payment figures based on the following purchase prices.
Home Purchase Price | 3% Down Payment | 10% Down Payment | 20% Down Payment |
$200,000 | $6,000 | $20,000 | $40,000 |
$400,000 | $12,000 | $40,000 | $80,000 |
$600,000 | $18,000 | $60,000 | $120,000 |
$800,000 | $24,000 | $80,000 | $160,000 |
$1,000,000 | $30,000 | $100,000 | $200,000 |
What To Consider When Making A Down Payment
Keep in mind that there’s no right or wrong answer for how much you need to have as a down payment to buy a house. Factors to consider when deciding how much to put down on a new home include: If you can’t afford your down payment, you may qualify for down payment assistance. Down payment assistance programs help relieve many home buyers of this large upfront cost of buying a house. Many down payment assistance programs and grants also help cover closing costs, which may include a home appraisal fee, loan origination fee and homeowners insurance.
Is It Better To Put A Large Down Payment On A House?
Larger down payments can seem like a high priority because they typically result in paying less interest over time and eliminating private mortgage insurance (PMI) fees on a conventional loan (assuming the down payment amounts to at least 20% of the purchase price). It’s essential, however, to analyze your financial situation to determine whether a large down payment is a good option for you. Waiting until you have enough savings for a large down payment could lead you to spend more money in the meantime. You could end up paying more in rent, for example, than you would save by eliminating PMI and reducing the amount of interest you pay. You could also end up missing an ideal moment to make a move in a hot housing market. Getting approved for a mortgage will reveal the kind of terms that the down payment you plan to make will qualify you for.
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Do You Need 20% For A Typical Down Payment On A House?
The myth of the 20% down payment comes from the PMI requirement. PMI is a type of mortgage insurance that conventional loan lenders often require for their own protection in the unfortunate event that a borrower ends up defaulting on their home loan. Most lenders require that you pay for PMI if you bring a down payment of less than 20% to the closing table. While you’ll need to pay private mortgage insurance if you have a lower down payment amount, you can request to cancel your PMI once you reach 20% equity in your home on a conventional loan. In reality, you can get a mortgage with as little as 1% down with a 2% equity grant from Rocket Mortgage®.1 Eliminating PMI from the start isn’t the only benefit to putting 20% down on your loan. Other advantages include: You can save thousands of dollars over time by reducing the amount of money you borrow and the interest you pay on the mortgage loan. Making a 20% down payment on a house can also come with a few downsides. The potential disadvantages of putting 20% down include: Consider your loan requirements, financial situation and individual preferences when deciding how much you need for a house down payment.Pros Of A 20% Down Payment
Cons Of A 20% Down Payment
The Bottom Line: The Average Down Payment On A House May Differ From Yours
As noted earlier, the typical down payment for first-time home buyers in America is about 6% of the purchase price. However, buying a home with as little as zero down is possible for USDA and VA borrowers, and others can put as little as 3% or 3.5% down. The down payment that’s right for you will depend on your individual circ*mstances and needs. When you’re ready to begin the home buying process, start your application online with Rocket Mortgage. We’ll help you understand the true cost of your mortgage and identify the best loan options for you. 1 Client will be required to pay a 1% down payment, with the ability to pay a maximum of 3%, and Rocket Mortgage will cover an additional 2% of the client’s purchase price as a down payment, or $2,000. Maximum grant amount is $7,000. Offer valid on primary residence, conventional loan products only. Maximum loan amount of $350,000. Cost of mortgage insurance premium passed through to client effective January 2, 2024. Offer valid only for home buyers when qualifying income is less than or equal to 80% area median income based on county where property is located.Not available with any other discounts or promotions and cannot be retroactively applied to previously closed loans or loans that have a locked rate. This is not a commitment to lend. Rocket Mortgage reserves the right to cancel/modify this offer at any time. Additional restrictions/conditions may apply.
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