Typical Down Payment on a House in the U.S.

Last Updated on September 18, 2024 by Luke Feldbrugge

A typical down payment on a house in the United States used to be a straightforward 20 percent. However, due to the soaring home prices today, a 20% down payment has become unattainable for many, especially first-time home buyers. Lenders have adapted to this shift and now offer more flexibility, with some government programs even featuring no down payment options for eligible individuals. Instead of feeling discouraged, consider the evolving world of down payments and explore alternative solutions.

First let’s get concrete and look at some real numbers:

The median down payment for a home, according to The National Association of Realtors, is 13 percent.
In terms of actual dollars, the median down payment was $26,000 at the end of 2021, as reported by ATTOM Insights.
On average, home buyers who saved for their down payment spent three years accumulating their down payment.
The average first-time homebuyer pays a 6% down payment.

These statistics do not tell the whole story, and they might not reflect your personal circumstances. There are various factors that can help you find an affordable down payment and make purchasing a new home feasible.

Average, Median and Typical Down Payment on a House: What’s the Difference?

People use these values interchangeably, but it’s good to know the difference. The typical down payment on a house refers to the value that is most commonly observed or representative in a dataset of home down payments. It provides a sense of what is considered the usual or normal down payment on a house within a given context. However, determining the typical value can be subjective and dependent on various factors.

The average is a useful measure for obtaining an overall understanding of the dataset. However, it can be heavily influenced by extreme values, or outliers, which can skew the result.

The median, on the other hand, is the middle value in a dataset when the values are arranged in ascending or descending order. By using the median, we can obtain a more reliable measure of the central tendency of the data.

In the context of a typical down payments on a house, the median down payment is often a more useful figure than the average down payment for home buyers.

Typical Down Payment on a House by Age

Age plays a role in determining the typical down payment on a house. Younger first-time buyers generally put down smaller amounts compared to older individuals or families. Recent statistics show that:

Buyers aged 23-31 have a median down payment of around 8%
Buyers aged 42-56 put down approximately 15%.

This disparity is understandable, as older home buyers often have a property to sell and can utilize the proceeds (equity) for their next home. These repeat buyers can afford a higher average home down payment.

If you want a further breakdown of age and down payments, see page 82 of the Home Buyers and Sellers Generational Trends Report from the National Association of Realtors.

Government-Backed Loans Can Help

Several government-backed loan programs exist to assist individuals and families with limited financial resources in achieving homeownership. It’s a good idea to research these programs because they offer reduced down payment requirements.

VA loans are reserved for armed forces personnel, military veterans, reserve members, and surviving spouses of service members killed in the line of duty. VA loans provide substantial benefits, such as:

These three benefits can drastically reduce your monthly payments.

USDA loans are part of a national program for purchasing homes in rural areas. This loan program also offers no down payment options. The U.S Department of Agriculture defines “rural” as a town with a population of fewer than 35,000 people, covering 97% of the United States. However, USDA loans have income limitations and are typically available to those with moderate or lower incomes.

FHA loans are for buyers seeking programs with a low down payment. These loans are insured by the Federal Housing Administration and cater to low to moderate-income earners with low credit scores. The FHA loan guarantee allows for a minimum down payment of 3.5% of the total home loan, making it an attractive option for those with lower credit scores who struggle to obtain loans from conventional lenders. FHA loans are not limited to first-time homebuyers; they are available to everyone.

Conventional Loan

Conventional loans are offered by most mortgage lenders. The Conventional 97 loans, however, can reduce the size of your down payment, because they only require 3% down for eligible homebuyers. There are four loan programs that are part of the Conventional 97:

Fannie Mae HomeReady Loans are for buyers with lower incomes who have a minimum credit score of at least 620 and who complete homebuyer counseling.
Fannie Mae 97% LTC Standard Loans help first-time homebuyers with credit scores of 620 or higher.
Freddie Mac Home Possible Loans are available for those with credit scores of 660 or higher, who live in underserved areas, or whose income is below a set limit.
Freddie Mac Home One Loans are for first-time homebuyers who enroll in and complete homebuyer education. These loans are available for single-unit homes that will be the primary residence for the homebuyer.

In certain cases, with a conventional mortgage, it may make sense to put a 20% down payment on a home if you can afford it. Hitting this mark has benefits such as avoiding private mortgage insurance (PMI), borrowing less and paying less in interest over time, and potentially securing a lower interest rate. PMI is an additional fee imposed when a buyer puts down less than 20% of the home purchase price. It helps protect the lender in case of default and can significantly increase your monthly mortgage payment.

Using a Gift with a Typical Down Payment on a House

Some home buyers receive gift funds from family or friends to contribute to their down payment. Whether this is possible depends on the mortgage lender’s policies, as there are guidelines and regulations surrounding gift money. You will need a letter documenting the gift and whatever else the lender asks for. If you want to fund the whole down payment amount with gift money, they typically ask for a full 20% down payment.

Earnest Money vs. Down Payment

It’s important to note that earnest money is distinct from the down payment. Earnest money is a deposit made by homebuyers to demonstrate their commitment to purchasing a property. It is typically a smaller amount, around 1-3% of the home’s purchase price, and is held in an escrow account until the transaction is finalized. Earnest money is often rolled into the down payment or closing costs but becomes available only at the end of the process.

Homes for Heroes can Provide Additional Savings

To navigate the complex world of down payments and mortgage loans, consider seeking assistance from Homes for Heroes. We connect community heroes, including military personnel, veterans, firefighters, educators, healthcare professionals, and law enforcement officers, with local real estate and mortgage specialists committed to assisting heroes with home buying, selling or mortgage needs. After closing with our specialists, Homes for Heroes offers you Hero Rewards® savings, averaging $3,000 if you buy or sell a home, or $6,000 if you do both. That money can be used on your home or anything else as needed. It’s our way to say thank you for your service. Sign up today to speak with a member of our team, and they will get you started down the best path for your needs.

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