Skip to main content Skip to main content

How Much Do I Need as a Down Payment on a House?

Happy couple new homeowners shaking hands with real estate agent

How Much Do I Need as a Down Payment on a House?

Buying a house, particularly if you’re a first-time buyer, is a confusing process. Between seemingly endless legal jargon and back-and-forth meetings with attorneys, realtors, and banks, it’s usually pretty easy to lose track of what you need to do and when.

With that in mind, take a seat and join us as we get to the heart of house down payments, why they’re necessary, and how much you should save.

What is a Down Payment on a House?

A down payment is a chunk of money that you put down in cash when you’re buying a house. It’s not literal cash, but rather, it’s the amount of money you’re expected to have available before financing. You’ll usually see down payments written as a portion of the total price, usually within the terms and conditions of your loan or mortgage.

How Much Should I Put Down on a House?

When you consider your down payment, remember that the more you can put down here, the less money you’ll need to borrow. And, if you borrow less, you can pay it off quicker, pay less in interest, and get more competitive deals from various lenders.

We recommend aiming for 20% of the purchase price as a down payment. Both because it reduces the cost of having a loan, and also because it eliminates private mortgage insurance or PMI.

PMI is a monthly cost that many mortgage providers roll into your monthly payments on riskier loans. Typically, the lower your down payment is as a percentage of the purchase price, the more likely you are to pay PMI. Once you’ve paid off enough to own 20% of your house, you’ll also have to refinance it to stop paying PMI.

In addition, offering a 20% down payment makes you far more attractive as a buyer. With this chunk of money available, sellers are more confident to take your offer as you’re less likely to have financing issues that could cost the sale.

Average Down Payments

According to Zillow, most buyers offer down payments of at least 10%, with 39% of buyers having 20% of the purchase price or more available as a down payment.

As you might expect, older generations are more likely to front 20% down payments and above than Millennial or Gen Z buyers.

Minimum Down Payments

It’s also worth remembering that some house loans are only available if you can meet a minimum down payment. Usually, you’ll be expected to have a down payment of at least 3%-3.5%.

0% down payment mortgages are available, but they’re rare and often more expensive than if you had a down payment. Veterans, disabled people, health care workers, and educators can often qualify for these programs if they’re first-time buyers or haven’t owned a home for three years.

How to Save for a Down Payment as a First-Time Buyer

Fortunately, saving for a down payment doesn’t have to mean giving up on all of your hobbies or interests. Here are some easy ways to save money for your down payment:

Family and Friends

34% of mortgage buyers use gifted money as part of their down payment. However, if you go down this route, you need to remember that many lenders have specific rules about how much-gifted money you can use and where the money came from.

Spend Less

By taking one less vacation a year, learning to cook at home, or giving up cable TV, you can save a good amount of money you can add to your down payment. Some banks even offer savings assistance where they round up purchases to the nearest dollar and deposit the difference into a savings account, helping you to save money without thinking about it.

Start a Side Hustle

If you’ve got a creative hobby like knitting, crochet, painting, or jewelry making, you can easily earn some cash on the side by selling your crafts on Etsy, eBay, or at local craft fairs. This can be a great way to earn an extra income that you can funnel straight into your down payment fund.

House Down Payments: In Summary

All down payments are a chunk of money you use to pay for your house upfront. If you can afford to front a 20% down payment or higher, you’re likely to get more competitive offers from lenders, a cheaper mortgage, and lower interest rates.

It might take more time to save up for a higher down payment, but having this extra cash will save you a lot of financial struggles when you can finally purchase your dream home.

We are here to help. No matter where you happen to be on your homebuying journey, contact one of our locations near you for a free, no-obligation consultation to explore your options.


Client testimonials.

Request a call.