The most common down payment is 20 percent of the home's price, but many buyers put down less

A down payment is the money you give the seller at closing — the percentage of the home's total price that comes from your own savings rather than from a loan. If a house costs $300,000 and you put down $60,000, that is a 20 percent down payment. The remaining $240,000 comes from your mortgage.

Twenty percent is the amount lenders prefer because it means you have real money at stake and the bank's risk is lower. But "preferred" does not mean "required". Most first-time buyers put down between 3 and 10 percent. Some put down 15 percent. A few put down 25 or 30 percent. The range exists because different loan types allow different minimums, and your own savings determine what is realistic.

The down payment you choose affects three things: how much you borrow, how much interest you pay over the life of the loan, and whether you will owe mortgage insurance — an extra monthly fee that protects the lender if you stop paying. Understanding what is normal helps you see what is possible for your situation.

Key Takeaways

  • Twenty percent down is what lenders prefer, but conventional loans allow as little as 3 percent, and government-backed loans allow as little as 3 to 3.5 percent.
  • If you put down less than 20 percent, you will pay mortgage insurance on top of your regular monthly payment, which adds hundreds of dollars per year.
  • A smaller down payment means a larger loan and more interest paid over time, but it also means you can buy sooner with less savings.
  • The down payment you choose is a trade-off between how much cash you have now and how much you will pay in interest and insurance later.

How down payment size varies by loan type

Different types of mortgages have different minimum down payments. A conventional loan — the most common type, not backed by the government — typically requires 3 to 5 percent down, though some lenders ask for more. An FHA loan, backed by the Federal Housing Administration, allows 3.5 percent down. A VA loan, for military members and veterans, often requires zero down. A USDA loan, for rural areas, also often requires zero down.

The loan type you can use depends on your situation: whether you are a first-time buyer, whether you are a veteran, whether the home is in a rural area, and what your credit score and income look like. Your mortgage lender can tell you which types you may have access to for, and that determines your minimum down payment range.

Even within one loan type, different lenders set different minimums. A bank might require 5 percent while a credit union requires 3 percent for the same loan type. Shopping around matters because the difference between 3 and 5 percent is thousands of dollars on a $300,000 home.

What happens to your monthly payment when you put down less

The smaller your down payment, the larger your loan, and the larger your monthly mortgage payment. If you put down 20 percent on a $300,000 house, you borrow $240,000. If you put down 5 percent, you borrow $285,000. That extra $45,000 borrowed means a higher monthly payment for 30 years.

But there is another cost: mortgage insurance. If you put down less than 20 percent on a conventional loan, or less than 10 percent on an FHA loan, the lender requires you to pay mortgage insurance every month. This is not homeowners insurance — it is insurance that protects the lender, not you. On a $285,000 loan with 5 percent down, mortgage insurance might add $150 to $300 per month, depending on your credit score and the exact loan terms.

Mortgage insurance stays on your loan until you have paid down the balance to 80 percent of the home's original value. On a 30-year loan, that can take 10 to 15 years. Some loans allow you to remove it sooner if your home value rises and you request it, but you cannot count on that.

The trade-off between saving now and paying later

Putting down 20 percent means you need more savings before you buy, but you save money over time. Putting down 5 percent means you can buy sooner with less cash, but you pay more in interest and insurance. Neither choice is wrong — it depends on your situation.

If you have been saving for years and have 20 percent ready, putting it down makes financial sense: you avoid mortgage insurance, you borrow less, and you pay less interest. If you have found a home you want to buy and you have 5 percent saved but not 20 percent, putting down 5 percent lets you buy now instead of waiting three more years to save. The mortgage insurance is a cost of buying sooner.

Some buyers split the difference: they put down 10 or 15 percent, which reduces but does not eliminate mortgage insurance. This is common when someone has saved a meaningful amount but not quite 20 percent.

How much down payment is actually typical right now

The median down payment — the middle point where half of buyers put down more and half put down less — varies by year and by region. In recent years, first-time buyers have typically put down between 6 and 10 percent. Repeat buyers, who often have more savings and home equity from a previous sale, often put down 15 to 25 percent.

The reason most first-time buyers do not put down 20 percent is straightforward: saving that much takes years. On a $300,000 home, 20 percent is $60,000. For someone earning $50,000 a year and paying rent, saving $60,000 while covering living expenses is difficult. Putting down 5 or 10 percent and buying sooner is the choice most people make.

This does not mean 20 percent is out of reach — it means it is not the typical path for someone buying their first home. If you have the savings, it is a smart move. If you do not, a smaller down payment is how most buyers actually enter the market.

What lenders look at besides your down payment amount

Your down payment is only one part of what a lender considers. They also look at your credit score (your history of paying bills on time), your debt-to-income ratio (how much you already owe compared to what you earn), and your employment history. A larger down payment can sometimes offset a lower credit score, but it cannot make up for unstable income or very high existing debt.

Lenders also verify that you have saved the down payment yourself — they want to see bank statements showing the money has been in your account for a certain period, usually two months. If someone gave you the money as a gift, you will need a gift letter stating it does not have to be repaid. This is not about whether you deserve the money; it is about whether you have the financial stability to handle a mortgage.

Frequently Asked Questions

Is 10 percent down considered a good down payment?

Ten percent is solid for a first-time buyer and is more common than 20 percent. You will still pay mortgage insurance, but less than you would with 5 percent. It is a reasonable middle ground if you have saved that much but not 20 percent.

Can I borrow money from family for my down payment?

Yes, but the lender needs to know it is a gift, not a loan you have to repay. You will need a signed gift letter from the family member stating the amount, that it is a gift, and that they expect nothing in return. Some lenders have specific forms they require.

What if I only have 3 percent saved?

You can still buy with a conventional loan or FHA loan that allows 3 to 3.5 percent down. You will pay mortgage insurance, and your monthly payment will be higher, but you can move forward. Talk to a lender about which loan types you may have access to for.

Does putting down more than 20 percent save me money?

Yes, because you borrow less and pay less interest over time. But the difference between 20 and 25 percent is smaller than the difference between 5 and 20 percent. If you have extra savings, putting down more helps, but do not drain your emergency fund to do it.

Can I remove mortgage insurance once I have paid enough of my loan?

On conventional loans, yes — once your loan balance reaches 80 percent of the home's original purchase price, you can request removal. On FHA loans, mortgage insurance stays for the full loan term unless you put down 10 percent or more initially. Ask your lender about the specific rules for your loan type.