How Big of a Down Payment Do You Need to Buy a Home?

When thinking about buying a home, the biggest roadblock for most buyers is the down payment. How large of a down payment do you need? The answer is it depends on the loan, the lender, and your priorities. But don’t worry! The size of your home down payment may not be as big as you think. 

So let’s talk about what a down payment is and how much you’ll need.

What is a down payment?

A down payment is the amount of money you pay upfront to purchase a house and is a percentage of the purchase price. The rest of the purchase is paid for with your home mortgage.

For example, you’re purchasing a $300,000 home. A 10% down payment would be $30,000, and your loan would then be for the remaining $270,000.

What is the minimum down payment for a house?

The minimum down payment varies depending on the type of home loan. Here is a quick breakdown of various down payment minimums:

  • 0% for VA and USDA loans
  • As low as 3% for some conventional loans like HomeReady or Home Possible
  • As low as 3.5% for FHA loans (but this depends on your credit score)
  • As low as 5% for other conventional loans (but it depends on the lender)

What is the average down payment on a house?

The average down payment on a home in 2021 was 7% for first-time home buyers and 17% for repeat buyers according to the National Association of Realtors. In 2022, the median down payment was 13% of first-time and repeat home buyers.

Do I have to put down 20% for a house? Is 10% enough?

No, you don’t have to put 20% down on a home. As mentioned above, there are plenty of mortgage options available that only require a down payment of 5% or less. So 10% is a fine down payment, especially for first-time home buyers.

The reason a 20% down payment is often mentioned is that lenders will require you to purchase private mortgage insurance (PMI) for down payments less than 20%. But you can cancel the PMI once you have 20% equity in your home.

How much down payment should I put down for a $100k home? $500k home?

The amount of your down payment depends on your loan. Here are a few scenarios:

  • You’re purchasing a $100,000 home with an FHA loan that requires a 3.5% down payment. This means you’ll need $3,500 down. 
  • If you’re looking at a $500,000 home with an FHA loan that requires a 3.5% down payment, you’ll need $17,500.
  • If you have a conventional loan that requires a 5% down payment for a $100,000 home, you’ll need a $5,000 down payment.
  • For a $500,000 home and a loan that requires 5% down, you’ll need $25,000.

How much down payment should I put down?

How much down payment you put down depends on several factors: your goals and financial situation. A big down payment has its benefits. The larger the down payment, the less you have to borrow and the more equity you’ll have in your home.

But keep in mind you’ll need money for closing costs, moving expenses, and (possible) repair or decorating costs. You don’t want to leave yourself cash-poor after the purchase of your new home. So putting all of your cash into a down payment may not make the most financial sense for you. 

When considering how much of a down payment you can afford, get out your calculator (or use a mortgage calculator) and try out different scenarios to see what fits and how much you’ll be paying each month. There is no one size fits all answer – and what works for you will be as unique as your new home!

Need help? Let us know, and we’ll get you to the right people.

 Your Team at Liberty Title Company of America

Compare listings