How Much Is a Down Payment on a House?

Updated: Apr 19

How much you’re required to put down on a house is determined by the type of loan you get, but it generally ranges from 3% to 20% of the purchase price of the home. Beyond lender requirements, it can be financially beneficial to increase your down payment to reduce the amount of your monthly mortgage payment. Offers with larger down payments can be more appealing to home sellers who are looking for buyers with a low risk of financing issues that could delay the sale – or worse, have it fall through.

What is a down payment on a house?

The down payment on a house is a portion of the cost of a home that’s paid in cash. The balance of the purchase price is usually paid by a loan you secure from a lender and pay back in a monthly mortgage payment. Down payments are expressed as a percentage of the total purchase price and the percentage you’re required to pay is dictated by the terms of your loan. Note that not all home buyers with financing are required to produce a down payment.

How much to put down on a house?

The ideal down payment amount is 20% of the purchase price of the home. Paying 20% up front reduces your monthly mortgage payments, can eliminate costly private mortgage insurance (PMI), can reduce interest rates and improves the competitive nature of your offer.

When trying to decide how much you should put down on a home, play around with a mortgage calculator to determine an amount that works best for your finances. As you explore, remember that in addition to your down payment, you’ll have some other up-front costs you’ll need to pay at closing, collectively called your escrow funds. It can include your closing costs, prorated taxes, title fees and more.

20% down reduces mortgage payment

The more money you pay upfront, the less you have to borrow from the lender, and the lower your monthly payment will be.

Example: Let’s say you buy a $300,000 home at a fixed rate of 4.25%.

  • With a 20% down payment ($60,000), you’d borrow $240,000, and your monthly payment would be $1,548.

  • With a 5% down payment ($15,000), you’d borrow $285,000, and your monthly payment would be $1,950.

20% down eliminates private mortgage insurance (PMI)

When you put 20% down, that means you own 20% of your home. This allows you to avoid paying PMI, which is a monthly charge that’s rolled into your mortgage payment to protect the lender from what they see as a riskier loan.

Example: If you buy the same $300,000 home noted above, with 5% down, your PMI payments each month would be $181 until you own 20% of the home and refinance into a loan without PMI.

Example of the benefits of putting 20% down on a $300,000 home purchase with a 4.25% interest rate on a 30-year fixed mortgage.

20% down improves mortgage rates

Buyers purchasing with a 20% down payment can often get better interest rates. A higher down payment is considered a sign that you’re financially stable, and thus a less risky borrower in the eyes of your lender. Overall, your risk is determined by three key factors: your debt-to-income ratio, your credit score and your loan-to-value ratio. The more money you put down as part of your down payment, the stronger your loan-to-value ratio.

For example, if you borrow $240,000 on a home that’s worth $300,000, like our example above, you have a loan-to-value (LTV) ratio of 80%, or $240,000 divided by $300,000. The lower the percentage, the better.

20% down makes your offer more appealing to the seller

In a competitive market, a larger down payment can make your offer more appealing to a seller, as they feel confident that you won’t have financing issues at closing that could cause the sale to fail.

What is the average down payment on a house?

The typical down payment on a mortgaged home in 2019 was 10-19% of the purchase price of the home. While 20% is the traditional down payment amount, 56% of buyers put down less than 20%, according to the Zillow Group Consumer Housing Trends Report 2019.

Here’s a breakdown of down payment percentages from buyers who purchased homes with a mortgage in 2019:

  • 20% of buyers have a down payment of more than 20%

  • 19% of buyers have a down payment of 20%

  • 21% of buyers have a down payment of 10-19%

  • 9% of buyers have a down payment of 6-9%