What is the Standard Down Payment on a House?

Photo by Realtor.com

We get asked this question a lot – how much do I need to put down on a house? Most people think it’s 20% of a home’s selling price. But this realtor.com article shares that this 20% figure is common, but not set in stone.

According to a new report by realtor.com, the median down payment on a house was only 13% of the sales price in the first 3 months of 2023. And that data represents ALL home buyers, not just first-time home buyers. If you just look at first-time home buyers, the median down payment was 6% of the sales price.

While it is beneficial to put down 20% or more, there are pros and cons to putting down different amounts of money.

Down Payment UNDER 20%
-FHA loans: Federal Housing Authority (FHA) offers mortgages with as little as 3.5% down, if your annual income is under a certain amount that varies by market.
-USDA loans: U.S. Department of Agriculture will allow you to put 0% down on eligible homes, usually in rural areas (Lafayette county IS a rural area). And your income must meet certain low requirements.
-VA loans: Veterans can put $0 down. (And on average, 20% of homebuyers are veterans).
Even though you are putting down less money, remember your loan will actually be higher, which means you will be paying more interest and private mortgage insurance, which can add several hundred dollars a month to your house payments. Also, you will generally get a less favorable interest rate.

Down Payment IS 20%
-You will ultimately be paying less in the end for the purchase.
-You will not have to pay private mortgage insurance.
-You will get a more favorable interest rate because 20% is the magic number for many lenders.

Down Payment MORE than 20%
-Your payment will be lower and you will pay less interest.
-People with a credit score below 620 will have to put down more than 20% to qualify for a loan.