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Down Payment Requirements for Mortgage

What is the Average Down Payment On A House In 2022?

What Is The Average Down Payment On A House in 2022?

You’ve probably been told that the average down payment on a house is 20%. Perhaps you think that a 20% down payment is a requirement. But is that true?

Nope.

And that misconception is a problem because in a world where the average selling price of a home is $331,533 (as of March 2022), coming up with $66,306.60, (20% of $331,533), is simply impossible.

My guess is that buying a home might be more of a possibility if you knew that:

The Average Down Payment On A House Is 12%

Oh, that makes a difference. So now, instead of $66,306, you only have to come up with $39,784.

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Still too high? How about this interesting fact:

The Average First-Time Home Buyer’s Down Payment Is 6%

Cool. That will save us a bunch. Now we only have to come up with $19,892 for the down payment on our first home.

But wait, there’s more! (I can’t believe I just said that! 🙂 )

You May Only Have to Pay 3.5% Down Payment, Or Maybe Even 0%!

Depending on your credit score, the type of loan you are applying for, and your lender’s requirement, your required down payment could be significantly less than 20% and could be as low as 0%!

Here are the facts about down payments.

Minimum Down Payment Requirements For Your Primary Home

(Note: your primary home is defined as the place where you live most of the time, whether it’s a house, a condo, or a townhouse doesn’t matter.)

Most lenders tie their minimum down payment requirements to your credit score: they assume that people with higher credit scores are less likely to default on their mortgage. (It’s always important to build and maintain a high credit score.) And the opposite is also true – the lower your credit score the more money they will probably ask you to put down as a minimum down payment.

  • Conventional loan down payments may be decided by the automated underwriting system. For most borrowers with a credit score of 620,  a 5% down payment is required.  Both Fannie Mae and Freddie Mac also offer programs that allow as low as 3% if you meet specific low-to-moderate income guidelines.
  • FHA Loans require a minimum down payment of 3.5% (if your credit score is 580 or higher.) If your credit score is between 500 and 579, FHA requires a 10% down payment.
  • VA Loans don’t require a down payment at all if you qualify based on your discharge reason and length of service. (See more information here on VA loan requirements for service members and their spouses.)
  • USDA Loans also don’t require a down payment if you qualify for a USDA Loan based on the location of your home and income requirements. 

Minimum down payment requirements for a secondary home or investment property are listed below. 

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What’s The Right Down Payment For Your Situation?

Unfortunately, the minimum down payment requirements for each type of loan doesn’t answer the question of what is the right down payment you should put down on your home.

The simple answer to this question: it is usually best for you to put down as much as you can reasonably afford, with a 20% down payment being ideal.

The Pros Of A 20% Down Payment

The biggest reason for initially making, or getting to a 20% down payment as soon as possible is the elimination of PMI insurance.

Higher Down Payments Equal Elimination of PMI Insurance

PMI Insurance (Private Mortgage Insurance) isn’t what it sounds like. Private Mortgage Insurance doesn’t protect you at all. Private mortgage insurance is an insurance policy that mortgage lenders force you to take out that gives them extra protection in case you default on your loan. 

In general, PMI will cost you between 0.5% and 1.5% of your loan amount each year. That cost is divided by 12 and added to your monthly payment.

So, for a $250,000 loan, you should expect to pay between $104 and $312 in private mortgage insurance fees extra in every monthly payment until the policy is canceled. That’s money that could be going towards payment on your principal or you could reduce your monthly house payment by that amount.

And you’ll keep paying that PMI premium until you reach 20% equity in your home and the policy is canceled.

The one bright side of PMI is that you have to have 20% equity in your home to be able to remove it from your monthly payments. You can achieve that by 

  1. Paying an initial down payment of 20% or greater
  2. Making house payments that increase your principal to 20% or greater
  3. Having house price inflation increase the value of your home so your equity (the value of your home less the amount you still owe on your loan) is greater than 20%.
  4. Or any combination of the above

That third point is key. If you are still paying PMI as part of your house payment, have owned your home for several years, and the value of your home has increased, you probably should call your mortgage lender and ask for them to reevaluate your current equity to see if those PMI payments can be removed. You may have to pay for a reappraisal of your property ($300 – $500) or a broker-price opinion, but those can be well worth it if you can remove thousands of dollars of costs from your mortgage payments each year.

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Higher Down Payments Equal Lower Monthly Payments

Mortgage lenders are always concerned about the probability that people will default (stop paying) on their mortgage, leaving them with the prospect of having to kick someone out of their home, and having to resell that house, perhaps at a loss.

Their experience shows that the higher the down payment people make on their mortgage, the lower the probability that they will default on that loan.

So, they’ll generally be willing to give you a lower interest rate for a higher down payment.

That lower interest rate will mean lower house payments every single month for up to 30 years, and that’s a very good thing! (And a very good reason for making a higher down payment if you can.)

Higher Down Payments Can Give You A Competitive Advantage Over Other Potential Buyers

Picture yourself as the seller of a home. You have two offers sitting on the kitchen table in front of you. Everything else is equal, but one is offering a 20% down payment, the other is offering a 5% down payment. Which would you choose?

Savvy sellers recognize that the person with a 20% down payment is more likely to have their finances in order, so they’re more likely to get their loan approved, and they would tend to select that offer over the other.

Another reason why higher down payments can work in your favor.

The Cons Of A 20% Down Payment

Most decisions have both pros and cons, including making a 20% down payment.

Lower Down Payments Mean You Get Into Your Home Sooner

So you stop paying rent, you begin to build up principal in your own home, and you get to enjoy the benefits of house price inflation rather than suffering from it.

Lower Down Payments Increase Your Financial Risk

Everyone should have a cash reserve to pay bills in case of an emergency. Once you’ve paid a down payment, it’s tough to get that money back. This should be considered as you buy your home.

Lower Down Payments Mean Less Money To Make Repairs And Improvements

Fixer-uppers can be a great value in the real estate market. But, the more money you pay as a down payment, the less you have to make those repairs and improvements. Many fixer-uppers take years to get into shape because the buyer didn’t reserve enough cash to make the repairs needed.

Is It Possible To Buy A House With No Money Down?

Short answer: yes! If you are able to qualify for a VA loan or a USDA loan, you may be able to buy a home with no money down. 

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Be aware that you will need to fit all their qualifications and make higher payments each month, but it is possible.


Average Down Payments By State 2022

Looking to find out the average down payments for your state? Here’s how much you can expect to pay based on the selling price of the average home in your state during the first few months of 2022.

Average Down Payments By State – 2022
As % of Median Home Value
State Median Home Value Median Down Payment % Of Median Home Value 20%: Recommended Down Payment 12%: (National Average) Down Payment 6%: (Average First-Time Buyer) Down Payment
Alabama $142,700 $14,441 10.1% $28,540 $17,124 $8,562
Alaska $270,400 $16,035 5.9% $54,080 $32,448 $16,224
Arizona $225,500 $59,000 26.2% $45,100 $27,060 $13,530
Arkansas $127,800 $14,000 11.0% $25,560 $15,336 $7,668
California $505,000 $103,000 20.4% $101,000 $60,600 $30,300
Colorado $343,300 $83,014 24.2% $68,660 $41,196 $20,598
Connecticut $275,400 $32,679 11.9% $55,080 $33,048 $16,524
Delaware $251,100 $48,300 19.2% $50,220 $30,132 $15,066
Florida $215,300 $50,000 23.2% $43,060 $25,836 $12,918
Georgia $176,000 $21,880 12.4% $35,200 $21,120 $10,560
Hawaii $615,300 $82,135 13.3% $123,060 $73,836 $36,918
Idaho $212,300 $94,000 44.3% $42,460 $25,476 $12,738
Illinois $194,500 $26,457 13.6% $38,900 $23,340 $11,670
Indiana $141,700 $17,000 12.0% $28,340 $17,004 $8,502
Iowa $147,800 $23,500 15.9% $29,560 $17,736 $8,868
Kansas $151,900 $19,190 12.6% $30,380 $18,228 $9,114
Kentucky $141,000 $13,500 9.6% $28,200 $16,920 $8,460
Louisiana $163,100 $8,670 5.3% $32,620 $19,572 $9,786
Maine $190,400 $35,000 18.4% $38,080 $22,848 $11,424
Maryland $314,800 $25,000 7.9% $62,960 $37,776 $18,888
Massachusetts $381,600 $77,500 20.3% $76,320 $45,792 $22,896
Michigan $154,900 $19,000 12.3% $30,980 $18,588 $9,294
Minnesota $223,900 $38,000 17.0% $44,780 $26,868 $13,434
Mississippi $119,000 $6,982 5.9% $23,800 $14,280 $7,140
Missouri $157,200 $15,600 9.9% $31,440 $18,864 $9,432
Montana $230,600 $69,975 30.3% $46,120 $27,672 $13,836
Nebraska $155,800 $23,650 15.2% $31,160 $18,696 $9,348
Nevada $267,900 $50,000 18.7% $53,580 $32,148 $16,074
New Hampshire $261,700 $63,000 24.1% $52,340 $31,404 $15,702
New Jersey $335,600 $60,200 17.9% $67,120 $40,272 $20,136
New Mexico $171,400 $23,399 13.7% $34,280 $20,568 $10,284
New York $313,700 $55,200 17.6% $62,740 $37,644 $18,822
North Carolina $172,500 $32,890 19.1% $34,500 $20,700 $10,350
North Dakota $193,900 $20,000 10.3% $38,780 $23,268 $11,634
Ohio $145,700 $17,775 12.2% $29,140 $17,484 $8,742
Oklahoma $136,800 $16,400 12.0% $27,360 $16,416 $8,208
Oregon $312,200 $65,375 20.9% $62,440 $37,464 $18,732
Pennsylvania $180,200 $24,000 13.3% $36,040 $21,624 $10,812
Rhode Island $261,900 $45,000 17.2% $52,380 $31,428 $15,714
South Carolina $162,300 $26,000 16.0% $32,460 $19,476 $9,738
South Dakota $167,100 $29,725 17.8% $33,420 $20,052 $10,026
Tennessee $167,200 $33,250 19.9% $33,440 $20,064 $10,032
Texas $172,500 $31,750 18.4% $34,500 $20,700 $10,350
Utah $279,100 $75,000 26.9% $55,820 $33,492 $16,746
Vermont $227,700 $47,000 20.6% $45,540 $27,324 $13,662
Virginia $273,100 $29,000 10.6% $54,620 $32,772 $16,386
Washington $339,000 $77,800 22.9% $67,800 $40,680 $20,340
West Virginia $119,600 $7,000 5.9% $23,920 $14,352 $7,176
Wisconsin $180,600 $25,000 13.8% $36,120 $21,672 $10,836

Don’t Forget Closing Costs

As you’re doing all of your financial calculations, don’t forget closing costs. Closing costs, the costs for all of the services provided in the process of approving and finalizing your loan, usually range from 3 – 6% of the price of your home. These costs will need to be paid at the time of closing of your loan, rolled into your loan (so they’re included in the loan amount) or some combination of the above. 

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How does this affect your down payment? If you’re putting every penny of your savings into your down payment you could have a problem paying your closing costs. You should discuss this with your lender as you go through the process of applying for your loan.

Are There Programs That Can Help Me Get A Down Payment?

Yes, depending on your income level and situation, there may be special programs in your state or community that can help you with your initial down payment (usually for first-time homebuyers.) Click here for more downpayment assistance information.

Minimum Down Payment Requirements For A Secondary Home

Secondary homes or residences are defined as a property you live in for part of the year, like a cabin or vacation home. Mortgage lenders require a higher minimum down payment on secondary homes because their experience shows that in times of financial hardship, people are more likely to default on their cabin or vacation home mortgages than they are on their primary home. They will also place specific requirements on that loan, for example, they won’t allow you to rent it out for more than 180 days in a year.

Conventional Loans will require a larger down payment for secondary homes, usually 10% or higher. 

FHA, VA and USDA loans cannot be used for secondary homes.

Minimum Down Payment Requirements For An Investment Property

Investment properties are homes, cabins, land, apartments, business buildings, etc. that you purchase for the primary purpose of making money from those properties. That income could come through rental and/or future resale. 

Mortgage lenders place the strictest loan conditions (including minimum down payment requirements) on these loans because these loans are defaulted upon much more frequently than primary or secondary residences.

Conventional loans will usually require a 20-25% minimum down payment on an investment property. Though if you may be able to negotiate a 15% down payment if your credit score is over 720.

FHA, VA, and USDA loans cannot be used for investment properties. 

The Bottom Line On Down Payments

All is not lost if you don’t have a 20% down payment available to purchase a home. The typical down payment is 12%, 6% for first-time home buyers. And there are options available through government-guaranteed loan programs like the FHA to get loans as low as a 3.5% down payment or even 0% through the VA or USDA if you qualify for their loan programs.

Talk with your lender to see what options are available to you.

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Have Questions About Your Down Payment Or Other Mortgage Issues?

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About the Author

Scott Schang

A 20+ year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues and making sense of complicated real estate and mortgage topics on this website since 2007

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