Introduction
Down payments are one of the most discussed—and misunderstood—elements of the U.S. homebuying process. Popular narratives often suggest that buyers must put down 20% to purchase a home, but public data shows that actual down payment amounts are often much lower, particularly for first-time buyers.
According to research published by the National Association of Realtors (NAR), the median down payment for first-time homebuyers is approximately 6–7%, while repeat buyers typically put down around 15–18%. These figures vary significantly by household income, market conditions, loan programs, and regional price levels.
This article provides a neutral, educational, U.S.-specific overview of down payments: what buyers actually put down, how down payment amounts vary, and why the concept matters beyond the headline percentage. It does not provide advice, recommendations, inducements, or eligibility guidance.
What a Down Payment Is (U.S. Context)
A down payment is the portion of a home’s purchase price paid upfront by the buyer using their own funds. The remaining amount is typically financed through a mortgage.
In U.S. housing finance:
- Down payments reduce the loan amount
- They affect loan-to-value (LTV) ratios
- They influence mortgage insurance requirements and risk assessment
Down payment requirements are not uniform and depend on lender policies, loan programs, and regulatory frameworks.
The 20% Myth: What the Data Actually Shows
NAR Buyer Profile Data
NAR’s annual Profile of Home Buyers and Sellers consistently reports that:
- First-time buyers: median down payment ~6–7%
- Repeat buyers: median down payment ~15–18%
- Only a minority of buyers put down exactly 20%
This data reflects completed transactions across diverse U.S. markets.
Why the 20% Figure Persists
The 20% figure is often cited because:
- It historically avoided private mortgage insurance (PMI) on conventional loans
- It represented a conservative lending benchmark in past decades
However, modern mortgage markets offer multiple structures that accommodate lower down payments.
Down Payments by Buyer Type
First-Time Buyers
According to NAR and Census data:
- First-time buyers are typically younger
- They have lower accumulated savings
- They rely more heavily on mortgage financing
As a result, first-time buyers tend to put down smaller percentages.
Repeat Buyers
Repeat buyers often:
- Use equity from prior homes
- Have higher incomes
- Accumulate savings over longer periods
This explains their higher median down payments.
Down Payments by Loan Type (High-Level Overview)
Publicly available CFPB and HUD materials describe general characteristics of common loan categories:
- Conventional loans: flexible down payment structures depending on lender and borrower profile
- FHA-insured loans: designed to support lower down payments (subject to eligibility)
- VA-guaranteed loans: may allow no down payment for eligible borrowers
- USDA loans: may allow low or no down payments in qualifying areas
This article does not describe eligibility requirements or promote any loan program.
Regional Variation in Down Payments
Impact of Home Prices
According to Zillow:
- Median home prices vary dramatically across U.S. metros
- Higher prices often translate into larger dollar down payments, even if percentages are similar
For example:
- 5% of a $300,000 home = $15,000
- 5% of a $700,000 home = $35,000
This illustrates why affordability discussions must consider dollar amounts, not just percentages.
Local Market Conditions
In competitive markets:
- Buyers may put down more to strengthen offers
- Sellers may prefer offers with higher upfront equity
However, this behavior varies widely and is not uniform across markets.
Down Payments and Mortgage Insurance
Private Mortgage Insurance (PMI)
In conventional lending:
- PMI is typically required when down payments are below 20%
- PMI protects the lender, not the borrower
According to CFPB data:
- PMI costs vary based on loan amount, LTV, and credit profile
- PMI can materially affect monthly payments
PMI may be cancellable under certain conditions, subject to law and loan terms.
Government-Backed Insurance
Some loan structures include insurance or guarantees that operate differently from PMI. These structures are governed by federal program rules and lender overlays.
Sources of Down Payment Funds
NAR buyer surveys show that common down payment sources include:
- Personal savings
- Proceeds from home sales (repeat buyers)
- Gifts from family members
- Grants or assistance programs (where applicable)
The mix of sources varies significantly by buyer profile and region.
Down Payment Assistance Programs (High-Level Context)
According to U.S. Department of Housing and Urban Development (HUD):
- Thousands of state and local programs exist nationwide
- Programs differ in structure, eligibility, and funding availability
This article does not describe or recommend specific programs.
Down Payments vs. Closing Costs
A common misunderstanding is conflating:
- Down payments (equity contribution)
- Closing costs (fees and prepaids)
CFPB data shows:
- Median closing costs (excluding down payment) around $5,954
- These costs are paid in addition to the down payment
Separating these categories is essential for understanding total upfront cash needs.
Down Payments and Long-Term Ownership
Equity and Leverage
Down payments affect:
- Initial equity position
- Loan balance
- Sensitivity to price changes
Higher leverage (lower down payment) increases exposure to:
- Market volatility
- Transaction timing risk
Lower leverage reduces risk but requires more upfront capital.
Psychological and Behavioral Factors
Housing research indicates that:
- Larger down payments can increase perceived financial security
- Smaller down payments increase liquidity but reduce initial equity
Household preferences vary based on risk tolerance and financial flexibility.
Why Down Payments Are Often Misunderstood
Public research highlights several reasons:
- Oversimplified online narratives
- Historical benchmarks that no longer reflect typical behavior
- Confusion between underwriting requirements and best practices
Education helps clarify—but does not standardize—down payment expectations.
Summary: A U.S. Data-Based Perspective
From a U.S. consumer education standpoint:
- Most buyers do not put down 20%
- Down payment amounts vary widely by buyer type and market
- Percentages and dollar amounts both matter
- Down payments interact with insurance, leverage, and liquidity
- No single down payment level defines affordability or success
Understanding real-world down payment data helps contextualize one of the most important components of homebuying.
Author Information
Written by:
Asim Iftikhar — Real Estate Contributor, ACT Global Media
Editorial Disclosure
This article is provided for general informational purposes only and does not constitute real estate, mortgage, financial, legal, or tax advice.
Regulatory Notice
Down payment requirements, loan terms, and housing costs vary by lender, program, location, and individual circumstances. Information is based on publicly available U.S. sources
