Introduction
Down payments are often one of the most misunderstood aspects of buying a home in the United States. Many buyers assume that a 20% down payment is required, yet national housing data consistently shows that most buyers put down far less.
According to the National Association of Realtors (NAR), the median down payment for first-time buyers is approximately 6%, while repeat buyers typically put down around 17%. These figures reflect how down payments vary significantly based on buyer experience, loan type, and broader housing market conditions.
This article provides an educational overview of how down payments commonly work in the U.S., what buyers typically contribute upfront, and why required amounts differ across mortgage programs.
What a Down Payment Represents in the U.S.
A down payment is the portion of a home’s purchase price paid upfront by the buyer, separate from the mortgage loan. It represents the buyer’s initial equity stake in the property and plays a role in how a loan is structured.
Down payments influence:
- Loan-to-value (LTV) ratios
- Mortgage insurance requirements
- Interest rate pricing frameworks
- Cash needed at closing
Down payments are expressed as percentages, but actual dollar amounts depend on home price and financing structure.
What Most Buyers Actually Put Down (U.S. Data)
NAR survey data shows clear differences between buyer groups:
- First-time buyers: ~6% median down payment
- Repeat buyers: ~17% median down payment
- All buyers combined: ~13% median
These figures demonstrate that while 20% is often discussed, it is not typical, particularly for first-time buyers entering the market.
Why Down Payments Vary So Widely
Buyer Experience
Repeat buyers often use equity from prior homes, while first-time buyers rely more on savings.
Loan Program Structure
Different mortgage programs establish different minimum down payment thresholds.
Home Price Levels
As prices increase, buyers may prioritize liquidity for closing costs and reserves.
Risk Allocation
Down payments affect how risk is allocated between borrower, lender, and mortgage insurers.
Common Low-Down-Payment Options (Educational Overview)
U.S. mortgage programs may allow lower down payments depending on eligibility:
- Conventional loans: As low as 3% for qualifying buyers
- FHA loans: Minimum 3.5% with qualifying credit profiles
- VA loans: 0% down for eligible service members and veterans
- USDA loans: 0% down for qualifying rural properties
Program availability depends on borrower eligibility, property characteristics, and applicable guidelines.
Trade-Offs of Lower Down Payments
Lower down payments may influence:
- Mortgage insurance requirements
- Monthly payment composition
- Long-term financing costs
- Total cash required at closing
These trade-offs vary by loan structure and market conditions.
Down Payments vs. Closing Costs
Down payments are not the only upfront cost. Buyers must also plan for:
- Lender fees
- Title and escrow costs
- Prepaid taxes and insurance
CFPB data shows median total loan costs exceeding $5,900, highlighting the importance of cash-to-close planning beyond the down payment alone.
Why Down Payments Matter Beyond Loan Qualification
Down payments influence:
- Equity position at purchase
- Financial flexibility after closing
- Long-term ownership sustainability
They are one component of a broader affordability picture rather than a standalone requirement.
Author Information
Written by:
Beenish Rida Habib — Mortgage & Lending Contributor, ACT Global Media
Editorial Disclosure
This article is provided for general informational purposes only and does not constitute mortgage, credit, financial, or legal advice.
Regulatory Notice
Down payment requirements and mortgage programs vary by lender, borrower qualifications, location, and applicable laws and regulations.
