Average Down Payment On A House For A First-Time Buyer: What To Expect + Statistics

A first-time buyer's average down payment on a house is 6%.¹ A first-time home buyer purchasing a $400,000 house can expect to pay $24,000 for a 6% down payment.

If this percentage sounds low to you, that’s likely because of the 20% down mortgage myth. This myth of a 20% rule was spurred by lending requirements stating borrowers with down payments below 20% must obtain mortgage insurance.

Not all buyers make the average down payment. In reality, it’s possible to purchase a home with as little as 3% down, or in some cases, no money down at all. While making a down payment lower than 20% can make homeownership more attainable, the lender will require mortgage insurance to protect their funds if the borrower fails to make payments.

First-time buyers now represent over a half of all mortgage loans.³ Home values differ drastically state by state, so the down payment you can expect to make will depend on the region where you’re buying a home. Generally, locations with a higher cost of living will have more expensive homes, which means a higher down payment.

While it’s often recommended to put as close to 20% down as possible, there are several options on the table if you’re unable or unwilling to make a larger down payment.

Choose A Loan With Little Or No Down Payment Requirement

Not all mortgage loans are created equal. The mortgage loan you apply for could determine how sizeable your down payment should be:

• Conventional loans offer down payments as low as 3% depending on factors like your credit score and history.
• FHA loans are backed by the government and require as little as 3.5% down, depending on your credit score.
• USDA loans are available to low- and moderate-income families in qualifying rural and suburban areas. They typically require little to no money down.
• VA loans are available to veterans and their families, as well as active duty service members. They typically require no money down if you qualify.

Look For A Payment Assistance Program

Your state or local government might offer a variety of down payment assistance programs geared toward helping home buyers. Some states offer specific first-time home buyer programs, too. These typically include: 

• Grants: This is the most valuable form of down payment assistance available because it doesn’t require repayment (though it could create a second lien on your home in some cases).
• Forgivable loans: These 0% interest loans don’t require repayment as long as you stay in your home for a specified number of years. You could have to pay back all or a portion of the loan if you move sooner.
• Deferred-payment loans: These 0% interest loans don’t require repayment until you move, sell, refinance your mortgage or pay down your loan. They are not forgivable.
• Low-interest loans: You may have the option to take out a second mortgage loan when your first mortgage is finalized. This can be used to pay your down payment, but you’ll have to make two mortgage payments each month.
• Matched savings program: Also called individual development accounts, these programs line up banks, government agencies or community organizations to match borrower deposits up to a certain amount, which you can use toward your down payment.

First-time home buyers have a number of purchasing trends and opportunities that differ from a repeat home buyer’s experience. Check out these additional statistics to better understand what your home buying experience may look like.

• 51% of new mortgage loans were awarded to first-time buyers in 2021.³
• First-time home buyers pay $13,437 in their first year of mortgage payments.⁹
• The median credit score of first-time buyers was 746 in 2022, compared to 754 for general buyers.⁹
• First-time home buyers largely prefer government sponsored enterprise (GSE) loans backed by Fannie Mae and Freddie Mac over private loans. Here’s how buyers varied by loan type in 2018:⁴
  • GSE: 44%
  • FHA: 27%
  • Private: 15%
  • VA: 9%
  • USDA: 5%
• The median age of a first-time home buyer in 2021 was 33 years old.⁵
• Freddie Mac mortgages for first-time home buyers reached all-time highs with 554,000 loans financed in 2021.⁶
• More first-time buyers rely on co-borrowers, with 3.5% co-signing with a person 55 years of age or older in 2022 – a 40% increase from 2020.⁷

Here are some frequently asked questions about average first-time home buyer down payments and the home buying process in general.

What Is A Good Down Payment On A House For A First-Time Home Buyer?

There’s no one-size-fits-all solution when it comes to buying a home. Similarly, your down payment will depend on factors unique to you, like your credit score or your savings cushion.

It’s often a good idea to put 20% down if you want to avoid mortgage insurance, as long as you’re comfortably able to do it without depleting your savings. However, even putting down just 3% can help you start building equity in your new home.

What Other Costs Should First-Time Home Buyers Consider?

Though a down payment is usually the biggest out-of-pocket expense first-time home buyers can expect to pay, there are other costs to plan for, like:

• Closing costs to process your mortgage (including origination, title and appraisal fees), approximately 3% – 6% of the home’s purchase price
• Cash reserves to satisfy lending requirements (if applicable), typically up to 6 months of mortgage payments
• Miscellaneous moving costs including any new furnishings or necessary repairs

Is A 20% Down Payment Required?

There is no legal requirement to make a 20% down payment on a house. Many options are available for buyers seeking lower or nonexistent down payments.

Buyers who put less than 20% down will be required to purchase mortgage insurance as a form of protection for the lender. This insurance is no longer required once borrowers reach 20% equity in their home.

How Can I Get Down Payment Assistance As A First-Time Home Buyer?

Every state has its own down payment assistance program via that state’s housing finance agency. Some states also offer programs specifically for first-time home buyers.

In addition to state programs, the Federal Housing Authority offers privately funded down payment grants across the nation.

A larger down payment has its benefits, but it’s not an option for all home buyers, nor is it a rule in the home buying process. Your unique circumstances like the type of loan, your credit score and your savings cushion could determine whether you qualify for a lower down payment or are able to avoid a down payment entirely.

Your down payment isn’t a penalty or a fee, but rather the first bit of equity you’ll put into your new home. When you’re ready to get started, get approved with Rocket Mortgage^® to identify the best loan options for your budget.

Sources

1. Rocket Mortgage

2. Census – MHS Annual Data

3. FHFA

4. Consumer Financial Protection Bureau

5. NAR

6. Freddie Mac – First-Time Homebuyers Are Driving The Market Forward

7. Freddie Mac – Co-Borrowing Is On The Rise

8. Census – New Residential Sales

9. Fannie Mae

10. Federal Reserve