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What Is A Typical Down Payment On A House?

A typical down payment on a house is 20 percent of the home’s purchase price. For example, if you’re thinking of buying a house worth $350,000, a down payment then would be $70,000.

But let’s be honest here, not too many people, especially first time home buyers, have that kind of cash saved up.

If you don’t have the expected 20 percent or typical down payment, don’t lose hope yet – you may qualify for a mortgage loan as low as 3 percent (more on this later).

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Why the 20 percent down payment makes sense?

The 20 percent down payment rule (although not the only option available for home buyers) has several benefits.

The first benefit of putting a 20 percent down payment on a house is that you have a greater chance of getting approved for a mortgage loan.

The second benefit is that you may qualify for a lower mortgage interest rate.

Another advantage is that you avoid private mortgage insurance (PMI). The third benefit is that you make smaller monthly payments.

How to avoid the typical down payment on a house?

As beneficial as the 20 percent down payment may be, however, there are several other ways to make a much lower down payment on a house. After all, not too many people have a lot of cash stashed away. If you have little cash saved up for a down payment, consider these options.

1. FHA Loan.

One of the best ways to avoid the typical down payment on a house is to apply for an FHA loan. An FHA (or Federal Housing Administration) loan is a government-backed mortgage. It requires lower down payments and lower credit score.

So, for to qualify for an FHA loan you just need a minimum credit score of 580 and 3.5 percent down payment. If you have a lower score than a 580, let’s say 500, you may be required to put 20 percent down.

There are several requirements attached to an FHA loan. The most important one, however, is that you have to pay private mortgage insurance or PMI. A PMI is just a protection for the mortgage lender from a loss in case you default from the loan.

So, do you have to put down 20 percent on house? The answer is “No.”

2. VA (Veteran Affairs) Loan.

Another way to avoid the typical down payment on a house is to apply for a VA loan. In fact, there is no money down and there is no private mortgage insurance. However, in order to be qualified, you have to be a qualified veteran, an active duty service member, or a member of the National Guard and Reserves. In addition to being a qualified applicant, you’ll to pay a loan fee between 1.25 to 3.3 percent. However, that fee can be rolled into the loan.

The Best Way to Save on Buying a House

Buying a house is extremely complex and costly.

If you’re looking for a way to decrease cost, we recommend finding a financial advisor. They can help you understand your options and look for ways to save money.

If you need help finding a financial advisor, SmartAsset’s free quiz helps Americans find vetted qualified financial advisors who serve their area.

This quiz asks you a few questions, then matches you with up to three fiduciary financial advisors. You can compare your advisor matches based on their specialty, pricing, and more. You even earn a free consultation with each of your matches, so you can compare them and be fully prepared to pick a financial advisor.

Saving tips for a down payment on a house

Before you start saving money for a down payment on a house, see how much house you can afford by comparing mortgage rates. Below are some tips on saving money for a down payment on a house:

1. Pay off your debt. The first place to start in saving for a down payment on a house is to get rid of your high interest credit card debt first. Once you’ve paid it off, your savings will be much freer. Plus, you’ll also improve your credit score by paying off your debt.

2. Get a side hustle. Starting a side gig can be a great way to earn extra cash. This extra cash can help pay smaller bills or can go right into your savings account. From starting a blog to tutoring on weekends to completing surveys, there are plenty of ways to make extra money.

3. Put away extra money. Any extra money you receive, or a larger portion of it, should go to your ‘down payment’ savings. For example, a bonus from your job, a tax refund, a gift from your relatives, etc…You should place that cash in an high yield online savings account to earn you some interest along the way.

4. Spend less. One of the best ways to save more money is to reduce your expenses. You can stash away extra cash by living below your means. So make a budget to determine how much you’re spending each month on food, entertainment, clothing, transportation, etc… and see where you can cut back. Perhaps, you really don’t need that cable. Could you put off going on vacation this year and save that money instead?


Now that you know what a typical down payment on a house is, your goal then should be to start saving for it. Also note that you don’t have to put 20 percent down. If you can’t come up with that 20 percent down payment, then explore other alternatives like applying for an FHA loan. In that case, you will have to buy a private mortgage insurance (PMI).

Learn more:

Working With The Right Financial Advisor.

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

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