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What’s the Typical House Down Payment?

Ever wonder what the typical house down payment is for a new home? Well, to be honest, it can vary quite a bit! We are going to cover all the options you have as a potential buyer, so let’s get started figuring out which one is best for you!

Different Loans Require Different Home Down Payments

Planning to purchase a home in cash? Unsurprisingly, the typical house down payment for this would be 100%. 😉

When it comes to mortgage loans though, the typical house down payment can range anywhere from 20% down to zero percent down. So, let’s break it down a bit more and see which option works best for you. 

1) USDA Loan: 0% down-payment

The lowest house down payment option you can get your hands on is available through the USDA loan. This loan is guaranteed by the U.S. Department of Agriculture and provides the option of 0% down! This loan has some pretty specific stipulations though, and not everyone will qualify for it.

typical house paymentFactors that will be taken into consideration include:

  • credit score,
  • yearly income,
  • intended property usage,
  • and location of the home.  

How do you qualify? 

While the USDA loan does set a required credit score minimum of 580, most automatic approval systems will not accept anything below 640. However, you may be able to qualify at the lower score via manual underwriting. 

Related: USDA Eligibility

Your debt-to-income ratio will also be considered. Most lenders look for ratios between 29-42%.

Factors that affect this percentage include:
  • loan principal, interest, real estate taxes and insurance on the new purchase.
  • any pre-existing monthly payments (credit cards, student loans, etc).
There are also income limit requirements: 
  • A 1-4 member household cannot earn more than $86,850 a year
  • A 5-8 member household cannot earn more than $114,650 a year

USDA Loans offer some great perks

Not only are USDA loan rates some of the lowest on the market (since banks take on less risk with these government backed loans), buyers can also borrow up to the appraised value of the home. This additional credit can be used to help cover closing costs. 

You can also potentially secure an additional lender credit by agreeing to a slightly higher interest rate. 

The USDA loan is one of the most appealing for buyers who don’t have a lot of cash to put down and who could really benefit from the potential for additional credit towards closing costs. 

Related: Tips for Finding The Best Mortgage Deals Right Now

2) FHA Loan: 3.5% down-payment

So what if you don’t qualify for the USDA loan? The Federal Housing Association (FHA) offers a loan that requires a typical down payment of 3.5%.

In addition to the lower down payment, this loan offers the following:

  • low interest rates,
  • lower credit requirements (and sometimes even approval with NO credit history),
  • a debt-to-income ratio no more than 50%.
  • your down-payment may be a gift from friends and family
  • the loan can be used to purchase a multi-unit property

Related: FHA Loan Down-Payment Requirements

There is a pretty big downside of the FHA loan however…

Many don’t realize it, but by taking on an FHA loan, you’ll be required to pay the monthly Private Mortgage Insurance (PMI) over the course of the entire loan. This can certainly add up over 30 years, but for some it’s worth the trade off for the lower upfront costs and interest rates. 

Overall, the FHA loan is a great fit for many potential buyers and offers a pretty decent low down payment option with the opportunity to put down the full 20% to avoid PMI altogether. 

3) Conventional Loan: 3%+ down-payment

A conventional loan is probably the most well-known mortgage loan option on the market. While many may think that a conventional loan requires 20% down, it’s actually pretty common for buyers to apply a typical house down payment of 5%-10% instead.

The stipulations for a conventional loan include:

  • 620+ credit score,
  • debt-to-income ratio of no more than 43%,
  • a minimum of 3% down payment,
  • and an average loan limit of up to $510,000.

One potential downside for the conventional loan option, however, is that you will need to have a higher credit score and larger chunk down to get the best PMI and loan interest rates. 

The conventional loan does offer a few perks when it comes to the PMI though: 

  • Borrowers are not required to pay upfront mortgage insurance fees like other loans.
  • Borrowers can get cancel their PMI once they’ve achieved 20% equity in the loan (80% of the appraised value).

The conventional loan is a great option whether you hope to stay on the lower side of the typical house down payment, or want to avoid PMI altogether with a full 20% down. 

Related: Your House is a Terrible Investment

tips for real estate investors4) Other Options

Did you know there are additional mortgage options other than these fairly well-known ones? 

The following loans offer low down payment and flexible underwriting:

Loans options with no PMI

In addition, some banks offer programs that require a slightly larger down payment, but DO NOT require PMI.

Here are some programs to check out if you are interested in going that route:

Don’t qualify for any of these? Check out your own bank to potentially find some lesser known loan options that may be available.

A little bit of research can save you THOUSANDS over the life of the loan, and it’s always worth exploring before committing to one financing option.

My Final Thoughts on the “Typical House Down Payment”

Depending on your situation, it may not always make sense to go with the lowest down payment option.

While some buyers prefer to have less cash tied up in the house and potentially invest the difference, others prefer to get the lowest/no PMI and crush their mortgage as quickly as possible.  

In fact, PMI costs can range from 0.5% to 1% of the total amount of the loan annually. And, as of 2018, buyers can no longer deduct the cost of PMI on their taxes. 

Finally, PMI can be a pain in the butt to cancel.

Some lenders require a formal written cancellation request when you’ve reached your 20% in equity. But wait – there’s more! You will likely be required to pay for a formal appraisal ($300-$500) of the home before the bank will consider canceling the monthly fee. 

Related: Home Appraisal Tips: How To Get Top Dollar for Your Home

So, while the typical house down payment may be low, it may not be the best option for everyone. But hey – that’s why we call it personal finance, right? 

Be Sure to Think Like a Seller

One other huge tip I’ll give here is be sure to not just think like a buyer, but put on your seller hat too.

If you had three offers on your house, one was a conventional mortgage offer, and the others were USDA and FHA loans, which one are you more inclined to take? For me, it’d be the more conventional loan with a decent down-payment.


It’s the least likely to fall through.

The appraisals are less nit-picky, the requirements of the lender are more relaxed, and the buyers that seek out conventional mortgages just seem to have better follow-through for some reason. 

Some of this may be fact and some may just be hear-say, but there’s certainly a stigma against some of these low down-payment loan options. And, with that stigma comes a reduced chance of winning a bid on a house. You’ve just got to know that going in.

Now that you know what to expect for a typical house down payment – are you ready to take the plunge? Let us know if you plan to purchase a home this year and which down payment option you prefer!

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AUTHOR Kerah Kemmerer

Hello! I'm Kerah. I'm a writer and personal finance enthusiast with a background in marketing. I'm also a wedding and portrait photographer, part-time RVer and a lover of simple and minimal living. Always up to some project or adventure over @krisandkerah on Instagram.

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