What is a down payment?

Linda Bell

Thu, August 20, 2026 at 7:15 PM GMT+3 5 min read

Key takeaways

A down payment is the amount of a home's purchase price that the buyer pays at closing.
You can get a conventional mortgage with as little as 3% down, and some government-backed mortgages don't require a down payment.
In 2025, the median down payment for all homebuyers was 19%, while first-time buyers put down a median of 10%, according to the National Association of Realtors.
While you need not put down 20%, making a larger down payment means having more equity — and often a lower mortgage rate. And if you put down 20% or more, you won't have to pay for mortgage insurance.

What is a down payment on a house?

A down payment on a house is the portion of your home's price that you pay upfront. It represents your initial equity in your home, or the amount of your home that you own outright. The rest of the purchase price is covered with your mortgage.

For example, if you're buying a $400,000 home and putting 10% down, you'll take out a $360,000 mortgage. Your down payment will be $40,000. This is your home equity.

You're not required to put down 20%, and many buyers don't. But there are good reasons to put down more than the minimum if you can. For one, you'll likely get a lower mortgage rate. And having less equity gives you a smaller financial cushion if home values fall. If your home loses value and you have little equity, it can be difficult to refinance, borrow against your home, or sell without owing more than the house is worth.

Down payment example

Here's what your monthly costs would look like for a 6.5%, 30-year, fixed-rate mortgage on a $400,000 home, given different down payment amounts. The chart uses data from our mortgage calculator:

Down payment

Monthly principal and interest

Monthly PMI cost

Total monthly payment

$12,000 (3%)

$2,542

$216

$2,758

$40,000 (10%)

$2,275

$165

$2,440

$60,000 (15%)

$2,149

$71

$2,220

$80,000 (20%)

$2,023

Our mortgage insurance estimates come from the Urban Institute and assume a credit score of 700. Both credit and your loan-to-value (LTV) ratio help lenders decide how much your PMI should cost.

This example doesn't factor in the potential interest rate savings associated with a larger down payment. For instance, a 20% down payment might qualify you for a lower interest rate compared to a 10% down payment.

How do down payments work?

When you apply for a mortgage preapproval, you'll be asked to estimate your down payment. This will help the lender calculate your LTV, the percentage of the home's value you're borrowing. Lenders use your LTV to decide whether to approve your mortgage and how much to charge you for it.

You'll make your down payment at closing, when you pay the rest of your closing costs, often by wire transfer. If you made an earnest money deposit — the initial "good faith" deposit made when your home offer gets accepted — it'll be applied to your down payment.

The down payment funds then move to an escrow account managed by a real estate attorney or settlement officer. This third party distributes the funds to the seller.

The requirement for a down payment protects both the homebuyer and mortgage lender. For lenders, a larger down payment equals less risk: The lender minimizes the hit if a homeowner stops repaying the mortgage and the lender needs to foreclose.

For borrowers, making a larger down payment means lower monthly costs, both in terms of principal and interest. It also protects against becoming underwater — when you owe more on your mortgage than your home is worth.

Minimum down payment requirements

Lenders' minimum down payment requirements are based on the type of mortgage you choose. While you can pay only the minimum, you can always put down more if your budget allows.

Loan type

Minimum down payment

Conventional, conforming loan

Jumbo loan

10%

FHA loan

3.5%

VA loan

None

USDA loan

None

Second home or investment property loan

10%-25%

Conventional loan: 3%

Most lenders allow borrowers to put as little as 3% down on a conventional loan for a primary residence.

However, not everyone qualifies for the lowest possible down payment amount. The amount you must put down will depend on your:
- Credit score
- Debt-to-income ratio (DTI)
- Savings and other assets
- Home price
And keep in mind that if you put down less than 20% on a conventional loan, you'll typically have to pay for private mortgage insurance, or PMI, which increases your monthly payments.
Jumbo loan: 10%

Jumbo loans are a type of conventional mortgage for higher-priced properties. In 2026, homes that cost more than $832,750 require a jumbo loan in most markets, though in high-cost areas, the limit may be as high as $1,249,125. Because of their size, jumbo loans typically require 10% down or more.
FHA loan: 3.5%

If your credit score is at least 580, you can get an FHA loan for as little as 3.5% down. If you have a credit score between 500 and 579, you can still qualify, but you'll need to put down 10%.

No matter how large your down payment on an FHA loan, though, you'll be required to pay a mortgage insurance premium (MIP). There are two types of MIP: an upfront premium that's paid at closing, and an annual premium that's divvied up and added to your monthly mortgage payment.
VA loan or USDA loan: No down payment required

Both the Department of Veterans Affairs and the Department of Agriculture back zero-down-payment loans for certain homebuyers. VA loans are available to qualifying members of the armed forces, veterans and their surviving spouses, while USDA loans are available to borrowers purchasing homes in designated rural areas.

Neither loan program requires mortgage insurance. However, with VA loans, you'll pay a one-time funding fee, which ranges from 1.25% to 3.3%. USDA loans have an upfront guarantee fee of 1% of the loan amount and an annual fee of 0.35% of the average annual loan balance.
Second homes and investment properties: 10% to 25%

If you're buying a second home or an investment property with a conventional loan, the down payment requirement is usually higher than for a primary residence. Second homes typically start at 10%, and investment properties can require as much as 15% to 25%, depending on your creditworthiness and financial situation.

This is because these loans are considered riskier for lenders; lenders assume you're more likely to stay current with the payments on your primary residence if you're in financial trouble.

What is the typical down payment?

When it comes to down payments, most people put down more than the minimum. According to the National Association of Realtors, the median down payment for all homebuyers in 2025 was 19%. For first-time homebuyers, the median was 10%, the highest since 1989. For repeat buyers, the median was 23%, the most since 2003.

Down payments have been climbing in recent years, as have home prices and the average age of buyers, including first-timers. In July 2026, the median price of an existing home in the U.S. was $434,100, the 37th consecutive month of year-over-year price increases. At the same time, in 2025, the median age of a first-time buyer was 40. This was an all-time high, and it was up substantially from the 1980s, when the median first-timer was in their 20s.

$82,479

This is the amount you'd have put down to make the median down payment (19%) on a median-priced home ($434,100).The median down payment for a first-time buyer (10%) would cost you $43,410, while the median for a repeat buyer (23%) would cost you $99,843.

Source: National Association of Realtors

Pros and cons of a large down payment

Pros

More competitive offers: In a hot housing market, sellers may prefer buyers with larger down payments, assuming these deals will be able to close.
Lower mortgage rates: Larger down payments mean less risk for the lender, and they often earn lower mortgage interest rates.
Lower monthly payments: Along with getting you a lower interest rate, making a larger down payment also means borrowing less, which means you'll have less to pay back on a monthly basis. And if you put down 20% or more, you won't have to pay for PMI.
Cheaper closing costs: The fees you pay to your lender at closing are usually calculated as a percentage of your loan's total value, so if you borrow less, your closing costs will be lower, too.
More equity: The greater the percentage of your home you own outright, the more equity you have right off the bat. This has some major advantages, including making it easier to refinance or borrow against your equity earlier in your mortgage term.
Lower chance of becoming underwater on your mortgage: If you make a very low down payment and your home loses value, you could end up owing more on your home than it's worth. Most lenders won't let you refinance in this case, and if you need to sell your home, you may have to pay your lender the difference between the sale price and your balance.

Cons

It may stretch you too thin: If you're draining nearly all your savings to make a bigger down payment, you're putting yourself in a precarious position as a new homeowner, especially when an emergency cost or home repair inevitably pops up. You can tap home equity for emergencies — but it takes more time and is more expensive to access than cash.
You may lose valuable time: Sitting on the sidelines for too long while you keep saving up down payment money can backfire in a fast-moving, competitive housing market. While you're trying to cut every expense, home prices might continue rising at a pace you can't keep up with.
You lose the chance to use money elsewhere: Some buyers prefer to keep more of their savings invested or available for other financial goals rather than putting it all into their home.

Tips to save for a down payment

Saving for a down payment can take some time, especially if you want to put down at least 20%. Here are a few ways to approach your savings goal:

Set a realistic target: Put aside a reasonable amount each pay period or month. This savings shouldn't put your financial well-being at risk or require you to ignore other priorities, like emergency or retirement savings.

Make your savings work for you: Schedule regular automatic transfers to your savings so you don't miss the extra money. You can also park those funds in a high-yield savings account, which will earn you significantly more than a standard one. While some brick-and-mortar banks may offer you a rate of 0.01% APY, high-yield accounts could earn you 4% or more.

Explore down payment assistance programs: You may qualify for grants or forgivable loans to help with a down payment and closing costs. Contact your state or local housing authority for options.

No- or low-down-payment loans: FHA, VA, and USDA loans allow qualified buyers to purchase a home with no or little money down.

What borrowers should know about down payments today

There's no one-size-fits-all answer to how much you should put down when buying a home. While larger down payments have advantages, rising home prices can make putting the 20% down easier said than done for many homeowners.

If you are in a position to put down 20% and maintain a healthy emergency fund, it's smart to do so. It will save you having to pay PMI and likely lower your mortgage rate.

That said, if you have good credit and steady income, but your savings are limited, making a lower down payment could save you years of putting money aside. Be sure to save enough that your down payment doesn't drain your account.

If you'd struggle to come up with a down payment of any amount, it might make sense to wait before buying a home. Even if you qualify for a no-down-payment loan, you'll need upfront cash for closing costs and other, sometimes unexpected, expenses. Committing to homeownership may overextend your finances.

Bankrate's mortgage down payment calculator can help you compare different down payment amounts and how that will impact what you have to shell out every month. Ultimately, the best down payment amount is the one that helps you buy a home without stretching your budget beyond what's comfortable.