Wealthy PotAverage Down Payment on a House: What Buyers Really Put Down
The typical first-time buyer puts down 10%, and the typical repeat buyer puts down 23%, according to the National Association of Realtors' 2025 Profile of Home Buyers and Sellers. Almost nobody starts at 20%. The 20% figure is not a rule, a law or a lending minimum: it is the level at which a conventional lender stops requiring mortgage insurance. Below it you can still buy, and federal law says the insurance has to come off again. This page gives the measured figures, the statutory cancellation rules, the real program minimums, and what each choice costs per month.
Table of Contents
The Short Answer
- 10% is the median down payment for first-time buyers, and 23% for repeat buyers (NAR, 2025 Profile, covering purchases from July 2024 to June 2025).
- The 20% threshold exists because below it a conventional lender generally requires private mortgage insurance. It is not a minimum to buy.
- PMI is not permanent. The Homeowners Protection Act of 1998 gives you the right to request cancellation at 80% loan-to-value and forces automatic termination at 78%.
- Published minimums: 3.5% for FHA with a credit score of 580 or above, 3% for conventional 97% programs, and zero for VA and USDA if you qualify.
- At the $410,700 median price and a 7.03% 30-year rate, moving from 20% down to 5% down cuts the cash needed by about $61,600 and raises principal and interest by about $411 a month, before mortgage insurance.
- FHA is the exception that matters: at the 3.5% minimum, its annual premium runs for the whole loan term and cannot be canceled by paying down.
What Buyers Actually Put Down
The only national survey that measures this directly is NAR's annual Profile of Home Buyers and Sellers, which has run since 1981. The 2025 edition, published on 4 November 2025, surveyed buyers who completed a purchase between July 2024 and June 2025.
| Buyer type | Median down payment | Share of all buyers | Median age |
|---|---|---|---|
| First-time buyers | 10% | 21% | 40 |
| Repeat buyers | 23% | 79% | 62 |
Both figures are historically high. NAR records the 23% for repeat buyers as "the highest down payment seen since 2003", and says the first-time buyer figure of 10 percent "matches the highest share recorded since 1989". That is not a sign of buyers getting richer. It is a sign of who is still able to transact: first-time buyers fell to a record-low 21% of the market, and 30% of repeat buyers paid cash outright and financed nothing.
Where the money comes from is as revealing as the size. Among first-time buyers, 59% used personal savings, 26% drew on financial assets such as a 401(k), stocks or cryptocurrency, and 22% had a gift or loan from family or friends. Slightly more than one in five first-time purchases in the United States is therefore part-funded by somebody else's balance sheet.
Note what is missing from all of this: any number near 20% for someone buying their first home. If you are waiting to reach 20% before you start looking, you are holding yourself to a standard that the median first-time buyer does not meet.
Why 20% Persists
The 20% number comes from one place. On a conventional loan, putting less than 20% down means the lender generally requires private mortgage insurance, and the Consumer Financial Protection Bureau is blunt about who that protects: PMI "insures the lender against loss caused by borrowers failing to make loan payments". The Bureau adds the part borrowers often miss: "If you fall behind on your mortgage payments, PMI does not protect you and you can still lose your home through foreclosure."
PMI is usually charged as a monthly premium added to your payment, though the CFPB notes it can also be a one-time upfront premium at closing, or a combination of the two.
We are not going to quote you a percentage, because there is no longer an honest one to quote. Every major US mortgage insurer has moved to individually risk-priced quotes rather than a published rate card, so any "PMI costs 0.5% to 1.5%" figure you see online is a recycled estimate, not a filed price. What is public is the coverage a lender must buy, which rises steeply as your deposit shrinks. Fannie Mae's standard requirement on a 30-year fixed loan is 12% coverage at 80.01% to 85% loan-to-value, 25% at 85.01% to 90%, 30% at 90.01% to 95% and 35% at 95.01% to 97%. More coverage costs more premium, which is why the cost of PMI climbs faster than the size of your deposit falls. Get an actual quote before you commit to a down payment size.
When PMI Ends, by Law
This is the part most pages get vague about, and it is the single most valuable thing to know before you agree to a smaller deposit. Private mortgage insurance is temporary, and federal law says so. The Homeowners Protection Act of 1998, approved on 29 July 1998 and effective for loans consummated from 29 July 1999, sets three separate exits.
You can request cancellation at 80%. The statute says PMI "shall be canceled on the cancellation date" if you submit a written request to the servicer, have a good payment history, and satisfy the holder's requirements on property value and on having no subordinate lien. The cancellation date is when your principal balance, on the loan's initial amortization schedule, "is first scheduled to reach 80 percent of the original value of the property securing the loan". The CFPB puts the same rule in plain terms: "You have the right to ask your servicer to cancel PMI on the date the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home."
It terminates automatically at 78%. No request, no paperwork. PMI "shall terminate" on the date the balance is first scheduled to reach 78 percent of original value, provided you are current on payments. If you are not current that day, it ends on the date you become current.
And there is a backstop at the midpoint. If neither of the above has happened, the statute says that "in no case may such a requirement be imposed beyond the first day of the month immediately following the date that is the midpoint of the amortization period of the loan", so year 15 of a 30-year loan, if you are current.
When the requirement ends, the servicer has 45 days to return any unearned premiums to you.
Three details matter in practice. First, "original value" means the price or appraisal at purchase, not what the house is worth now, so the statutory clock is driven purely by the amortization schedule. Second, the Act covers a single-family dwelling that is your primary residence, so second homes and rentals fall outside it. Third, a high-risk loan is treated differently, with automatic termination at 77% rather than 78%.
If your home has appreciated, you do not have to wait for the schedule. That route runs through the loan investor rather than the statute. Fannie Mae's servicing rules let a borrower ask for termination based on the current value of a one-unit primary residence at 75% LTV or less once the loan is between two and five years old, or 80% or less after five years, with a clean recent payment record. Freddie Mac's Home Possible page states the same principle, that mortgage insurance "can be cancelled after loan balance drops below 80% of the home's appraised value and cancellation criteria are met". An appraisal costs money and the servicer sets the evidence rules, so ask before you order one.
| Down payment | Scheduled to reach 80% LTV | Automatic termination at 78% LTV |
|---|---|---|
| 10% | about 8.4 years | about 9.7 years |
| 5% | about 10.8 years | about 11.8 years |
| 3% | about 11.7 years | about 12.6 years |
The Low Down Payment Programs
For many buyers the answer to "how do I get to 20%" is that you do not, and you use a program built for the situation instead. Each minimum below comes from the agency or enterprise that runs the program, not from a lender's advertising.
| Program | Minimum down | Main condition | Mortgage insurance |
|---|---|---|---|
| VA purchase loan | 0% | Eligible service; price must not exceed the appraised value | None. A funding fee applies instead |
| USDA Section 502 Guaranteed | 0% | Eligible rural area; income at or below 115% of area median | Guarantee and annual fees apply |
| Conventional 97% LTV | 3% | At least one borrower must be a first-time home buyer | PMI, cancellable under the Act |
| Fannie Mae HomeReady | 3% | Income at or below 80% of area median. No first-time requirement | PMI, reduced coverage, cancellable |
| Freddie Mac Home Possible | 3% | Income at or below 80% of area median | PMI, reduced coverage, cancellable |
| FHA | 3.5% | Credit score 580 or above. Scores of 500 to 579 are capped at 90% LTV | MIP. See the warning below |
VA is the strongest deal in American mortgage lending if you are eligible. The Department of Veterans Affairs states plainly that there is "no down payment as long as the sales price isn't higher than the home's appraised value" and "no need for private mortgage insurance (PMI) or mortgage insurance premiums (MIP)". What you pay instead is a one-off funding fee, which can be financed: on a purchase with less than 5% down it is 2.15% of the loan for first-time use and 3.3% for subsequent use, falling to 1.5% at 5% down and 1.25% at 10% down. Veterans receiving compensation for a service-connected disability, surviving spouses receiving DIC and Purple Heart recipients on active duty are exempt from the fee entirely.
USDA is narrower but genuinely zero down. Rural Development describes the Section 502 Guaranteed program as "100% financing" and says in terms that there is "no money down for those who qualify". The two gates are geography, checked address by address on USDA's eligibility map, and income, which "cannot exceed 115% of median household income".
Conventional 3% down is the option most buyers do not realize exists. Fannie Mae's Eligibility Matrix allows a fixed-rate purchase of a one-unit principal residence at up to 97% LTV, with the footnote that "for non-HomeReady purchase transactions without a Community Seconds, at least one borrower must be a first-time home buyer". If your income is at or below 80% of the area median, HomeReady and Freddie Mac's Home Possible reach the same 3% without any first-time requirement and with reduced mortgage insurance coverage, which lowers the premium.
FHA deserves a warning that its marketing never carries. The 3.5% minimum is statutory: 12 U.S.C. 1709(b)(9)(A) requires a cash investment "equal to not less than 3.5 percent of the appraised value of the property", and HUD Handbook 4000.1 caps purchase loans at 96.5% LTV. FHA charges an upfront premium of 1.75% of the loan, normally financed, plus an annual premium. Under HUD Mortgagee Letter 2023-05 that annual premium is 0.55% for a loan above 95% LTV with a term over 15 years at or below the national conforming loan limit, which is $832,750 for 2026. Here is the catch. The Homeowners Protection Act governs private mortgage insurance, and FHA's is not private. On a loan with a term over 15 years, HUD's own table sets the duration of that annual premium at the full mortgage term for any loan above 90% LTV at origination, and 11 years for loans at or below 90%. A buyer putting down the 3.5% minimum therefore pays that premium for 30 years and cannot end it by paying down the balance. The usual exit is refinancing into a conventional loan once you have the equity, which means paying closing costs again and taking whatever rate exists that day.
Putting 10% down on an FHA loan rather than 3.5% is one of the few decisions here that changes the rules rather than just the arithmetic: it drops you to the 11-year duration band.
What Less Down Actually Costs
Here is the same house bought five ways. As of 24 September 2026, Freddie Mac's weekly survey put the 30-year fixed rate at 7.03%, and the Census Bureau's median sales price of houses sold was $410,700 in the second quarter of 2026.
| Down payment | Cash at closing | Loan amount | Monthly principal & interest | Interest over 30 years |
|---|---|---|---|---|
| 20% | $82,140 | $328,560 | $2,193 | $460,755 |
| 10% | $41,070 | $369,630 | $2,467 | $518,349 |
| 5% | $20,535 | $390,165 | $2,604 | $547,147 |
| 3.5% (FHA minimum) | $14,375 | $396,326 | $2,645 | $555,786 |
| 3% (conventional minimum) | $12,321 | $398,379 | $2,658 | $558,665 |
Read the first and third rows together, because that is the actual decision. Dropping from 20% to 5% frees up $61,605 in cash and costs $411 a month more in principal and interest, plus a mortgage insurance premium that ends once you reach the statutory threshold. Whether that trade is good depends on what the $61,605 does instead, and on how long you would have taken to save it while rents and prices moved.
Two things this table does not show. It excludes taxes, insurance and any HOA fee, which our guide to the average mortgage payment covers properly. And it holds the rate constant across all five rows, which real lenders do not: pricing adjustments generally make a high-LTV loan carry a slightly higher rate, so treat the gaps above as a floor. Put your own price, rate and deposit into the mortgage calculator before deciding.
When a Bigger Down Payment Is the Wrong Move
The reflex answer is that more down is always better. It is not, and the reason is that a down payment is simultaneously a cost decision and a liquidity decision.
- Money in the house is hard to get back out. Cash in a savings account can pay for a broken furnace, a job loss or a medical bill. The same cash inside the walls can only be reached by selling, refinancing or borrowing against the house, all of which take weeks, cost money and require a lender to say yes, usually at exactly the moment a lender is least inclined to.
- Closing costs and reserves come on top. Emptying the account to hit a round percentage and then moving in with nothing behind you is a worse position than putting 5% down and keeping a funded emergency fund. Lenders often require reserves anyway.
- PMI ends, so price it as a term cost, not a permanent one. The table above shows a 5% deposit reaching automatic termination in roughly 12 years on schedule alone, and sooner with extra principal or appreciation. Compare the total premium you expect to pay over that window against what the withheld cash earns or protects, rather than treating PMI as a permanent tax.
- Waiting has a price too. Saving another five percentage points of a $410,700 house means finding roughly $20,500 more. If prices and rates move against you in the meantime, the larger deposit can buy less house than the smaller one would have.
- The reverse case is real. If you have ample reserves, no higher-interest debt and a long horizon in the property, a larger deposit lowers the loan, removes the insurance and cuts lifetime interest substantially. The table above puts the 20% versus 3% gap at nearly $98,000 of interest over the full term.
The order that usually works: fund the emergency reserve first, clear high-interest debt, then size the deposit with what is genuinely spare. If you are still deciding whether to buy at all, our guide to renting versus buying works through both sides, and the 15-year versus 30-year comparison covers the other big structural choice. For the saving side of the problem, see saving for a home down payment.
Sources & Methodology
- National Association of Realtors, 2025 Profile of Home Buyers and Sellers: median down payment by buyer type, buyer shares, ages and down payment sources. Published 4 November 2025, covering July 2024 to June 2025.
- Homeowners Protection Act of 1998, Pub. L. 105-216: the statutory text of PMI cancellation at 80%, automatic termination at 78%, the midpoint backstop and the 45-day premium refund.
- Consumer Financial Protection Bureau: the regulator's plain-language statement of the same thresholds, and its explanation of what PMI is and who it protects.
- 12 U.S.C. 1709(b)(9): the statutory 3.5% FHA cash investment requirement.
- HUD Handbook 4000.1: FHA maximum LTV of 96.5%, the minimum required investment, the 580 and 500 credit score bands, and the 1.75% upfront premium.
- HUD Mortgagee Letter 2023-05: current FHA annual mortgage insurance premium rates and, critically, their duration by LTV band.
- US Department of Veterans Affairs and its funding fee rate charts: zero down payment, no mortgage insurance, and the fee schedule effective 7 April 2023.
- USDA Rural Development: 100% financing and the 115% of area median income limit for the Section 502 Guaranteed program.
- Fannie Mae HomeReady, the Selling Guide mortgage insurance coverage table and the Servicing Guide termination rules: the 3% minimum, the 97% LTV first-time buyer condition, coverage percentages by LTV band, and current-value cancellation at 75% or 80% LTV with seasoning.
- Freddie Mac Home Possible: the 3% down payment, 97% maximum LTV and the 80% of area median income limit.
- Freddie Mac Primary Mortgage Market Survey: the 30-year fixed rate of 7.03% for the week ending 2026-09-24.
- US Census Bureau and HUD, median sales price of houses sold: $410,700 for 2026 Q2, the latest quarter published.
- Federal Housing Finance Agency: the 2026 conforming loan limit of $832,750 for one-unit properties.
What we deliberately did not state. We give no typical private mortgage insurance rate. Every major US mortgage insurer now quotes individually and none publishes a public rate card, so no defensible national figure exists. We also omit USDA guarantee and annual fee percentages, which the program's own pages do not state.
This article is for general information and is not financial, tax or legal advice. All figures were checked against the primary sources listed above on 2026-09-30. The payment and cancellation schedules are hypothetical illustrations; your own rate, premium, cancellation date and eligibility will differ, and lenders may impose stricter standards than a program's published minimum. Confirm your own position with your lender or servicer before acting.
FAQ
What is the average down payment on a house?
There is no single national average. The measured medians from NAR's 2025 Profile are 10% for first-time buyers and 23% for repeat buyers, covering purchases from July 2024 to June 2025.
Do I really need 20% down to buy a house?
No. 20% is the point at which a conventional lender stops requiring private mortgage insurance, not a minimum to buy. Published minimums go down to 3.5% for FHA, 3% for conventional 97% programs, and zero for VA and USDA borrowers who qualify.
How much is a 20% down payment on an average house?
At the Census median sales price of $410,700 for the second quarter of 2026, 20% is $82,140. At 5% it is $20,535 and at 3% it is $12,321.
When does PMI go away?
Under the Homeowners Protection Act you can request cancellation when your scheduled balance reaches 80% of the original property value, and the servicer must terminate it automatically at 78% if you are current. If neither has happened, it cannot be imposed past the midpoint of the loan term, so year 15 on a 30-year loan.
Can I get rid of PMI if my house has gone up in value?
Not through the statute, which uses the original value. But Fannie Mae's servicing rules allow a borrower to request termination based on the current value of a one-unit primary residence at 75% LTV or less after two to five years of seasoning, or 80% or less after five years, with a clean payment record. Ask your servicer what evidence it requires before paying for an appraisal.
Does FHA mortgage insurance ever cancel?
Not on a minimum-deposit loan. HUD sets the duration of the annual premium at the full mortgage term for loans above 90% LTV at origination, and 11 years at or below 90%. Paying the balance down does not end it. Refinancing into a conventional loan does.
What is the lowest down payment I can make?
Zero, if you are eligible for a VA loan or for USDA's Section 502 Guaranteed program in an eligible rural area with income at or below 115% of the area median. Otherwise 3% on a conventional 97% loan, which requires at least one first-time buyer unless you qualify for HomeReady or Home Possible on income.
How much more does a smaller down payment cost per month?
On a hypothetical $410,700 purchase at 7.03%, principal and interest run about $2,193 at 20% down, $2,467 at 10%, $2,604 at 5% and $2,658 at 3%. Mortgage insurance is additional on every row below 20%.
Where do first-time buyers get their down payment?
Personal savings for 59% of them, financial assets such as a 401(k), stocks or cryptocurrency for 26%, and a gift or loan from family or friends for 22%, per NAR's 2025 Profile.
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"Average Down Payment on a House: What Buyers Really Put Down (2026)." Wealthy Pot, 2026. https://wealthypot.com/average-down-payment-on-a-house/
