Many home buyers are confused when it comes to how much down payment they need for their home purchase. Knowing the down payment for house that you’re expected to pay can help quite a bit since it will make it easier to narrow down the total cost. Realistically, not every home purchase will require a massive down payment. Plus, there are different strategies you can use to lower costs as well.
What’s the average down payment in the US?
On average, you are expected to pay around 20% of the home value as a down payment. That being said, many lenders try to stay competitive and require a lower down payment. So it is common to have some lenders that go for 3% as a down payment. Some even don’t require any down payment at all, but they have other costs you have to take into consideration.
Is it mandatory to put 20% down? Ideally, if you don’t have the money already, it’s important to find alternatives to this. The 20% rule became a thing during the Great Depression, and that was due to unique economic situations at the time. Now, things have changed, and the lending market is way more competitive.
Sure, ideally, you want to have a large down payment, as it makes repaying your loan a lot easier. Yet, at the same time, if you can’t afford to do that, you can go for loans that have a smaller down payment. You can work closely with your flat fee realtor to narrow down the right property and directly with the lender so you can find an ideal loan to fit your needs.
How much should you choose as a down payment?
According to data from ATTOM, at the beginning of 2024, the median down payment was 14.2%. However, a lot of qualified first-time buyers will even go for a 3.5% down and an FHA loan. So, there are ways for you to lower the amount that needs to be paid. Just make sure that you use the right option, and the results can be very good.
At the end of the day, going for a small down payment and a dedicated loan can help immensely. It’s ideal to browse the market and see where you can find the best value and solutions. We highly recommend checking all the different options until you identify the right loan. Don’t rush; instead, check all the relevant offers first!