How much should you put down on a house?

Despite the pervasive assumption that 20% down is required for a home purchase, most first-time buyers put down between 3% and 10%. In 2025, the median down payment for first-time buyers was just 10%, compared to 23% for repeat buyers. The right amount often depends on your loan type, financial situation and the availability of down payment assistance.

According to the National Association of Realtors (NAR), 31% of first-time buyers reported that saving for a down payment was the most difficult part of buying a home. The economics around home purchases may have evolved through the years, but some buyers continue to follow old advice and save for a 20% down payment. In reality, 20% is a target that most first-time buyers cannot easily achieve and shouldn't prioritize.

With the right financial strategies in place, buying a home with a lower down payment is possible. The following steps will help you to evaluate your personal finances and determine a suitable target for your down payment.

What most first-time buyers actually put down

For many first-time buyers, it's not possible to simply cut out restaurant meals for a couple of months and amass a down payment. Saving for a house is a long-term commitment that requires dedication and a willingness to pursue multiple fund sources.

But if the target isn't 20%, how much of a down payment do you need? As of their latest report, the NAR cited the median down payment for first-time buyers as just 10%. Plus, in addition to their own savings, first-time buyers may also include gifted funds from family or friends in their down payment. A recent survey revealed that 27% of Gen-Zers accepted financial help from friends or family when buying a home.

The timeframe for saving is another key factor to consider. If you've been setting money aside for a while, rest assured, you're not alone. The typical homebuyer now needs seven years to save for a down payment.

Minimum down payments by loan type

The type of mortgage loan you choose may also affect the down payment amount required. In addition to conventional mortgages, lenders may administer specialized government loan programs for homebuyers. Before submitting an application, ask your loan officer about different mortgage programs and choose one that pairs well with your down payment and income.

Conventional loans

• Minimum down payment: Some conventional mortgages allow down payments as low as 3%.
• Mortgage insurance and fees: Private mortgage insurance (PMI) is typically required when you put less than 20% down, but it can be removed once you reach 20% equity.
• Qualifications: Fannie Mae HomeReady® and Freddie Mac Home Possible are examples of conventional programs available through Citizens for homebuyers looking for lower down payment options. Qualified borrowers may need to attend a home buyer education session and may also be subject to income limitations.

FHA loans

• Minimum down payment: As low as 3.5%
• Mortgage insurance and fees: Mortgage insurance premium (MIP) is required; if you put less than 10% down, annual MIP typically remains for the life of the loan.
• Qualifications: FHA loans offer flexible credit qualification requirements, subject to lender guidelines.

VA loans

• Minimum down payment: 0% down
• Mortgage insurance and fees: VA loans offer zero-down financing without monthly mortgage insurance. However, a one-time VA funding fee applies in lieu of PMI.
• Qualifications: Loans are available for active-duty service members, veterans and qualifying surviving spouses.

USDA loans

• Minimum Down Payment: 0% down
• Mortgage insurance and fees: Borrowers may be assessed fees, including an upfront fee and a guaranteed annual fee.
• Qualifications: Eligible buyers living in rural and suburban areas only, subject to income limits and geographic restrictions.

Note: Loan products and availability vary by lender. Some loan programs discussed in this article may not be available through all lenders and are included for educational purposes.

What is down payment assistance and who qualifies?

Homebuyers can also receive down payment assistance (DPA) through a variety of mortgage programs. These DPA programs provide eligible borrowers with loans or grants to cover a portion of their down payment and closing costs.

Over the years, DPA programs have evolved and broadened their access. As of 2025, 2,624 active DPA programs, geared toward a range of buyers with different personal, geographic and financial profiles, were available. Within these programs, 1,628 serve first-time buyers, and 273 (10%) have no income limit requirement.

Types of DPA programs

Before approaching a lender, it helps to understand the kinds of assistance available, along with the expectations for each type of funding.

• Grants: Money given to you for a down payment and closing costs with no requirement to pay it back at any time in the future.
• Forgivable loans: Generally, a second mortgage at 0% interest that doesn't require repayment unless you move, sell, or refinance within a set timeframe.
• Deferred payment loans: A second mortgage with little or no interest that allows you to delay repayment until you move, sell or refinance.

How to find DPA programs

Down payment assistance is offered through state housing finance agencies, major cities and nonprofits. Mortgage lenders may also administer DPA programs for their customers. You can ask a Citizens mortgage loan officer about DPA programs and their qualifications or check current down payment assistance programs and options at Citizens online.

How much should you actually put down? A decision framework

In today's housing market, simply aiming for 20% of the sales price isn't always the best strategy for homebuying success. Rather, a down payment should be based on current savings, income and the potential costs of higher interest and mortgage insurance (PMI). As home prices are generally increasing, continuing to save for a higher down payment can sometimes result in the loss of financial ground. Buying sooner, with a lower down payment, may avoid home prices stretching beyond reach. Homeowners also benefit when home values increase. These equity gains could outweigh the added costs associated with a lower down payment.

In the scenarios below, we'll demonstrate how your down payment decision could yield varying results.

Scenario 1: The liquidity-first buyer

Say a buyer has enough savings to put down 15–20% of the home purchase price but doing so would leave them little or no cash after closing. Depleting liquidity to maximize a down payment reduces emergency reserves that may be needed in the first years of homeownership. The better decision might be to put 5–10% down, preserve 3-6 months of living expenses, and look into DPA eligibility to help close the financial gap.

Scenario 2: The rate-and-PMI-sensitive buyer

Our second buyer has 20% available and plans to put down the full amount in order to eliminate PMI and secure a prime interest rate. While this is a legitimate strategy for buyers with strong liquidity (i.e., cash reserves) who plan to stay in their home for a long time, the decision to put down 20% should be based on a well-thought-out financial strategy. Keep in mind, while PMI typically adds 0.2% to 2.0% to your loan annually, the cash deployed to increase your down payment to the 20% threshold can't be invested elsewhere.

Scenario 3: The DPA-eligible buyer

Who receives down payment assistance? Many home buyers fit this profile, especially first-time buyers. If saving enough for a down payment is delaying your homebuying plans, you may want to explore down payment assistance (DPA) programs early in the homebuying process. Request a free consultation with a loan officer early in the homebuying process and ask about your eligibility for DPA programs.

Your down payment is the first move

Homebuying is not an exact science and there's no universal answer to the down payment question. If you're looking for professional advice, a Citizens Mortgage loan officer can guide you through a series of down payment alternatives and help you choose the best option based on your savings and home buying timeline. Take the first step now.

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Frequently asked questions

Do I really need to put 20% down on a house?

A 20% down payment is not always necessary. Many mortgage programs, including some conventional mortgages, allow for lower down payment amounts. You'll need to weigh your options and make a decision based on your personal timeframe, current savings and housing budget. You may also want to consider applying for down payment assistance programs in your local area.

How does my down payment affect my monthly mortgage payment?

For down payments below 20%, buyers may be asked to pay private mortgage insurance (PMI), which adds 0.2% - 2.0% to your loan until you reach 20% equity in your home. Buyers with lower down payments may also pay more in interest. However, a lower down payment may get you into a home faster and allow you to take advantage of home equity gains as property values rise.

Can I use gift money for my down payment?

Yes, it's common for homebuyers to receive gifted funds from friends and family to use as a down payment. The gifted amount will need to be properly documented and reported to your lender and the IRS, if applicable.

Ready to take the next step?

Buying a home is one of life's most important financial decisions That's why thousands of homebuyers turn to Citizens for personalized guidance, competitive mortgage solutions, and support every step of the way. To learn more about our mortgage solutions, please call 888-514-2300, visit us online, or find a Citizens Loan Officer.

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