Many buyers feel they need to put 20% down to buy a home.
In reality, the typical buyer doesn’t do it.
Among buyers taking out a loan (i.e. excluding cash buyers), the average down payment looks like:
- First-time buyers: 6%
- Repeat buyers: 17%
- Total (both groups above): 14%
Some Conventional loan programs allow as low as 3% down; many others start at 5%.
FHA allows 3.5% down.
VA allows 0% down.
As you can see, there are plenty of options. The biggest two advantages to putting 20% down:
- Better loan terms
- Pay no mortgage insurance
Of course, the more you put down, the less you pay on the debt each month, but that’s true at all down payment levels. 20% is a common threshold for better terms. Oddly, however, there are some occasions where I’ve seen buyers get better terms at 15% down, though that’s not the norm.
Reach out if you have any questions or would like to be introduced to a great Loan Officer/Mortgage Broker.