Many prospective home buyers wonder about the ideal down payment amount for purchasing a house. The required down payment can vary significantly depending on the loan program, the buyer’s age, and their location. This article explores the average down payment across the U.S. and provides insights on how to manage and afford a home loan.
What Is the Average Down Payment on a House?
As of the second quarter of 2023, the national average down payment for a house is approximately 14.4%, which translates to a median amount of $34,248, according to data from Realtor.com.
Regional differences are notable: Louisiana home buyers recorded the lowest average down payment at 9.2%, equivalent to $6,729. In contrast, Washington, D.C. saw the highest down payment percentage at 20.4%, with a substantial median amount of $100,800, reflecting the area’s high property values.
Average Down Payment Trends for 2024
Home buyers are currently making smaller down payments in many markets, a trend that has persisted since home prices peaked in late 2022. The average median down payment of $34,248 in Q2 2023 represents a 3.3% decrease from the previous year’s $35,410. Concurrently, the median home sales price fell by 7.4%, from $449,300 to $416,100.
Certain affordable markets have seen an increase in median down payments relative to the sales price, while expensive markets are witnessing a decline in down payment amounts. Northeastern and midwestern states, like Wyoming and Connecticut, are experiencing the largest year-over-year increases, whereas Western states such as Idaho and Arizona are seeing more significant declines due to previous price surges.
Down Payments for Second Homes
For second homes or investment properties, the average down payment is notably higher at 27% of the purchase price, according to Realtor.com’s 2023 Down Payment Report. This higher down payment reflects the increased financial capacity of buyers in this sector.
Average Down Payment for First-Time Home Buyers
First-time home buyers typically make a lower down payment compared to repeat buyers. The National Association of Realtors (NAR) reports that in 2022, first-time buyers had an average down payment of 6%, whereas repeat buyers put down about 17%. The share of first-time buyers also decreased to 22% in 2022 from 34% in 2021.
Average Down Payment Statistics by State
Down payment amounts vary significantly by state. Below is a snapshot of median down payments and average down payment percentages across several states:
| State | Median Down Payment | Average Down Payment Percentage |
|---|---|---|
| Alabama | $7,198 | 10.10% |
| Alaska | $18,162 | 11.00% |
| Arizona | $30,703 | 14.50% |
| Arkansas | $11,603 | 11.90% |
| California | $85,179 | 18.20% |
| Colorado | $66,062 | 17.20% |
| Connecticut | $43,033 | 15.80% |
| Delaware | $36,052 | 15.60% |
| Florida | $33,411 | 15.20% |
| Georgia | $15,266 | 11.50% |
| Hawaii | $44,440 | 13.10% |
| Idaho | $61,067 | 19.90% |
| Illinois | $27,963 | 14.00% |
| Indiana | $16,430 | 12.20% |
| Iowa | $27,395 | 15.50% |
| Kansas | $15,353 | 11.90% |
| Kentucky | $15,337 | 12.20% |
| Louisiana | $6,729 | 9.20% |
| Maine | $28,850 | 13.10% |
| Maryland | $25,368 | 11.90% |
Average Down Payment by Age
Down payments also vary by age group. According to NAR, buyers aged 24 to 32 typically make a median down payment of 8%. As buyers age, their down payments tend to increase:
| Age Group | Median Percent Down Payment |
|---|---|
| 24 to 32 | 8% |
| 33 to 42 | 11% |
| 43 to 57 | 10% |
| 58 to 67 | 20% |
| 68 to 76 | 21% |
| All Buyers | 14% |
How to Save for a Down Payment
Saving for a down payment can be challenging, but there are strategies to help:
- Know Your Down Payment Amount: Use a down payment calculator to estimate upfront costs and monthly payments. While 20% is ideal to avoid private mortgage insurance (PMI), some programs allow as little as 3% down with additional fees.
- Compare Mortgage Types: Different loan programs have varying down payment requirements. For instance, conventional loans might require 3% down, while FHA, VA, or USDA loans can have different thresholds.
- Reduce Your Debt-to-Income Ratio: Lowering your DTI ratio by increasing income, paying off debt, or purchasing a less expensive home can help qualify for better rates.
- Automate Your Savings: Set up automatic transfers to a savings account to steadily build your down payment fund.
- Consider Gift Funds: Family members may provide financial gifts to help with the down payment. Check with lenders for specific rules and requirements.
Down Payment Assistance Options
For those who find saving a 20% down payment challenging, several assistance programs can help:
- First-Time Home Buyer Loans: Programs like Conventional 97, Fannie Mae HomeReady, Freddie Mac Home Possible, and Freddie Mac HomeOne offer low down payment options.
- Government-Backed Loans: FHA, VA, and USDA loans provide options with minimal or no down payments, though they may come with fees or insurance requirements.
- State and Local Assistance: Various programs offer grants, matched savings, and second mortgages to assist with down payments and closing costs.
In summary, understanding the average down payment and exploring financial strategies and assistance options can help make homeownership more accessible.
