What is a Down Payment?

Down Payment Article


A down payment is money paid upfront, for mortgages usually at closing, to complete a financial purchase that is typically paid for on credit. There is a general range—3% to 20%— for down payments on a housing loan.

A larger down payment means the buyer is using more of their own funds during their home purchase. But there are a variety of reasons a homebuyer may choose to put less than 20% down. Homebuyers may wish to allocate some of their savings towards a home renovation, a rainy-day fund, or choose to make an investment.

Traditionally larger down payments were once recommended, but different loan types have adjusted their requirements to promote healthy home purchasing habits. Below are the current minimum down payments for common home loan types.

  • Conventional loans– 3%
  • FHA loans– 3.5%
  • USDA home loan and VA loans – borrowers may qualify for 0% down.

To further help expand homeownership, each state has individual down payment assistance programs for first-time home buyers.

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