A down payment is the amount of cash that homebuyers must pay toward a home’s purchase price to secure the financing they need to make their purchase. Our down payment calculator can help you figure how much you need to pay.
Traditionally, lenders want a 20% down payment on a conventional or jumbo loan. However, depending on the lender’s requirements, the size of the mortgage, and the type of loan, the required down payment can vary.
First-time homeowners know the difficulties of saving for a down payment. It is one of the largest barriers to entering the housing market for new purchases. As housing prices rise, so does the challenge of saving for a traditional down payment.
To compound that, interest rates for fixed-rate mortgages in January 2025 hovered around 6.91%.[1] Increasing your down payment can decrease your mortgage borrowing costs and increase your home's affordability.
Down Payment Calculator
Calculator
Down Payment Calculator
Where to Save Your Down Payment
With your target savings goal, you might wonder where to store your savings. Stashing your cash in a high-interest online savings account is a smart money move. You might save for months (or years) to reach your down payment goal. By opening a dedicated savings account, you can earn interest income and simultaneously take advantage of compounding interest.
Practically, one of the best ways to prepare yourself for saving for a down payment is to peruse neighborhoods where you might want to buy a house, condo, or townhome. From there, you can get a sense of the average asking prices. If you aim for the traditional 20%, you can calculate how much you need to save. But that may change based on what type of mortgage you get.
Related: Need a Real Estate Agent? Here' What You Need to Know
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You can secure a mortgage from a bank, credit union, or mortgage company. Your credit score and credit report can affect your borrowing costs, like your interest rate.
Types of Mortgages to Consider
Most mortgages require a down payment. However, the type of mortgage you secure can determine how much down payment you will owe. Some mortgage programs don’t even require a down payment. Here are common types of mortgages to consider:
- Jumbo Loans: These loans finance expensive properties and typically require great credit scores. (Read more about Jumbo loans).
- Conventional Loans: Loans from private mortgage lenders that have more flexible down payment requirements. (Read more about Conventional loans).
- FHA Loans: Mortgages issued by the Federal Housing Administration that have lower credit requirements and ranges of down payment requirements. Read more about FHA loans).
- VA Loans: Veteran Affairs loans usually don’t require a down payment or private mortgage insurance. (Read more about VA loans).
- USDA Loan: U.S. Department of Agriculture loans can have no down payments, low interest rates, and other incentives. (Read more about USDA loans).
Frequently Asked Questions
Once you agree with the seller on a purchase price, the combination of your down payment and mortgage will finance the house purchase. You will send your down payment to an escrow account, where the funds will be dispersed to the seller or the seller’s mortgage lender.
There is no one-size-fits-all down payment amount. Most mortgage lenders analyze your debt-to-income ratio to assess the level of affordability of your monthly mortgage payments. You want to ensure your down payment is large enough to comfortably afford your mortgage payments.
Many first-time homebuyers take months to accumulate their down payments. Check out our tips on saving for your down payment while renting.
(1) FreddieMac. Mortgage Rates Reach Highest Point Since July. Last Accessed January 16, 2025.
