It can be challenging to save the money for a down payment on a house, especially if you’re a first-time homebuyer. The standard minimum down payments for various types of mortgages might not be as high as you think, however. Here’s what to know about the average down payment for a first-time buyer and what’s needed to qualify.

Average down payment on a house for first-time homebuyers

Many first-time homebuyers mistakenly believe they must put 20 percent down to qualify for a mortgage. Fortunately, that’s not the case.

The typical down payment for a first-time homebuyer was 6 percent in 2022, according to the National Association of Realtors (NAR). For a $350,000 home, a 6 percent down payment totals $21,000.

Compare that to repeat buyers, whose typical down payment in 2022 was 17 percent, or $59,500 on a $350,000 home. Twenty-six percent of first-time buyers reported to NAR that the down payment was the most difficult part of buying a home.

How much should first-time homebuyers put down?

The amount you should dedicate to a down payment depends on your financial situation, comfort level and other factors.

If you can put 20 percent down, you’ll avoid mortgage insurance and potentially obtain a lower interest rate, which can mean significant savings. You shouldn’t do this if it means draining all of your funds, however. It’s important to maintain an emergency cushion. Plus, you’ll need money for closing costs — more on that below — and expenses like furniture, moving and any home repairs after you move.

On the other hand: Because your savings rate might never match the growth in home prices, coming up with just 3 percent down on a conventional loan might be worth it to become a homeowner, even if it means paying mortgage insurance temporarily. Once you have enough equity, you might be able to refinance to a lower rate down the line, too.

How to lower your down payment as a first-time buyer

The lower your down payment, the easier it is to save for it. Here are some methods to lower your down payment:

Low or no down payment mortgages

Loan type Down payment minimum Credit score minimum Debt-to-income (DTI) ratio maximum
Conventional loan 3% 620 Up to 43%
FHA loan 3.5% 580 Up to 50%
VA loans 0% Usually 620 Up to 41%
USDA loan 0% Usually 640 Up to 41%

While a lower down payment can make homeownership more accessible, keep in mind that if you put down less than 20 percent on a conventional loan, you’ll be required to pay for private mortgage insurance (PMI), which protects the lender if you were to stop making payments. A lower down payment typically also means you won’t qualify for the lowest possible mortgage rate.

First-time homebuyer down payment assistance programs

Many states and local municipalities offer down payment assistance programs for first-time homebuyers, such as:

  • Grants: A grant is essentially a gift that can help cover your down payment and closing costs. You never have to pay it back.
  • Forgivable loans: A forgivable loan is a type of second mortgage for a specific number of years, typically with a zero percent interest rate. As its name suggests, you don’t have to repay this loan unless you move, sell or refinance before a certain time frame.
  • Deferred payment loans: Like forgivable loans, a deferred payment loan is a second mortgage with a zero percent or low interest rate that you can use for a down payment. However, you’ll be required to repay the loan when you move, sell or refinance.

To find out if you’re eligible for down payment assistance, ask your mortgage lender which programs they accept and whether you qualify.

Benefits of a smaller down payment

  • Begin building equity sooner: You can move into a home and begin building equity sooner than if you waited to save for a bigger down payment.
  • Move in on your timeline: Saving for a large down payment takes time. A lower down payment can allow you to buy a home when you need to.
  • Keep more money in your pocket: Moving house comes with costs like repairs, upgrades and furniture. With a lower down payment, you can keep more of your money to cover these expenses.
  • Get into a home before prices rise further: It could take years to save a 20 percent down payment, and all the while, home prices and interest rates could go up.
  • Maintain an emergency fund: You don’t want to drain your savings to make a large down payment. With a smaller amount down, you’ll ideally retain enough to pad your emergency fund for unexpected costs.

Other homebuying costs to consider

While a down payment is typically the largest out-of-pocket expense for first-time homebuyers, it’s not the only one. You’ll also need to cover the closing costs of the mortgage — all the expenses needed to process your loan, like the origination, appraisal and title fees. Closing costs range from 2 percent to 5 percent of a home’s purchase price.

Another cost you might need to account for: cash reserves. Not every borrower needs to have reserves, especially if you have a strong mortgage application otherwise, but it’s still wise to have the savings stashed away if you were to find yourself unable to pay your mortgage. If your lender does require reserves, you could need anywhere from one month to six months’ worth of mortgage payments in the bank.

Bottom line

While putting 20 percent down to purchase your first home has its benefits, it’s not a rule. Depending on the loan type, your credit and other factors, you might qualify for a down payment as low as 3 percent, or be able to avoid a down payment altogether. You might also be eligible for down payment assistance. Overall, your down payment amount should help you achieve your homeownership dreams while also allowing you the flexibility to work on other financial goals, such as adding to an emergency fund or paying off debt.