Down payment

What It Means

A down payment is the part of a home's purchase price you pay yourself at closing, usually stated as a percentage of the price. The mortgageMortgageA loan used to buy or refinance a home, secured by the home itself and repaid in monthly installments over a set term. See more pays for everything else, so a bigger down payment means a smaller loan. Loan programs set their own minimums: the Federal Housing Administration (FHA), for example, requires at least 3.5%. On a conventional loan, putting down less than 20% may mean the lender requires private mortgage insurancePrivate mortgage insuranceInsurance that protects a mortgage lender if the borrower stops paying, often required on a conventional loan with less than 20% down. See more, according to the Consumer Financial Protection Bureau (CFPB).

How People Say It

• "We've got about ten percent saved for the down payment."
• "His parents are gifting us part of the down."
• "If we wait a year we can put twenty percent down."

The Breakdown

Worked example. Three down payments on a $400,000 home:

What the result means. Every dollar you put down is a dollar you don't borrow or pay interestInterest rateThe yearly percentage a lender charges for borrowing money, not counting fees; the APR adds certain fees to show a fuller cost. See more on, and at 20% on a conventional loan you're past the point where the CFPB says PMI may be required. A smaller down payment gets you into a home sooner with a larger loan and, often, an insurance cost on top. Closing costsClosing costsThe fees and upfront charges you pay to finalize a mortgage, apart from the down payment, itemized on your Loan Estimate and Closing Disclosure. See more are a separate bill due at the same time, so the cash you need on closing day is the down payment plus those costs.

What buyers actually put down. The National Association of Realtors (NAR) 2025 Profile of Home Buyers and Sellers, covering purchases from July 2024 to June 2025, found a median down payment of 19% for all buyers, 10% for first-time buyers and 23% for repeat buyers. These are medians, the middle value, so half of buyers put down less.

Good to Know

HUD says the FHA's 3.5% minimum can come as a gift from a family member, an employer or a charitable organization. If part of yours is a gift, ask your lender how it wants the gift documented before the money moves. In NAR's 2025 Profile, 59% of first-time buyers used personal savings for the down payment. Keeping an emergency fundEmergency fundMoney set aside only for unplanned costs, like a car repair, a medical bill or a lost paycheck, kept where you can reach it quickly. See more apart from the down payment money leaves a cushion for costs that show up after you move in.

Related Terms and Categories

• Mortgage

  A loan used to buy or refinance a home, secured by the home itself and repaid in monthly installments over a set term.

• Private mortgage insurance

  Insurance that protects a mortgage lender if the borrower stops paying, often required on a conventional loan with less than 20% down.

• Closing costs

  The fees and upfront charges you pay to finalize a mortgage, apart from the down payment, itemized on your Loan Estimate and Closing Disclosure.

• Emergency fund

  Money set aside only for unplanned costs, like a car repair, a medical bill or a lost paycheck, kept where you can reach it quickly.

• Sinking fund

  Money set aside in small, regular amounts for a known future cost, so the bill doesn't land on a single paycheck.

• Debt-to-income ratio

  Your total monthly debt payments divided by your gross monthly income, shown as a percentage; lenders use it to judge whether you can take on a new payment.

Debt and credit