As you begin your home-buying journey, one of the first steps is to save up for a down payment. Many people think you must put 20% down, but this notion is outdated and no longer the only option for getting into a house. In fact, the median down payment in 2019 was 12%. This figure drops to 6% for first-time buyers and increases to 16% for repeat buyers. Depending on your loan type and credit score, you could put down as little as 3%. And if you qualify for a VA or USDA loan, you may be able to buy a house with $0 down.

Down Payment Requirements for Buying a House

Different types of home loans have different minimum down payments. Take a look:

  1. Conventional loans are the most common type of mortgage. The minimum down payment is as low as 3%, though your lender may require a higher amount if your credit score is under 620 or you have a lot of existing debt.
  2. VA loans are government-backed mortgages available to current military service members and veterans. If you qualify, you can buy a house with no money down.
  3. USDA loans are another type of government-backed mortgage that can only be used to buy a home in a qualified rural or suburban area. As with VA loans, you can put $0 down.
  4. FHA loans are also backed by the government. They have lower minimum credit score limits than conventional loans and still allow you to buy a house with as little as 3.5% down. 

Why Do Some People Still Make 20% Down Payments?

While putting 20% down is not required, it’s still an important threshold. Until you reach 20% equity in your home, you must pay private mortgage insurance (PMI) alongside your mortgage payment. This protects the lender if you default on your loan. Once you pass the 20% mark, you can request to cancel your PMI.

Another reason to put 20% down is to qualify for a lower interest rate. You also decrease your total loan amount by putting more money down upfront. Both benefits result in more affordable mortgage payments for years to come.

How Much Should I Put Down?

While a down payment of 20% has its perks, typical buyers put down far less. Your decision depends on these factors:

  1. The minimum down payment required by your loan
  2. Your current cash savings
  3. The condition of the home and potential to make repairs or renovations after moving in
  4. How close you are to retirement
  5. Your debt-to-income ratio

For more home-buying tips or to begin the process of finding your dream home, team up with Vutech | Ruff. Our award-winning agents have years of experience and provide outstanding real estate services. We can help you find a home in one of the best neighborhoods in the Columbus area! Call us at 614-897-0618 or contact us online to speak with a knowledgeable Ohio real estate agent today.