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a day ago
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How much is a down payment on a house?
You don't need to put 20 percent down to get a mortgage, and some mortgages don't even require a down payment. You can get a conventional mortgage with 3 percent down, but with anything less than 20 percent, you'll have to pay mortgage insurance. Making a larger down payment can get you a lower interest rate. Most — but not all — mortgage loans require a down payment, a percentage of the home value you pay upfront. How much you should put toward a down payment depends on the type of loan you're applying for and your financial situation. You might have heard you're required to put down 20 percent on a home, but in truth, you don't have to pay that much upfront. Your down payment size will depend on the minimum amount required for the loan type you're getting as well as how much you have saved for the purchase that you can comfortably part with. For example, if you plan to put down 10 percent on a $400,000 conventional loan, your down payment would equal $40,000. A 3 percent down payment — the minimum requirement for a conventional loan — would come to $12,000. The median down payment for all buyers as of 2025 was 15 percent, according to the National Association of Realtors. Bankrate insight Among Bankrate users, 42 percent, or nearly 260,000 users, plan to make a down payment of less than 20 percent, according to Bankrate's 2024 Annual Data report. Learn more: What's the average down payment on a house? Loan type Minimum down payment Conventional conforming loan 3 percent Jumbo loan 10 percent FHA loan 3.5 percent VA loan None USDA loan None Second home or investment property 10-25 percent The down payment requirements for a conventional loan on a primary residence vary depending on the lender, the borrower and the property type. For example, first-time homebuyers and buyers with low to moderate incomes could qualify for a fixed-rate conventional loan with a 3 percent down payment. However, you may or may not qualify to make your lender's lowest offered down payment. The amount you must put down will depend on your: Credit score Debt-to-income ratio (DTI) Savings and other assets House of choice Whatever the minimum required down payment on your conventional loan, keep in mind that if you put down less than 20 percent, you'll have to pay for private mortgage insurance (PMI). However, once you reach 20 percent equity in your home, you can request that your lender remove PMI from your bill. Jumbo loans are a specific type of conventional mortgage for high-priced properties. In 2025, homes that cost more than $806,500 in most markets will need a jumbo loan, though in high-cost areas, the limit may be as high as $1,209,750. Because of their size, jumbo loans typically require 10 percent down or more. FHA loans require a minimum down payment of 3.5 percent with a credit score of at least 580. If you have a credit score between 500 and 579, you'll need a 10 percent down payment. No matter how large your down payment on an FHA loan, you'll be required to pay mortgage insurance premiums (MIPs). There are two types of MIP: an upfront MIP paid at closing that's 1.75 percent of the loan amount, and an annual MIP that's added to your monthly mortgage payment. The annual MIP is based on the size of your down payment, your loan amount and your loan term, but it ranges from 0.15 to 0.75 percent of your total loan amount. If you put down 10 percent or more, and you took out your FHA mortgage after June 3, 2013, this annual MIP can be removed after 11 years. Otherwise, you'll pay this expense for the life of the loan. The VA and USDA both back zero-down payment loans for qualified homebuyers. VA loans are available to qualifying members of the armed forces, veterans and their surviving spouses. USDA loans, on the other hand, are available to borrowers purchasing homes in designated rural areas. The USDA has maps on its website that show eligible areas. Neither loan program requires mortgage insurance. With VA loans, you'll pay a one-time funding fee, which ranges from 1.25 percent to 3.3 percent depending on how many VA loans you've had, your loan type and your down payment amount. USDA loans have an upfront guarantee fee of 3.5 percent of the loan amount and an annual fee of 0.5 percent of the average annual loan balance. Your lender will be charged this fee and may pass the cost on to you. If you're buying a second home or an investment property with a conventional loan, the down payment requirement is usually higher than for a primary residence. Second homes typically start at 10 percent, and investment properties can require as much as 15 to 25 percent, depending on your creditworthiness and financial situation. Beyond the requirements, how much you should put down on a house is a personal decision. Consider: Your financial goals: Is your goal to build home equity, or would you prefer to invest that money elsewhere, such as a retirement fund? How long you plan to stay in the house: Is this a starter home, or do you plan on being there long term? If you plan on selling in five to 10 years, you might not be as interested in putting a lot of money down. Your emergency savings: Don't deplete your emergency fund just to make a larger down payment on a house. You'll need the cushion for unexpected expenses. Home needs: If you need to invest in a larger home – for example, if you need home office space or a guest room — you may be stretching your budget and need to put less money down relative to your loan size. If you're downsizing, on the other hand, a big down payment may be easier to manage. Closing costs: Closing costs are a bundle of fees paid when you finalize your mortgage. They can include attorney fees and a loan origination fee, and they usually cost 2 to 5 percent of your mortgage's principal amount. If your closing costs are on the higher end of that range, they may eat into your down payment savings. Costs to upgrade and repair the home: When you move, you'll likely need to pay for repairs or home improvements and buy new furniture or appliances. Your ability to save for a down payment is a good sign you're ready for the financial commitment of homeownership. Here are some clear benefits to waiting until you can make a bigger down payment: Lower mortgage rate: The less money you borrow as a percentage of the home's value, the less risk your loan poses to the mortgage lender. As a result, larger down payments tend to correlate with lower interest rates. More equity: The greater the percentage of your home you own outright, the more equity you have. That can be handy if you're looking to finance a renovation project in the short term. You can tap your home equity through a cash-out refinance, home equity loan or home equity line of credit (HELOC). Lower monthly payments: Because you're borrowing less money and you likely have a lower interest rate, you can expect a lower monthly mortgage payment. Cheaper closing costs: The fees you pay to your lender at closing are usually calculated as a percentage of your loan's total value, so if you borrow less, your closing costs will be lower, too. More competitive offer: If you're in a seller's market and competing with several other buyers, a larger down payment can make your offer more competitive. Being able to put up more cash might give the seller confidence that your loan will close. Lower chance of becoming underwater on your mortgage: If you finance too much of your home, and it ends up losing value, you could end up owing more money than your home is worth. Even if you can afford it, making a big down payment on a house isn't always the best decision. Here are some reasons why you may want to put less money down: It gets you in the door: If a down payment is your main obstacle to homeownership, making a lower one could be smart. More money for repairs or renovations: If you're buying a home that needs some investment, and you could theoretically pay for the repairs in cash, you may choose to make a lower down payment. Buying a more expensive home: If you take advantage of a lower down payment mortgage, you could buy a bigger home with the same money you would use to put 20 percent down on a cheaper home. Not draining your savings: By putting less down, you're potentially keeping money in the bank which you can use elsewhere. If you put that money into your house, you might get it back — and then some — when you sell or refinance. Investing it elsewhere: While homes are seen as secure investments, investors may prefer to put their money into the stock market where they could see a higher return. The lower your credit score, the more you may be required to pay upfront toward your home. For example, FHA loan borrowers may have credit scores as low as 500. However, if your score is 579 or below, you'll need to make a 10 percent down payment. If you have a score of 580 or higher, you can qualify to put down only 3.5 percent. With other types of mortgages, a lower credit score may not increase your required down payment, but it is likely to increase your overall costs. If you qualify for a mortgage, you'll typically receive a higher mortgage rate than a borrower with a lower credit score — and that raises the total cost of your mortgage. Because down payments are expressed as a percentage of the home's sales price, you can multiply the sales price by your target percentage to determine how much you'll need to put down. Here are some examples of how much the down payment on a house would be at different price points: Median home price* 3% down 9% down 18% down 20% down Midwest: $313,300 $9,399 $28,197 $56,394 $62,660 South: $365,300 $10,959 $32,877 $65,754 $73,060 Northeast: $487,400 $14,622 $43,866 $87,732 $97,480 West: $628,500 $18,855 $56,565 $113,130 $125,700 You can use Bankrate's mortgage down payment calculator to get a sense of how different down payment amounts impact your monthly mortgage payment, and the interest you can save by putting more money down. How can I find down payment assistance? Down payment assistance programs help eligible first-time homebuyers — and sometimes repeat buyers — with low to moderate incomes. Assistance can come from a government agency, a nonprofit or even your mortgage lender. It might include a forgivable or deferred loan, a grant or a matched savings program. Why do mortgage lenders require a down payment? Your down payment offsets the lender's risk. The more money you put down, the less the lender stands to lose if you default on payments, especially early in the loan term. Down payments on government-backed loans tend to be lower because the loan is at least partially guaranteed by a federal agency. When do I make my down payment? Down payments are typically made in two steps. First, you'll deposit a portion of your down payment — typically about 1 percent of the home price — as earnest money shortly after the seller accepts your offer on the home. You'll make the rest of your down payment at closing, along with paying your closing costs. This total amount is referred to as your cash to close. Can you buy a house without a down payment? Yes, mortgages backed by the VA and USDA are available without a down payment. Some commercial lenders or local credit unions may also offer no-down-payment mortgages. What other costs should I anticipate when buying a house? In addition to the down payment, you'll also need to pay closing costs, which usually total between 2 and 5 percent of your loan amount. Your lender might also require you to prove that you have reserves. This means you have enough money in the bank to cover a couple of months' worth of mortgage payments.
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2 days ago
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Baby Boomers aren't the 'solution' to the housing crisis
More than one-third (33.5%) of Baby Boomer homeowners say they will never sell their home, according to a new Redfin survey. National Association of Realtors deputy chief economist and vice president of research Jessica Lautz joins Wealth to discuss what this trend means for the housing markets, particularly potential first-time homebuyers facing affordability challenges. To watch more expert insights and analysis on the latest market action, check out more Wealth here. A new survey from Redfin shows that about one in three baby boomers say they will never sell their homes. How is this trend affecting overall housing supply in the market dynamics we've seen over the past year? Yeah, certainly. We know that baby boomers have reinvented everything, so it's not a surprise that they're reinventing aging in place. Uh, they're not going to move. And we know that they're the biggest share of home buyers in the last year too. Uh, they have the cash to be able to do so as opposed to first-time home buyers who are really just struggling with affordability. And so if there's not enough of supply to go around, this is really going to be an increased issue. We can't look at baby boomers as the solution to our housing crisis. We really do need to build more. And you mentioned affordability concerns. How are you looking at first-time home buyers and the challenges that they're facing? Yeah, if we look at first-time home buyers, they're at historic lows, but also their ages are at historic highs. So we know that they're renting for a longer period of time, and this is an issue when we think about the housing market, and we think about movement. If baby boomers aren't moving and we can't bring in new first-time home buyers, we don't have the supply to go around, it's just a very difficult housing market when we think about young adults getting on that first rung. Sign in to access your portfolio
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2 days ago
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Baby Boomers aren't the 'solution' to the housing crisis
More than one-third (33.5%) of Baby Boomer homeowners say they will never sell their home, according to a new Redfin survey. National Association of Realtors deputy chief economist and vice president of research Jessica Lautz joins Wealth to discuss what this trend means for the housing markets, particularly potential first-time homebuyers facing affordability challenges. To watch more expert insights and analysis on the latest market action, check out more Wealth here.
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3 days ago
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What's the best age to buy a house?
Buying a home is one of the biggest financial decisions you'll ever make. So, you may be wondering: What is the best age to buy a house? Are you too young to think about homeownership? Or do you feel like you've waited too long to buy? Here's a look at the average age of first-time home buyers and how to decide the right age to make a move. Learn more: A step-by-step guide to buying a house This embedded content is not available in your region. In this article: Average age to buy a house Pros and cons of buying when younger Pros and cons of buying when older Is there a 'right time' (or age) to buy? FAQs Young adults are now waiting longer to buy their first homes. In 2024, the average age for Americans to buy their first house reached a record high of 38, according to a report from the National Association of REALTORS®. The shift is largely due to soaring home prices and student loan debt levels. Many young adults are also delaying marriage and prioritizing personal growth and career development over homeownership. That said, the right age to buy a home may vary depending on your financial situation, desired location, lifestyle, and long-term goals. Building equity. Buying early and owning your own home for an extended period gives you time to build up equity. Your home equity is the difference between what your home is worth and the amount you still owe on your mortgage. You can leverage home equity to invest or meet other financial goals in the future, and even use it to afford a down payment on your next house if you move. However, you don't accumulate equity when you rent. Predictable housing costs. Annual rent increases are relatively common. But when you purchase a home with a fixed-rate mortgage, you get set monthly mortgage payments. (Note: Property taxes, homeowners insurance, and homeowners' association fees, if applicable, may fluctuate over time.) Tax perks. You can save at tax time by deducting mortgage interest, property taxes, and other home costs on your return. Homeowners who itemize deductions can take advantage of this perk. Reach out to a tax professional to learn more. Freedom of expression. Most landlords impose restrictions on the customizations you can make to rental properties. Owning a home, though, means you can renovate or upgrade your space to make it more functional. Lower price point. Home prices generally rise over time. So, buying young means you can take advantage of the lower price point. Plus, if you stay in the house for a long time, you could pay off your home loan before you retire. Limited mobility. Leasing means you only have to stay put for a year (or less in some cases) before you can relocate. But buying a home is more of a long-term investment, and selling too prematurely could be costly. Lending terms. There are loan programs for people with low or no credit scores or those with limited income, minimal cash reserves, or high debt levels. The problem is, you may not qualify for the best lending terms offered to prospective buyers. Specifically, you could get stuck paying a higher mortgage rate. Financial stability. Buying in your middle or older years gives you more time to build a solid financial foundation. Remember, good credit, ample reserves, and a low debt-to-income ratio make you more attractive to lenders. More clarity. It's also highly likely that you'll have more clarity on where you want to live long term when you're older. Whether you're retiring in your dream area or relocating to be closer to adult children, buying a home later in life can bring peace of mind. You'll have confidence knowing you're living exactly where you want to be. Forfeited equity growth. Again, buying young can work in your favor as home values climb. But buying older gives you less time to build up equity that you can convert to cash to use however you see fit. Mortgage payments during retirement. Some homeowners experience a significant dip in income during their golden years. Unfortunately, costly mortgage payments could stretch your budget thin. Uncertainty. There's no way to know what the future holds. You could face medical challenges or other unexpected obstacles as you age that make it difficult for you to afford or maintain your dream home. The right time to buy a home isn't always about age. It's more about your financial situation, future plans, and ability to manage homeownership costs. Here are some questions to ponder: Do you meet the lending criteria for a mortgage? Do you have a minimal debt load? Can you afford to make a down payment on a new home? Do you have at least three to six months of expenses saved for emergencies? Can you comfortably afford the monthly mortgage payments? Do you plan to live in the home for an extended period of time? Do you have the means to cover maintenance and repairs? Do you have a designated point of contact to assist with questions or address your needs? Answering yes to most of these questions is a sign that you're ready to buy a home, regardless of your age. Before moving forward, analyze your situation, needs, and goals to make an informed decision. Dig deeper: Should you buy a house? How to know if you're ready. A 2024 National Association of REALTORS® report revealed that the average age of first-time home buyers is 38. However, depending on your financial situation and goals, the right age for you could be much younger or older. Again, there's no right or wrong age to purchase a home, as it depends on your unique situation. However, most states require you to be at least 18 unless an adult signs real estate contracts on your behalf. If you're financially stable with a solid credit profile, adequate savings, and a clear vision for your future, homeownership in your 20s could be a smart financial move. You'll have several years to build equity, benefit from predictable housing costs, and even enjoy a paid-off home before retirement should you purchase your 'forever home.' Laura Grace Tarpley edited this article.
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4 days ago
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For the first time in 12 years, home sellers outnumber buyers — and it could mean lower prices soon
After years of red-hot bidding wars, the housing market may be heading into a cold front — and it may cause prices to fall. But there's a bit of a catch. The number of US home sellers now dramatically exceeds the number of buyers, according to a new Redfin report, signaling a shift in power not seen since the real estate firm began tracking such data in 2013. As of April, there were nearly 500,000 more homes on the market than buyers actively looking — marking the widest gap between the two groups in that span of time. The imbalance hints at a broader market slowdown, not because homes are becoming more affordable, but because fewer people are willing — or able — to buy. And in order to sell, homeowners may have to reduce their prices for the pool of people who are actively on the hunt. For now, despite the cooling demand, prices continue to climb. The median sales price for an existing home rose 1.8% year-over-year in April to $414,000, a record for that month, according to the National Association of Realtors. That marks the 22nd straight month of annual price growth, even as affordability erodes. Driving the slowdown are elevated mortgage rates, which are hovering just under 7%. Higher borrowing costs are compounding monthly payments, deterring new entrants during what is typically the busiest season for home shopping. At the same time, economic jitters — ranging from a volatile stock market to global trade concerns — are making consumers more cautious. 'Based upon previous spring selling seasons, I have noticed a lot of listings are sitting longer on the marketplace (this year),' Karen Pohl, a real estate agent in Las Vegas, told CNN. 'I think there are a lot of sellers who still have really ambitious pricing for their homes, and it may be time to get realistic with their pricing in order to be competitive in the marketplace.' Pohl added that more sellers have begun offering concessions or cutting prices. The surge in listings is the largest since March 2020, while the buyer pool is at its lowest point since the onset of the pandemic, with the exception of April 2020 when lockdowns froze activity. Redfin estimates buyer activity based on pending sales and the typical timeline from initial home tour to purchase. A recent survey from Bank of America shows that 75% of potential buyers are waiting for both home prices and interest rates to decline before making a move. Still, Redfin doesn't expect the most major price correction. 'Generally, the ratio of sellers to buyers seems to be a predictor for home price growth, but with a lag of about three to six months,' Chen Zhao, the company's head of economics research, told CNN. 'The reason we think home prices will fall by 1% and not something larger is because it's actually very hard for home prices to fall, unless sellers have to sell,' she said. 'Sellers can always decide they don't like the prices that are currently in the market and decide to stay in their home.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
