< Back to JVM's Blog

Minimum Down Payment for a ‘Typical’ Home

A young family moves into a home that they purchased after working with their lender to find out the minimum down payment they needed to buy a house.

Many homebuyers want to know what is the minimum down payment they need to purchase a home. These are some scenarios for homebuyers who are interested in buying a home in California or Texas. Homebuyers do not need a 20% down payment when buying a home – in fact over half of all homebuyers put less than 20% down when purchasing a new home.

How Much Of A Down Payment Do You Need To Buy A House?

Down payments can vary between states, loan amounts, and loan types. These are two scenarios for the minimum down payment homebuyers need to buy a house in California or Texas based on the median home values for the Bay Area and Dallas.

As of July 2020, the median home value in the Bay Area was approximately $1,141,029. Using this number, here’s what the down payment would look like for each mortgage loan option:

  • Conventional = $34,231: A lot of homebuyers in the Bay Area choose conventional loans. This type of loan offers down payments as low as 3% of the purchase price. So, a buyer who is eligible for a conventional loan, purchasing a median-priced home in the Bay Area, could put down $34,231.
  • FHA = $39,936: The minimum down payment for an FHA loan is 3.5% of the purchase price or appraised value. So, a qualified borrower buying a median-priced home with an FHA loan could make a minimum down payment of $39,936.
  • VA = $0: The Department of Veterans Affairs loan program allows eligible homebuyers to put 0% of the purchase price down. So, a veteran or military homebuyer who qualifies for a VA loan could avoid making a down payment.

The median home value in Dallas in July 2020 was approximately $226,145. Using this number, here’s what the down payment would look like for each mortgage loan option:

  • Conventional = $6,784: A lot of homebuyers in Dallas choose conventional loans. This type of loan offers down payments as low as 3% of the purchase price. So, a buyer who is eligible for a conventional loan, purchasing a median-priced home in Dallas, could put down $6,784.
  • FHA = $7,915: The minimum down payment for an FHA loan is 3.5% of the purchase price or appraised value. So, a qualified borrower buying a median-priced home with an FHA loan could make a minimum down payment of $7,915.
  • VA = $0: The Department of Veterans Affairs loan program allows eligible homebuyers to put 0% of the purchase price down. So, a veteran or military homebuyer who qualifies for a VA loan could avoid making a down payment.

Over Half of All Buyers Put Down Less Than 20%

There is a widespread misconception among first-time homebuyers that they have to put down at least 20% to qualify for a mortgage. The truth is, typical homebuyers are not required to put down 20%. As outlined above, the minimum down payment for borrowers can be as low as 3% for a conventional loan.

Zillow recently released an updated version of its “Consumer Housing Trends Report.” They concluded from their nationwide surveys and in-depth analysis that 56% of homebuyers in the U.S. made down payments of less than 20% when purchasing a home.

It should also be noted that borrowers are allowed to use multiple sources to fund the down payment. For example, many buyers combine their savings with gift money from a family member.

The bottom line is that homebuyers do not have to put down 20%. While the average down payment has risen in the past few years because of home prices increasing, there are still low down payment options.

Down Payment Questions?

Many homebuyers want to make the minimum down payment possible when buying a home – especially if they are tight on funds to close or are first-time homebuyers.  The key takeaway here is that homebuyers are not restricted to only putting 20% down. There are many financing options available for your unique home buying situation. Don’t let the 20% down payment scare you away from investing in real estate.

If you would like to learn more about low down payment financing options or discuss your qualification in more detail, you can reach out to one of our expert Client Advisors. Our team is available 7 days a week by email at jvmteam@jvmlending.com or by phone at (855) 855-4491.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167