What is the average down payment on a house?

According to Lending Tree, the average down payment for a house in the US is about 12.29%. Now, I wouldn’t necessarily accept that as the most common down payment, for instance almost 25% of mortgages are FHA loans which only require 3.5% down. The problem with 12.29% is that all it is an average; it covers up large differences between different types of mortgages. For instance in large, expensive areas like New York City, and Washington D.C. down payments of 40% on very expensive property throw off the averages, and skew them badly. What’s really important for a potential borrower is not the US national average down payment, but what the minimum down payment is for the types of loans you are qualified to get.

Many banks and institutions would like a borrower to make a 20% down payment when purchasing a home. For most borrowers 20% is simply unrealistic; that percentage would require a down payment of $40k on a $200k loan. I doubt many current home owners could afford to make that payment when they purchased their home.

That’s why we have organizations like the FHA and Fannie Mae that provide other down payment options for potential borrowers. Here are some common requirements for those types of loans:

1. Federal Housing Administration (FHA) – the FHA down payment requirements are about 3.5% on a loan. For many borrowers that is very workable, and is probably the reason the FHA underwrites such a large amount of today’s loans.
2. Fannie Mae and Freddie Mac – The typical down payment on a house from these corporations is about 10%. There are special program that allow borrowers to make loan with much smaller down payment, but they have other requirements.
3. Veteran’s Administration (VA) – as a special service to former military members, the VA offers 0% down payment loans. Obviously, to take advantage you would need to be a former military member.
4. United States Department of Agriculture (USDA) – the USDA Rural Development program offers many loans with no down payment at all. However, they have strict location requirements, if you happen to be in a qualifying area; however, they can be the best loan available.