The amount a buyer puts down on a home purchase ranges between 3% and 20%. Most buyers put down 10-19%, while 16% have down payments of 3-5%. The National Association of Realtors reports the average down payment is 12%. The exceptions to these averages are USDA and VA loans, for which zero dollars are required to be put down.
It is important to note that any down payment less than 20% of the purchase price will require the added monthly cost of mortgage insurance.
FHA loans require a minimum down payment of 3.5%, with a mortgage insurance premium (MIP) needed to be paid in addition to the mortgage payment. Larger down payments are rewarded with lower interest rates.
There is no single right answer for how much a buyer needs to put down on a loan. It ultimately depends on the kind of mortgage you are applying for and what your individual financial situation dictates.
The mortgage lender will have certain conditions for the loan you are applying for. The general rule is that you apply for as big a mortgage as you can comfortably afford with the down payment funds that you are able to put down.
When saving for a down payment, figure out how long it will take you to save versus what is happening in the housing market. You can then determine how long it will take you to get into a home.
I can help you determine how much you should save for a home. Call or email me.