How Much Should I Put Down on a House

How much should you put down on a house? For many first-time homebuyers, the answer depends on savings, loan type, monthly payment comfort, closing costs and long-term financial goals. While a 20% down payment can reduce borrowing costs and may help you avoid private mortgage insurance, many buyers purchase a home with less. Understanding how down payments work can help you build a realistic savings plan and choose a homebuying path that fits your budget. 

Key Takeaways 

• A 20% down payment can lower costs, but many buyers put down less. 
• Closing costs should be saved separately from your down payment amount. 
• FHA and some conventional loans may allow lower down payment options. 
• The right down payment depends on savings, loan type and monthly comfort.

What Is a Down Payment?

Your down payment on a home serves as a deposit sealing your deal to purchase the property. The remaining balance of the purchase is then paid off over time, most often by a monthly mortgage payment. 

Down payments are generally expressed in terms of percentages. Say the house you purchase has a price tag of $250,000 and you provide a down payment of $25,000—that is a down payment of 10%. The remaining 90% of the home cost is what your monthly mortgage payment will cover. Consequently, a higher down payment will result in lower monthly mortgage payments. Higher down payments can also result in lower interest rates on a loan, reducing the overall cost of purchasing your home. 

How Much Do You Put Down on a House?

Many potential homeowners have heard of the 20% rule when it comes to planning your down payment. However, this percentage is more of an ideal target than a hard and fast standard. The amount of money you should consider putting down on a home can be influenced by a variety of factors including: 

• Financial stability (including savings, debt-to-income ratio, and earnings)
• Age
• Income
• Credit health
• Market conditions

Be sure to factor closing costs into your savings plan separately from your down payment. According to the Consumer Financial Protection Bureau, closing costs typically range from 2% to 5% of the home purchase price, not including your down payment. For example, on a $400,000 home, that could mean budgeting roughly $8,000 to $20,000 for closing costs in addition to the amount you plan to put down. Planning for both costs can help you avoid being blindsided by fees due near the end of the homebuying process. 

For a deeper look at expenses due near closing, Perry Homes’ guide to how closing costs are determined explains common fees, prepaid costs and budgeting considerations for buyers. 

Some homebuyers may qualify for lower down payment options, including FHA loans that allow as little as 3.5% down for eligible borrowers. Conventional loan options may also allow lower down payments depending on the lender, loan program, credit profile and purchase price. For current context, the National Association of REALTORS® reported that the typical down payment for first-time buyers was 10% in its 2025 Profile of Home Buyers and Sellers, while repeat buyers had a median down payment of 23%. Considering both your available savings and the monthly mortgage payment you can comfortably afford can help you decide what amount makes sense for your situation. 

Before choosing a down payment amount, it can also help to understand how to get approved for a mortgage and what lenders may review before issuing a loan decision. 

There are also a variety of online calculators available to help you decide what kind of down payment you can afford. As you get closer to purchase, Perry Homes’ guide on what to expect when closing on a house can help you prepare for signing, final payments and next steps. 

The best course of action for hopeful homebuyers is to start saving as soon as possible to afford enough time to build up a healthy fund for the down payment—without pulling resources from other important areas of your financial health. Creating a monthly savings plan can help you stay on track and reach your goal. 

Once you know your target amount, Perry Homes’ guide on how to save for a down payment can help you turn that goal into a more practical monthly plan. 

Benefits to the 20% Rule

While the 20% rule is not a hard standard, it does pose some benefits to homebuyers. First, putting 20% down on a home can increase your chances of securing a lower interest rate on your loan. Lenders see individuals who pay a higher amount on a down payment as a good risk—you will not only be more likely to secure a loan, but also a better loan option. 

Additionally, as mentioned before, the higher the amount of your down payment, the lower your monthly payments will be. This is beneficial in more ways than just reducing monthly expenses as you enter homeownership—paying off more of your home initially will result in fewer additional costs incurred over your mortgage term from interest rates. Conventional loans with a down payment of less than 20% often require private mortgage insurance, or PMI, which can add to your monthly housing costs. 

Increasing your down payment on a home does not only have financial benefits, though. It is not uncommon for sellers to gravitate toward offers with higher down payments. This is because a higher down payment increases the buyer’s chances of securing a loan to purchase the property, therefore increasing the probability of successfully closing the sale. 

If you are still learning the language of financing, this guide to key housing and mortgage terms can help clarify terms like down payment, escrow, appraisal and closing costs. 

Drawbacks to the 20% Rule

Saving 20% of the cost of your new home can be difficult, especially for first-time homebuyers. To reach this threshold, some potential buyers will delay their home search or purchase. This can become an issue if the area in which you are looking to buy is experiencing appreciating home prices.  

Some potential homebuyers attempt to expedite the process by dipping into savings accounts or pulling money from other investments. While this may be a quicker way to collect your 20%, most financial advisors warn against the practice as it depletes necessary protections and funds. Emergency funds are also a very important part of homeownership. Some buyers will funnel all excess money toward saving for a down payment, neglecting to build up an emergency fund to protect their investment once they have purchased a home.  

Larger down payments also tie up more of your money in a home. If you are not planning on staying in that property for very long, many of the long-term benefits of a 20% down payment may not outweigh the costs of saving up and spending the full amount. This can also become problematic if the housing prices in your area begin to drop. Conversely, if home values in your area are appreciating, a lower down payment could potentially yield a higher ROI on your property down the road should you choose to sell.  

The answer to, “How much should I put down on a house?” will vary greatly based on each potential homeowner’s situation, needs and wants. When you are ready to compare options, explore new homes, browse move-in ready homes, or contact Perry Homes for guidance on your next step.