What is the average down payment for a first-time homebuyer in 2026?

As of 2025 data, the median down payment for first-time homebuyers was 7%. While 2026 data is not yet fully compiled, this trend is expected to continue, with many first-time buyers utilizing low down payment options like FHA (3.5% down) or conventional loans (3-5% down).

How much should I save for a down payment on a house?

Financial experts typically recommend saving at least 5% to 20% of the home's purchase price for a down payment. Aiming for 20% allows you to avoid private mortgage insurance (PMI) and often secures better interest rates, but lower percentages are common and achievable through various loan programs.

Can I use gift money for a down payment?

Yes, you can often use gift money for a down payment, especially with FHA and conventional loans. Lenders will require a gift letter from the donor (typically a relative) stating that the funds are a true gift with no expectation of repayment, along with a clear paper trail of the money transfer.

What are closing costs, and how much should I budget for them?

Closing costs are fees paid at the end of a real estate transaction, separate from your down payment. They typically range from 2% to 5% of the total loan amount and cover items like appraisal fees, title insurance, and lender fees. You should budget an additional 2-5% of the home's price on top of your down payment savings.

Is it better to put 20% down or invest the extra cash?

The decision depends on your individual financial situation, risk tolerance, and alternative investment opportunities. Putting 20% down avoids PMI and lowers your interest rate. However, if you have high-interest debt or a high-return, low-risk investment opportunity, it might be more beneficial to put less down and use the extra cash elsewhere. Always ensure you have an adequate emergency fund regardless of your down payment size.

How can I save for a down payment faster?

To save faster, create a strict budget to identify areas for expense reduction, automate regular transfers to a dedicated high-yield savings account, seek opportunities to boost your income through side hustles or overtime, and direct any financial windfalls (like tax refunds or bonuses) directly to your down payment fund.

What is the minimum down payment for a conventional loan?

For a conventional loan, the minimum down payment can be as low as 3%. However, if you put down less than 20%, you will be required to pay Private Mortgage Insurance (PMI) until you build sufficient equity in your home.

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