Yes, a down payment can be made on a used home. Homebuyers must provide a portion of the purchase price upfront to secure a mortgage. The required down payment varies based on the loan type, lender policies, and the buyer’s creditworthiness. For conventional loans, typical down payments range from 3% to 20%, while government-backed loans like FHA or VA may offer lower requirements, sometimes as low as 0% for VA loans. Lenders use the down payment to reduce their risk, ensuring buyers have a financial stake in the property.

The necessity of a down payment stems from financial risk management. Lenders require equity to mitigate default risks, as a larger down payment means the buyer’s investment in the home is higher, aligning their interests with the lender’s. Data from the 2023 National Association of Realtors (NAR) shows that 68% of first-time buyers made a down payment of 6-20%, with the median down payment at 13%. The Federal Housing Finance Agency (FHFA) reports that 3% down payments are increasingly common for used homes, supported by loan programs like Fannie Mae’s HomeReady and Freddie Mac’s HomePossible. For loans below 20% down, private mortgage insurance (PMI) is typically required, adding 0.5-1.5% to annual premiums. A 2022 study by the Urban Institute found that a 5% down payment reduces the likelihood of default by 25% compared to no down payment. These requirements ensure sustainable homeownership while balancing accessibility for lower-income buyers.