The minimum down payment for purchasing a home in the United States typically ranges from 3% to 20%, depending on the loan type and lender. Conventional loans often require at least 3% for first-time buyers, while repeat buyers may need 5%. Government-backed loans like FHA, VA, and USDA offer lower minimums—3.5% for FHA loans, 0% for VA loans, and 0-6% for USDA loans. Lenders may also impose additional requirements based on credit scores, income, and debt-to-income ratios.

The down payment percentage is determined by risk mitigation strategies. Lenders require larger down payments to reduce their exposure to default risk, as lower equity in a home increases the likelihood of a lender taking possession during a downturn. For conventional loans, a 20% down payment eliminates private mortgage insurance (PMI), which costs 0.5-1% of the loan amount annually. Data from the Federal Housing Finance Agency (FHFA) shows that 68% of borrowers with a 20% down payment avoid PMI, saving an average of $1,500 annually. First-time buyers, who average a 13% down payment (National Association of Realtors, 2023), often rely on mortgage programs like FHA loans, which accounted for 7% of all home purchases in Q1 2024 (U.S. Census Bureau). VA loans, used by 6% of buyers, enable zero-down purchases for veterans, reflecting government efforts to promote homeownership. A 2023 study by the Urban Institute found that reducing down payments to 5% increased homeownership rates by 1.2 percentage points among low-to-moderate-income households. However, lenders may still require higher down payments for loans exceeding $450,000 in high-cost areas to offset higher default risks. Ultimately, the down payment balances affordability with lender safety, with averages varying by loan type and regional economic factors.