Average Down Payment – What Should You Plan For

If you are looking to purchase a new home within the next few years, you may be trying to save up for a good down payment on that house. In order to plan, you need to know what a typical down payment may be for a home in your area.

What is a down payment?

The down payment is the amount you plan to bring to the closing table when you close on a home you are purchasing. The down payment amount is the cash you put down on the house. The amount of your loan will be the purchase price less the down payment amount you have contributed. The greater the down payment you have available, the better the financing you can receive meaning that you will get better interest rates and loan terms.

In the past, a standard down payment on a conventional loan was 10% of the purchase price. However, since the house crisis experienced over the past few years, lenders have tightened up their requirements and higher down payments have become the requirement. Today, the average down payment is approximately 12% of the purchase price.

Knowing your price range for purchasing a home will help you determine what an approximate down payment amount may be. For instance, if you plan to purchase a home between $120,000 and $150,000 you may want to save for a down payment of between $14,400 and $18,000. Though there are some financing options still available that require a down payment less than the average, saving up a down payment amount of at least 12% of your planned purchase price is a good savings goal.

Down payments for your state

Down payment averages are also locational. For instance, the national average down payment is just over 12%, according to a study completed by Lending Tree through November 2011; however, this does typically change from state to state.  The state with the highest average down payment is New Jersey ringing in with an average down payment of 13.71% whereas Iowa comes in with the lowest average down payment at just over 11%. Idaho sits right in the middle at 12.2%

If you are saving for a down payment, you will want to be aware of the type of financing you plan to use and the down payment you will need to have ready in order to save effectively for a good down payment. Planning can help you be prepared and not run into any financing surprises once you have found the house you are wanting and are ready to make your purchase.

Some listings to view that are active updated daily supplied by IDX/MLS under $300,000 in Boise Idaho with the last 30 days: