How to Figure Out Down Payments & What’s Really Enough

How to Figure Out Down Payments & What’s Really Enough | New Home Gurus

A Handy, Concise Homebuyer Guide to Down Payments

Down payments come up in most home purchases because most folks finance, instead of buying homes outright. In fact, about 97% of first-time homebuyers and over 70% of repeat home buyers use down payments to buy and finance a house. That’s according to the latest data from the National Association for Realtors® (NAR), which has also revealed that down payments are not the same for all buyers.

Here’s why, with a closer look at:

If you’re a home buyer or seller who needs help with offers, negotiations, or closing now, contact an experienced Realtor® at New Home Gurus.

How Much Is the Average Down Payment on Houses in Texas?

Average down payments vary by region and whether first-time or repeat buyers are involved. Looking at some of the latest statistics, the table below highlights the average down payments in Texas in 2023 when compared to average down payments nationwide.

RegionAverage Down Payment, Dollar AmountAverage Down Payment
(% of Home Price)

NAR data shows a different perspective, revealing more about average home down payments by buyer age, as the table below shows.

Homebuyer AgeAverage Down Payment
(as a % of Home Price)
24 to 328%
33 to 4211%
43 to 5710%
58 to 6720%
68 to 7621%
77 to 9727%
All Ages14%

Regardless of homebuyer age, the NAR has also reported a difference in average down payments for first-time homebuyers versus repeat buyers, as shown in the table below.

Homebuyer ExperienceAverage Down Payment
(as a % of Home Price)
No Experience, First-Time Buyer8%
Some Experience, Repeat Buyer19%

Here, it’s crucial to point out that:

  • Average down payments tend to increase with age and experience in the home purchasing process.
  • Average down payments nationwide have been on the rise, hitting all-time highs in 2023.
  • First-time homebuyers generally see down payments as one of the biggest barriers to buying a home.
  • Just over half of repeat buyers use money from the sale of a prior home for the down payment on their next house.

Why Do Home Buyers Make Down Payments (What’s the Purpose of Down Payments)?

Down payments are typically made to satisfy lender requirements and mortgage terms. Here’s how they generally work:

Why Do Home Buyers Make Down Payments?
  • You, the buyer, will apply for a mortgage loan.
  • If you’re approved, the lender will typically establish the minimum down payment required for the lender to green light the mortgage.
  • When you’re closing on a house, you’ll pay the down payment, and the lender will cover the rest of the purchase price. Going forward, you repay the lender according to the terms of your loan.

Remember, conventional mortgages aren’t the only option, and shopping around for mortgage products with different lenders could open up more options for flexible down payments.

When & How Are Down Payments Paid?

You’ll pay the down payment at closing. Usually, these funds will be handed over to a loan officer to combine with mortgage funds, so that the total sum can, then, be handed over to the seller to complete the purchase.

If you’ve put down earnest money, that amount may be applied toward your down payment, depending on the terms of your deal.

Is a Bigger Down Payment Always Better?

No, bigger down payments are not always better — and they won’t be a great idea for you IF you’re not going to have enough to cover other costs associated with buying and owning a home, like (but not limited to):

Is a Bigger Down Payment Always Better?
  • Closing costs
  • Homeowner’s insurance
  • Moving costs
  • Your mortgage payments

So, the amount you put down on a home should be carefully balanced within the bigger picture of your home ownership costs.

With that in mind, it’s usually prudent to put down a sizeable amount that won’t break the bank. And if you can afford to put down a larger down payment and continue to cover your other costs, you may be able to:

  • Qualify for better mortgage products and lower interest rates
  • Build equity in your house faster
  • Enjoy lower monthly mortgage payments
  • Potentially pay off the mortgage faster

How Much Should My Down Payment & Other Homebuying Costs Be?

Your circumstances, the home you want to buy, and several other factors can influence the answer here. While lenders can help you work out the numbers, an experienced Realtor® can help you with all seller interactions. That can be key to taking the right steps and streamlining the purchase process, so you don’t waste extra time and money trying to buy your next house.

At New Home Gurus, our experienced Realtors® work closely with home buyers and sellers across Texas, providing indispensable guidance and help with offers, negotiations, and all aspects of closing. Plus, we split our commission with our clients after closing.

Homebuyers and sellers who work with New Home Gurus can get back an average of $4,500 to $12,000 at closing.

How Much Cash Can You Get after Closing?

Call (281) 668-8124 or Contact Us to Find Out Now

We are standing by, ready to answer your questions and explain the details of our commission-sharing program.

Subscribe to our Newsletter

Share this post with your friends