June 2025

Make the most of your down payment

A large down payment on a home can help reduce monthly mortgage payments, but a low down payment could help you buy a home sooner. In fact, according to the National Association of Realtors, in 2024, the median down payment for first-time homebuyers was just 9%.Footnote1

What you decide to put down on a home will depend on how much you can save as well as how quickly you want to move in. Here's some information to help you decide what makes sense for you.

Benefits of a lower down payment

As home prices rise, it's become more difficult for many people to save 20% or more up front. One of the key advantages of a lower down payment is that you don't have to wait for years while you build your savings.

Other advantages of a low down payment include:

  • Stop renting and start building equity — especially if your monthly mortgage payment would be the same as or less than your rental payments.
  • Choose from multiple home loan options that allow lower down payments — including Bank of America's Affordable Loan Solution® mortgage with a 3% down payment.Footnote2
  • It's easier to set aside some of your savings — so you'll still have a reserve for home improvements and emergencies.

The downside: If you put down less than 20%, you'll need to pay private mortgage insurance (PMI), which will increase your monthly payment.

Benefits of a down payment of 20% or more

With a larger down payment, you can avoid paying PMI, which can keep your monthly mortgage payment lower. You'll also pay less each month because your overall mortgage balance will be smaller.

Other advantages of a higher down payment include:

  • Possibly qualifying for a better rate, since a higher down payment reduces risk for the lender.
  • Paying less interest over the life of a loan, since the mortgage balance is lower.
  • Having more equity in the home from the start, which can be an advantage if you want to refinance or sell.
  • Getting an edge over other buyers with a more attractive offer.

The downside: Unless you already have a lot of savings, it may take longer to save up for your new home. You should also avoid depleting your savings just to maximize your down payment.

Saving is not your only option

Be sure to explore other ways to maximize your down payment and ensure your monthly mortgage payment is within your budget.

Apply for help. Many state and local governments offer down payment assistance, especially for first-time homebuyers. You can also search the Bank of America Down Payment Center to see what may be available in your area.Footnote3 Possibilities include low down payment loan options plus grants offered by Bank of America that can help qualified homebuyers with their closing costs as well as with their down payment.

Use gift funds. Many mortgages allow you to use gift funds toward your down payment. Note that they must be actual gifts — you can't pay them back, since a loan would affect your credit. But if you have friends or family who are able and willing to donate to your down payment, that could help you increase your down payment even more. Just be sure to work with your lender to confirm that gifts are allowed with your loan type.

Remember your overall goal

To become a successful homeowner, your main focus should be to make decisions that work within your budget. A lending specialist can be a helpful resource as you explore your options.

A note from your lending specialist

Whether you're ready to buy or just starting to plan, I can help you review your budget and explore your home buying options. Let's talk soon!

1 How Much Should You Put Down on a House? By Dan Green, Updated by Aleksandra Kadzielawski, The Mortgage Reports, January 22, 2025. Accessed March 2025.

2 Maximum income and loan amount limits apply. Fixed-rate mortgages (purchases or no cash out refinances), primary residences only. Certain property types are ineligible. Maximum loan-to-value ("LTV") is 97%, and maximum combined LTV is 105%. For LTV > 95%, any secondary financing must be from an approved Community Second Program. Homebuyer education may be required. Other restrictions apply.

3 Down payment and/or closing cost assistance programs may not be available in your area. Down payment and/or closing cost assistance amount may be due upon sale, refinance, transfer, or repayment of the loan, or if the senior mortgage is assumed during the term of the loan. Some programs require repayment with interest, and borrowers should become fully informed prior to closing. Not all applicants will qualify. Minimum credit scores may apply. Sales price restrictions and income requirements may apply. Homebuyer education may be required. Owner-occupied properties only. Maximum loan amounts may apply.


MAP7838189 | 04/2025