What You Should Save for a House Down Payment, By State

Buying a house is easily one of the most significant purchases a person will make in his or her lifetime. But, for most people, it doesn’t happen quickly; in fact, it takes a lot of planning to make that purchase a reality. And one of the very first steps is saving enough money for a down payment.

The general rule for home buying is 20 percent of the projected home price as a down payment (though in some cases, it can be less or more). Though the down payment ultimately goes to the seller, mortgage lenders prefer that the buyer pays as high a down payment as possible. The thinking is the more money a buyer has invested in their home, the less likely they are to default on loan payments. A large down payment also helps potential buyers avoid the purchase of private mortgage insurance (PMI), which insures the mortgage lender against losing money if the buyer can’t make his or her mortgage payment.

While 20 percent is a good starting point for most home buyers, in some more competitive real estate markets like New York City and San Francisco, larger down payments offer you a better chance at securing the property. “It’s not uncommon to receive multiple offers on a competitive property, “says Shawn Kunkler of Paragon Real Estate Group in San Francisco. Agents will put together a list of all the offers received. The more money a buyer puts down, the better chance they have for closing a sale. “You will be competing with buyers who are putting as much as 50 percent to 100 percent down,” says Tyler Whitman of Triplemint real estate in Manhattan. “The more cash you have to put down on a property, the more security the seller has in your ability to close.”

There are some markets, too, where less than 20 percent down is totally acceptable: Think less competitive, buyer-friendly markets where there are more houses wanting to be sold than people wanting to buy. Also, those buying with a government-sponsored loan also usually have a smaller down payment.

All that being said, here is a look at what you should save for a down payment. These numbers are based off 20% of the median home price by state, using data from Trulia.