The first-time buyer's guide to down payments & closing costs
Buying a home comes with upfront costs that can be easy to underestimate. This guide explains down payments and closing costs, including what they are, how much you might pay, and what options may help if saving enough feels out of reach.
What is a down payment?
A down payment is the money you put toward the purchase of a house when you take out a mortgage. It's usually shown as a percentage of the total purchase price.
You may have heard that you need to put 20% down when buying a home. That amount is often tied to avoiding private mortgage insurance (PMI), which protects your lender if you default on your mortgage. According to the National Association of Realtors, many first-time buyers put down 10%, and some conventional loans may allow as little as 3% down.
Putting more money down can lower your monthly payment, but it also means paying more up front. The right amount depends on your finances, loan type, and goals.
What are closing costs?
Closing costs are fees you and the seller pay to complete the home purchase and transfer ownership. They typically range from 2-5% of the home's sale price.
Some costs are paid by the buyer, some paid by the seller, and others may be negotiated as seller concessions.
Common closing costs may include:
- Title fees for the title search, title insurance, and other services needed to transfer the property's title
- Lender fees for processing and underwriting your loan, potentially listed as application and origination fees
- Appraisal fee required by most lenders before approving a loan
- Escrow funds for items like property taxes, homeowners insurance, and PMI
- Attorney fees in states where real estate attorneys handle title transfer and closing
These are just examples. Your final costs are listed on your closing disclosure shortly before closing. Learn more about closing costs and the home buying process.
How much you may pay up front
To close on a home, you'll generally need enough cash to cover both your down payment and the closings costs you're responsible for.
The following example shows how much cash you may need to close on a house at three different price points, assuming a 10% down payment and 5% closing costs:
| HOME PRICE | DOWN PAYMENT | CLOSING COSTS | TOTAL TO CLOSE |
|---|---|---|---|
| $100,000 | $10,000 | $5,000 | $15,000 |
| $200,000 | $20,000 | $10,000 | $30,000 |
| $300,000 | $30,000 | $15,000 | $45,000 |
Pro tip:
A lower down payment lowers your upfront costs at closing. For example, putting 3% down instead of 10% for a $200,000 house would mean you only need a down payment of $6,000 versus $20,000 (plus closing costs).
Your final closing costs may not be confirmed until a few business days before your scheduled closing date.
What if I don't have enough saved?
If saving enough up front has been a barrier, you're not alone, and help may be available. Many local, state, and private programs offer financial assistance with down payments and closing costs.
Some buyers may also qualify for government-backed loans such as programs for rural homebuyers or eligible veterans and servicemembers.
How UpPayment® can help
UpPayment* is Progressive's down payment assistance program, created to help first-time buyers overcome cost barriers.
In partnership with the National Urban League, the 2026 UpPayment program will offer at least 200 eligible homebuyers down payment assistance of up to $13,500 each. Participation includes HUD‑certified housing counseling, which is free for everyone and offers practical, personalized homebuying guidance.
Explore how UpPayment works to see if it may be a fit for you. And check out our guide to housing counseling to learn how a counselor can help you through the buying process.
