How Much Down Payment Do You Need for a House?

The 20% down payment is personal finance gospel, but it's not the only option -- and for many buyers, it's not even the best one. In 2026, you can put down as little as 0% with certain loan programs. The real question isn't "how much do I need?" but "how much should I put down given my situation?"

Down Payment Options by Loan Type

Different mortgage programs have different minimum requirements:

• Conventional loan (first-time buyer): 3% minimum. On a $400K home, that's $12,000 down.
• Conventional loan (standard): 5% minimum. On a $400K home, that's $20,000 down.
• FHA loan: 3.5% minimum with a credit score of 580+. On a $400K home, that's $14,000 down.
• VA loan: 0% down for eligible veterans and active-duty military. No down payment required on any purchase price.
• USDA loan: 0% down for eligible rural properties and income-qualified buyers.
• Conventional (PMI avoidance): 20% down eliminates private mortgage insurance. On a $400K home, that's $80,000 down.

See how different down payment amounts affect your monthly payment with our home affordability calculator.

Why Do People Recommend Putting 20% Down?

Putting 20% down remains the gold standard for several reasons:

• No PMI: Private mortgage insurance costs 0.5-1.5% of the loan amount annually. On a $400K mortgage, that's $2,000-$6,000/year ($167-$500/month) in extra costs that don't build equity.
• Lower monthly payment: A smaller loan means less principal and interest each month
• Better interest rates: Lenders typically offer the best rates to borrowers with 20%+ down
• Instant equity cushion: 20% equity protects you from being underwater if home values dip
• Stronger offer: In competitive markets, sellers prefer buyers with larger down payments because they're less likely to have financing issues

Should You Buy a House With Less Than 20% Down?

Saving 20% can take years, and waiting has real costs:

• Rising home prices: If homes appreciate 3-5% annually, a $400K house becomes $420K-$440K in two years. You're chasing a moving target.
• Rent payments: Every month you rent, you're paying someone else's mortgage. If rent is $2,000/month, that's $48,000 over two years of saving.
• Opportunity cost: Home equity builds from day one. Starting sooner means more time for appreciation and principal paydown.
• PMI is temporary: PMI automatically drops off once you reach 20% equity. On many loans, this happens within 5-8 years through a combination of payments and appreciation.

Model different down payment scenarios with our mortgage calculator to see the monthly payment difference between 5%, 10%, and 20% down.

How Much Does Down Payment Size Actually Matter?

On a $400,000 home at 6.5% interest, here's how the monthly payment changes:

• 3% down ($12,000): $388K mortgage = $2,452/month P&I + ~$194 PMI = $2,646/month
• 5% down ($20,000): $380K mortgage = $2,402/month P&I + ~$158 PMI = $2,560/month
• 10% down ($40,000): $360K mortgage = $2,275/month P&I + ~$150 PMI = $2,425/month
• 20% down ($80,000): $320K mortgage = $2,023/month P&I + $0 PMI = $2,023/month

The difference between 3% and 20% down is $623/month -- significant, but it requires $68,000 more cash upfront. That's years of savings for many buyers.

Down Payment Assistance Programs

Many states and local governments offer down payment help for first-time buyers:

• Grants: Free money that doesn't need to be repaid, typically $5,000-$25,000
• Forgivable loans: Second mortgages that are forgiven after you live in the home for a set period (usually 5-10 years)
• Matched savings programs: Government matches your savings 2:1 or 3:1 for down payment purposes
• Tax credits: Mortgage credit certificates reduce your federal tax liability, freeing up cash for your down payment

Check your state's housing finance authority website for current programs. Many have income limits that are higher than you'd expect -- often up to 120% of area median income.

Closing Costs: The Expense People Forget

Down payment isn't your only upfront cost. Budget for closing costs of 2-5% of the purchase price:

• On a $400K home: $8,000-$20,000 in closing costs
• Common costs: Lender fees, appraisal, title insurance, attorney fees, prepaid taxes and insurance

So a 20% down payment on a $400K home isn't $80,000 -- it's $88,000-$100,000 when you include closing costs. Make sure your savings target accounts for both.

Start building your savings plan with our savings calculator to see how long it will take to reach your down payment goal.

The Bottom Line

There's no single right answer for down payment size. VA-eligible buyers should seriously consider 0% down (it's one of the best benefits available). First-time buyers with limited savings can start with 3-5% and work toward 20% equity over time. If you can comfortably put 20% down without emptying your emergency fund, do it -- you'll save thousands in PMI and interest.

Whatever your situation, run the numbers first. Use our home affordability calculator to find your comfortable price range, and model specific scenarios with the mortgage calculator.