What you actually need to put down on a $400,000 house
The down payment on a $400,000 house ranges from $12,000 to $200,000, depending on the loan type and your lender's requirements. A conventional loan typically requires 3% to 20% down. An FHA loan requires 3.5% down. A VA loan (if you may have access to) requires 0% down. The exact amount you need depends on which loan program you use, your credit score, and whether you have enough cash on hand.
The down payment is the money you bring to closing. The lender finances the rest through a mortgage. A larger down payment means a smaller loan, lower monthly payments, and no mortgage insurance. A smaller down payment means you borrow more, pay more each month, and usually pay an insurance premium on top of your mortgage payment.
Key Takeaways
- A 3% down payment on a $400,000 house is $12,000; a 20% down payment is $80,000.
- Conventional loans with less than 20% down require private mortgage insurance (PMI), which adds $200 to $400 per month to your payment.
- FHA loans allow 3.5% down ($14,000) but charge mortgage insurance for the life of the loan if you put down less than 10%.
- VA loans require 0% down if you are a veteran or active-duty service member, but you pay a funding fee instead.
- Your credit score, debt-to-income ratio, and savings affect whether a lender will accept a lower down payment.
Down payment amounts by loan type
Each loan program has different rules about how much you must put down. Conventional loans are mortgages not backed by the federal government. They typically require 3% to 20% down, though some lenders will go as low as 3% if your credit score is 620 or higher and your debt-to-income ratio is below 43%. On a $400,000 house, 3% is $12,000 and 20% is $80,000.
FHA loans are backed by the Federal Housing Administration and are designed for buyers with lower credit scores or smaller savings. They require 3.5% down on a $400,000 house, which is $14,000. You can also put down 10% ($40,000) if you want to avoid mortgage insurance later. FHA loans charge an upfront mortgage insurance premium (1.75% of the loan amount) and an annual premium that stays on your loan for either 11 years or the life of the loan, depending on your down payment.
VA loans are available to veterans, active-duty service members, and some surviving spouses. They require 0% down. Instead of a down payment, you pay a funding fee that ranges from 1.4% to 3.6% of the loan amount, depending on your military branch and whether you have used a VA loan before. On a $400,000 house, that fee is roughly $5,600 to $14,400.
USDA loans are for rural properties and require 0% down if your income is below the area limit. Like VA loans, they charge an upfront fee (1% of the loan amount) and an annual insurance premium instead of a down payment.
What mortgage insurance costs and when you pay it
If you put down less than 20% on a conventional loan, your lender requires private mortgage insurance (PMI). PMI protects the lender if you stop paying. It does not protect you. On a $400,000 house with a 10% down payment ($40,000), your loan is $360,000. PMI typically costs 0.5% to 1% of the loan amount per year, paid monthly. That is roughly $150 to $300 per month added to your mortgage payment.
You can remove PMI once you have paid down the loan to 80% of the home's original value, or after 11 years if you made your payments on time. If you put down 3% ($12,000), you are borrowing $388,000, and PMI will cost closer to $200 to $400 per month. Over 11 years, that is $26,400 to $52,800 in insurance alone.
FHA mortgage insurance works differently. You pay an upfront premium (1.75% of the loan amount) at closing, which is usually rolled into your loan. On a $400,000 house with 3.5% down, that is $7,000. You also pay an annual premium of 0.55% to 0.8% of the loan amount per year, depending on your down payment and loan term. If you put down less than 10%, this annual premium stays for the life of the loan. If you put down 10% or more, it drops off after 11 years.
How much cash you need beyond the down payment
The down payment is not the only money you bring to closing. You also pay closing costs, which typically range from 2% to 5% of the home price. On a $400,000 house, that is $8,000 to $20,000. Closing costs include the appraisal, title search, title insurance, attorney fees, recording fees, and lender fees. Some of these can be negotiated or rolled into the loan, but most lenders require you to pay them in cash.
You should also have reserves after closing — money left in the bank after you have paid the down payment and closing costs. Lenders like to see 2 to 6 months of mortgage payments in reserves, especially if you are putting down less than 20%. On a $400,000 house with a conventional loan, your monthly payment (principal and interest only) will be roughly $2,100 to $2,400, depending on interest rates. Reserves of 2 to 6 months would be $4,200 to $14,400.
Adding it up: if you put down 10% ($40,000) and have closing costs of 3% ($12,000), you need $52,000 in cash before you even move in. If your lender wants 3 months of reserves, add another $6,300 to $7,200. Many first-time buyers do not account for closing costs and reserves, so they run short of cash even though they have saved enough for the down payment.
Down payment information programs and gifts
If you do not have enough cash saved, down payment information programs exist in most states and counties. These are usually run by local housing authorities, nonprofits, or state housing finance agencies. Some programs give you a grant (money you do not repay). Others give you a second loan at 0% interest. The amount varies by location and your income, but many cover 3% to 5% of the purchase price.
You can also receive a down payment gift from a family member. Lenders allow gifts for the down payment on most loan types, but they have rules: the gift must come from a blood relative or someone with a documented family relationship, and the person giving the gift cannot expect repayment. You will need a gift letter signed by the person giving the money, stating the amount and that it is a gift, not a loan. The lender will verify the funds came from that person's account.
Some employers and nonprofits offer down payment information as an employee benefit. If you work in education, healthcare, or public service, your employer may have a program. The amount and terms vary widely, so check with your human resources department.
How your credit score and debt affect the down payment you can make
Lenders use your credit score and debt-to-income ratio to decide whether to accept a lower down payment. A credit score of 740 or higher usually qualifies you for the best rates and the lowest down payment options (3% on conventional loans). A score between 620 and 739 may limit you to 5% to 10% down, depending on the lender. A score below 620 typically disqualifies you from conventional loans; you would need an FHA loan instead.
Your debt-to-income ratio is your total monthly debt payments divided by your gross monthly income. Lenders usually want this below 43%, though some will go to 50% if your credit is strong and you have reserves. If you have student loans, car payments, credit card debt, or other obligations, they count against you. A higher down payment can sometimes offset a higher debt-to-income ratio, because it lowers your monthly mortgage payment.
If your credit score is low or your debt is high, putting down 10% to 15% instead of 3% can make the difference between approval and denial. It also locks in a better interest rate, which saves you thousands over the life of the loan.
Comparing down payment scenarios for a $400,000 house
| Down Payment % | Down Payment Amount | Loan Amount | Monthly PMI/Insurance | Loan Type |
|---|---|---|---|---|
| 3% | $12,000 | $388,000 | $200–$400 (PMI) | Conventional |
| 5% | $20,000 | $380,000 | $150–$300 (PMI) | Conventional |
| 10% | $40,000 | $360,000 | $150–$250 (PMI) | Conventional |
| 20% | $80,000 | $320,000 | $0 (no PMI) | Conventional |
| 3.5% | $14,000 | $386,000 | $180–$250 (FHA insurance) | FHA |
| 0% | $0 | $400,000 | $5,600–$14,400 (funding fee) | VA |
Frequently Asked Questions
Can I put down less than 3% on a conventional loan?
Most conventional lenders require at least 3% down, but some require 5% or more. If you cannot put down 3%, an FHA loan at 3.5% down is usually your next option. Some down payment information programs can cover the difference between what you have saved and 3%, turning a 0% down payment into a 3% down payment.
Is it better to put down 10% or 20%?
Putting down 20% eliminates PMI, which saves you $150 to $400 per month. Over 30 years, that is $54,000 to $144,000. However, if you have the cash for 20% down but could invest it elsewhere at a higher return, or if you need to keep reserves for emergencies, 10% down may make sense. Run the numbers with your lender to see the exact monthly difference.
What happens if I cannot save enough for closing costs?
Some lenders allow you to roll closing costs into the loan, which means you borrow the money instead of paying it upfront. This increases your loan amount and your monthly payment, but it means you need less cash at closing. Ask your lender whether they offer this option and what the trade-offs are.
Do I have to use my entire down payment savings?
No. You can put down more than the minimum if you have the cash. Putting down 15% instead of 10% lowers your monthly payment and may remove PMI sooner. However, keep enough in reserves for emergencies and home repairs. A new roof, furnace, or foundation issue can cost $5,000 to $25,000.
Can I get a VA loan if I am still on active duty?
Yes. Active-duty service members, veterans, and some surviving spouses of veterans are may be able to access for VA loans. You will need a Certificate of may be able to access from the VA, which you can request online through VA.gov or through your lender. The process takes a few days to a few weeks.