What you'll actually need to put down on a $400,000 house

The amount you put down depends on the loan type you choose, not on a fixed rule. Conventional loans typically require 3% to 20% down. FHA loans allow 3.5% down. VA loans (if you're may be able to access) allow 0% down. USDA loans (in rural areas) also allow 0% down. On a $400,000 house, that means anywhere from $0 to $80,000, depending on which loan you may have access to for.

Your down payment affects your monthly payment, your interest rate, and whether you'll pay mortgage insurance. A larger down payment lowers your monthly cost and removes the insurance requirement faster. A smaller down payment lets you buy sooner with less cash on hand right now, but costs more over time.

The lender will also look at your debt-to-income ratio, credit score, and savings history. Down payment size alone doesn't determine whether you can borrow. Many first-time buyers can may have access to for loans with down payments under 5%, but the specific amount you can put down depends on your financial situation and the loan program.

Key Takeaways

  • FHA loans allow 3.5% down ($14,000 on a $400,000 house) and are common for first-time buyers, though you'll pay mortgage insurance for the life of the loan.
  • Conventional loans with 3% down ($12,000) exist but usually require mortgage insurance until you reach 20% equity, adding $200 to $400 per month to your payment.
  • VA and USDA loans allow 0% down if you meet may be able to access requirements, but VA loans are only for military members and USDA loans only for rural properties.
  • Your down payment size affects your interest rate—lenders typically offer better rates to borrowers putting down 10% or more.
  • Closing costs (typically 2% to 5% of the purchase price) are separate from your down payment and must be paid at signing.

FHA loans: the most common path for first-time buyers

FHA loans allow you to put down as little as 3.5% on a $400,000 house, which is $14,000. You'll need a credit score of at least 580 to may have access to, though scores above 620 get better rates. The FHA insures the loan, which means the lender takes less risk and can offer lower down payment requirements.

The trade-off is mortgage insurance. You'll pay an upfront mortgage insurance premium (1.75% of the loan amount, added to what you borrow) and an annual premium (0.55% to 0.80% of the loan balance per year, split into monthly payments). On a $400,000 house with $14,000 down, that insurance adds roughly $250 to $350 per month to your payment. You cannot remove this insurance—it stays for the life of the loan.

FHA loans also have limits on how much you can borrow in your area. In most counties, the limit is higher than $400,000, but check your county's FHA loan limit before you commit to a price range. The property must meet FHA standards, which means the inspector will flag serious problems that a conventional lender might overlook.

Conventional loans: lower insurance costs if you can put down more

Conventional loans (not backed by the FHA, VA, or USDA) require a minimum of 3% down in most cases, which is $12,000 on a $400,000 house. However, putting down less than 20% means you'll pay private mortgage insurance (PMI). PMI typically costs 0.5% to 1.5% of your loan amount per year, or $150 to $450 per month on a $400,000 loan.

The advantage of conventional loans is that PMI can be removed once you reach 20% equity in the home (either through payments or home appreciation). On a $400,000 house, that's $80,000 in equity. Depending on your loan terms and home value changes, this could take 8 to 15 years, but it's not permanent like FHA insurance.

Conventional loans require a credit score of at least 620, though 640 or higher gets you better rates and terms. Your debt-to-income ratio (total monthly debt payments divided by gross monthly income) usually cannot exceed 43%, though some lenders go to 50% if you have strong savings and a high credit score.

VA and USDA loans: zero down payment if you're may be able to access

If you're a military member, veteran, or surviving spouse, you may may have access to for a VA loan, which allows 0% down. You'll pay a funding fee (1.4% to 3.6% of the loan amount, depending on your service history and down payment) instead of mortgage insurance. On a $400,000 house with 0% down, that fee is roughly $5,600 to $14,400, usually rolled into your loan.

VA loans have no upper limit on the loan amount in most cases, and the VA guarantees a portion of the loan to the lender. Interest rates are typically competitive, and you don't pay PMI. The main requirement is a Certificate of may be able to access from the VA, which you can request online through VA.gov.

USDA loans work similarly for rural properties (defined by USDA zip code maps, not by how rural a place feels). You can put down 0% and pay no mortgage insurance if your income is below 115% of the area median. The USDA guarantees the loan instead of requiring insurance. Check the USDA Rural Development website to see if your target property falls in an may be able to access area.

How down payment size changes your monthly payment and interest rate

A larger down payment lowers your monthly payment in two ways: you borrow less money, and lenders offer lower interest rates to borrowers with larger down payments. The difference is real. On a $400,000 house, putting down 10% instead of 3% might lower your interest rate by 0.25% to 0.5%, which saves $50 to $150 per month over 30 years.

Down payment size also affects how quickly you build equity. With 3% down, your first payments go mostly toward interest and insurance. With 20% down, a larger portion of each payment goes toward principal, and you own more of the home when ready.

However, a smaller down payment lets you buy sooner if you don't have $80,000 saved. The question is whether waiting to save more money costs you more than paying insurance for a few years. If home prices in your area are rising 5% per year and you can buy now with 5% down instead of waiting two years to save 20%, you may come out ahead even after paying insurance.

Closing costs are separate from your down payment

Your down payment is not the only cash you need at closing. Closing costs typically run 2% to 5% of the purchase price—on a $400,000 house, that's $8,000 to $20,000. These costs cover the appraisal, title search, title insurance, attorney fees, recording fees, and lender fees.

You'll receive a Closing Disclosure document at least three business days before closing that itemizes every cost. Some costs can be negotiated or split with the seller. Some lenders allow you to roll closing costs into the loan (called "no-cost" or "low-cost" mortgages), but this raises your interest rate slightly.

Plan to have your down payment plus closing costs available before you make an offer. Lenders will verify that the funds are in your account and have been there for at least 60 days (to prevent fraud). If you receive a gift from a family member to help with down payment or closing costs, the lender will require a gift letter stating the money does not need to be repaid.

First-time buyer programs that may reduce your down payment

Many states, counties, and nonprofits offer down payment information programs for first-time buyers. These programs may provide grants (money you don't repay), forgivable loans (loans that disappear if you stay in the home for a set period), or matched savings accounts. The amount varies widely—some programs cover $5,000 to $15,000, others cover up to 5% of the purchase price.

may be able to access usually depends on your income (often capped at 80% to 120% of area median income), credit score (usually 620 or higher), and whether you've completed a homebuyer education course. Some programs are only for specific professions (teachers, healthcare workers, first responders) or specific neighborhoods.

To find programs in your area, contact your state housing finance agency, your county assessor's office, or a HUD-approved housing counselor. The National Foundation for Credit Counseling and NeighborWorks America both maintain searchable databases of local programs. Starting your search here is faster than calling individual lenders.

Frequently Asked Questions

Can I use a gift from family for my down payment?

Yes. The lender will require a gift letter from the family member stating the amount, that it's a gift (not a loan), and that repayment is not expected. The gift must come from someone related to you by blood, marriage, or adoption. Some lenders allow gifts from employers or close friends if documented properly. The money must be in your account for at least 60 days before closing.

What happens if I put down less than 20% on a conventional loan?

You'll pay private mortgage insurance (PMI), typically 0.5% to 1.5% of the loan amount per year. PMI can be removed once you reach 20% equity through a combination of payments and home appreciation. This usually takes 8 to 15 years. You can also remove PMI by refinancing once your home value rises enough.

Is it better to put down 3% or save for 10%?

It depends on your situation. Putting down 3% lets you buy sooner and keeps cash available for emergencies. Putting down 10% lowers your interest rate (usually by 0.25% to 0.5%), removes PMI faster, and reduces your monthly payment. If home prices are rising quickly in your area, buying sooner may be worth the extra insurance cost. If prices are stable, waiting to save more may save you money overall.

Do I need to have all my down payment and closing costs saved before I start looking?

You should have them saved or have a clear plan to have them before you make an offer. Lenders verify that funds are in your account and have been there for 60 days. If you're still saving, get pre-approved first so you know exactly what amount you need and can plan your timeline accordingly.

Can I put down more than 20% to avoid PMI?

Yes. Putting down more than 20% eliminates PMI on a conventional loan and lowers your interest rate further. However, you're tying up cash that could go toward emergency savings, retirement, or other investments. The math depends on your interest rate, your investment returns, and your comfort with having liquid savings.