The down payment on a $500,000 house ranges from $17,500 to $100,000, depending on the loan type and your lender's rules
The amount you put down is a percentage of the home's price. Most lenders require between 5% and 20% down, though some programs go lower. On a $500,000 house, that means you could put down anywhere from $25,000 (5%) to $100,000 (20%). A few loan types allow 3.5% down, which would be $17,500, but these come with higher costs and stricter requirements.
Your actual down payment depends on three things: the loan type you use, the lender you choose, and what you can afford. A conventional loan (the most common type) typically wants 10% to 20% down. An FHA loan allows 3.5% down. A VA loan (if you're military or a veteran) may require 0% down. Each option has different costs attached, so the smallest down payment is not always the cheapest choice overall.
Key Takeaways
- A 5% down payment on a $500,000 house is $25,000; a 20% down payment is $100,000; an FHA loan allows 3.5% down, which is $17,500.
- Conventional loans usually require 10% to 20% down, while FHA loans allow 3.5% down and VA loans may require nothing down.
- Putting down less than 20% means you will pay mortgage insurance, which adds to your monthly payment and total cost.
- Your lender will also require cash reserves and proof of income, so down payment is only one part of what you need to show.
What happens when you put down less than 20%
If you put down less than 20%, your lender will require you to pay mortgage insurance. This is insurance that protects the lender if you stop paying the loan. You pay for it, but it protects them. On a $500,000 house with a 10% down payment ($50,000), mortgage insurance typically costs between 0.5% and 1% of the loan amount per year, added to your monthly payment.
The lower your down payment, the higher the insurance rate. A 5% down payment costs more in insurance than a 10% down payment. This means that while a 5% down payment requires less cash upfront, your monthly payment will be higher. Over the life of a 30-year loan, this adds up significantly. Many people put down 10% to 15% as a middle ground — enough to lower insurance costs but not so much that they drain their savings.
Mortgage insurance stays on your loan until you have paid down the balance to 80% of the home's original value. On a $500,000 house, that means you stop paying insurance once your loan balance drops to $400,000. How fast that happens depends on your monthly payment and how long you keep the loan.
Down payment requirements by loan type
| Loan Type | Minimum Down Payment | Down Payment on $500K House | Who Can Use It |
|---|---|---|---|
| Conventional | 5% to 20% | $25,000 to $100,000 | Anyone with good credit and income |
| FHA | 3.5% | $17,500 | First-time buyers and others; credit score 580+ |
| VA | 0% | $0 | Military members, veterans, surviving spouses |
| USDA | 0% | $0 | Rural property buyers; income limits explore |
Each loan type has different rules about what else you need besides the down payment. FHA loans require mortgage insurance no matter what percentage you put down, and it stays on the loan for the full 30 years if you put down less than 10%. VA and USDA loans have no mortgage insurance requirement, which is one reason they are popular with people who meet the requirements.
Conventional loans are the most flexible but typically require a higher credit score and more cash reserves. If you do not meet the requirements for FHA, VA, or USDA loans, a conventional loan is usually your only option, even if it means putting down more money upfront.
Cash you need beyond the down payment
The down payment is not the only money you need at closing. You will also pay closing costs, which typically run 2% to 5% of the home price. On a $500,000 house, that is $10,000 to $25,000. Closing costs cover the appraisal, title search, loan origination, and other fees. Some of these you can negotiate or shop around for; others are set by law or regulation.
You will also need to show your lender that you have cash reserves — money left over after the down payment and closing costs. Lenders want to see that you can cover a few months of mortgage payments if you lose income. For a $500,000 house, this might be $15,000 to $30,000 depending on the lender and loan type. This money stays in your bank account; you do not spend it at closing.
Add these together and you need roughly 10% to 15% of the home price in total liquid cash, even before you choose a down payment percentage. On a $500,000 house, that is $50,000 to $75,000 in the bank before you start the process. This is why many people save for a year or more before buying a home at this price point.
How your credit score affects down payment options
Your credit score — a number that shows how reliably you have paid past debts — determines which loan types you can use and what down payment percentage each lender will accept. A score of 740 or higher typically opens access to conventional loans with 5% down and the best interest rates. A score between 680 and 739 may require 10% down. Below 680, you may be limited to FHA loans or need a larger down payment.
If your score is below 620, most lenders will not work with you on a $500,000 purchase. You would need to spend time raising your score first — typically by paying down existing debt and making on-time payments for six months to a year. This is not a quick fix, but it is worth doing because a higher score saves you thousands in interest over the life of the loan.
Strategies for saving a down payment on a high-price home
Saving $25,000 to $100,000 takes time. Many people use a combination of approaches: setting aside a percentage of each paycheck, selling items they no longer need, using a tax refund, or receiving a gift from family. Some employers offer down payment information programs; ask your HR department if yours does.
If you have a 401(k) or similar retirement account, some plans allow you to borrow against your balance for a home purchase. This is not the same as withdrawing the money — you repay the loan to yourself with interest. Talk to your plan administrator about whether this option exists for you and what the rules are.
Another option is to buy a less expensive home first, build equity, and sell it later to use that equity as a down payment on a $500,000 house. This takes longer but spreads the financial burden across multiple years and multiple homes.
What to do if you cannot save the down payment you want
If you are ready to buy but have saved less than you hoped, you have options. An FHA loan with 3.5% down ($17,500) gets you into a home faster than waiting to save 20%. The trade-off is that you pay mortgage insurance for the full loan term, which costs more overall. But if you plan to stay in the home for 10+ years, the monthly cost may be worth it to you.
A gift from a family member counts toward your down payment in most loan programs. The lender will ask for a letter stating that the money is a gift and does not need to be repaid. This is a common and legitimate way to close the gap between what you have saved and what you need.
Some lenders offer down payment information programs, though these are less common for homes at the $500,000 price point. These programs may offer grants (money you do not repay) or second mortgages (a separate loan you repay). Search your state's housing finance agency website to see what programs exist in your area.
Frequently Asked Questions
Can I put down less than 5% on a $500,000 house?
Yes, with an FHA loan you can put down 3.5% ($17,500), and with a VA or USDA loan you can put down 0%. Conventional loans rarely go below 5%. The lower the down payment, the higher your monthly mortgage insurance cost, so compare the total monthly payment across options before deciding.
Does a larger down payment lower my interest rate?
Usually yes, but not always by much. A larger down payment shows the lender you are less risky, so they may offer a slightly lower interest rate. The difference is often 0.25% to 0.5%, which saves you money over time. However, the savings may not be worth it if putting down more money leaves you without emergency savings.
What if I have a gift for the down payment?
Most lenders accept gifts from family members. You will need a signed letter from the person giving the money stating it is a gift and does not need to be repaid. The lender will verify the money came from their bank account. Gifts do not count as income and do not affect your debt-to-income ratio.
Can I borrow the down payment from someone?
No. If the money is a loan, the lender will count it as a debt you owe, which increases your debt-to-income ratio and may disqualify you or lower the loan amount you can get. The money must be a gift or come from your own savings, retirement account, or employer program.
How long does it take to save a down payment for a $500,000 house?
It depends on your income and current savings. If you save $1,000 per month, a 10% down payment ($50,000) takes five years. A 20% down payment ($100,000) takes ten years. Many people aim for 10% to 15% as a balance between saving time and keeping monthly costs reasonable.