Down payments range from 3% to 20% of the home's purchase price, depending on the loan type and your financial situation
A down payment is the cash you pay upfront when you buy a home. The rest comes from a loan. On a $300,000 house, a 10% down payment is $30,000. A 20% down payment is $60,000. The percentage you pay depends on which mortgage program you use, how much you have saved, and what lenders will accept.
The amount matters because it affects your monthly payment, how much interest you pay over time, and whether you'll need mortgage insurance. A larger down payment usually means a smaller loan, lower monthly payments, and no insurance requirement. A smaller down payment means you borrow more, pay more each month, and almost always pay for insurance until you've built enough equity in the home.
There is no single "right" down payment amount. What you can afford to put down, what your lender requires, and what makes sense for your situation are three different questions.
Key Takeaways
- Down payments typically range from 3% to 20% of the home price, with 20% being the threshold where mortgage insurance is usually not required.
- Conventional loans often require 5% to 20% down, while FHA loans allow as little as 3.5% down but charge mortgage insurance for the life of the loan.
- VA and USDA loans may allow 0% down if you meet military service or rural property requirements.
- Your down payment amount directly affects your monthly payment, total interest paid, and whether you'll pay mortgage insurance.
- Lenders set minimum down payment requirements, but you can put down more than the minimum if you have the funds available.
How down payment percentages work with different loan types
Conventional loans (the most common type) typically require between 5% and 20% down. Some lenders will go as low as 3% for borrowers with strong credit and income. If you put down less than 20%, you'll pay private mortgage insurance (PMI) — an extra monthly fee that protects the lender if you stop paying. PMI usually costs between 0.5% and 1.5% of your loan amount per year, added to your monthly payment.
FHA loans (backed by the Federal Housing Administration) allow down payments as low as 3.5%. These are popular with first-time buyers because the down payment requirement is lower. However, FHA loans charge mortgage insurance no matter what percentage you put down — and that insurance stays on the loan for the full 30 years if you put down less than 10%. This makes the monthly payment higher than a conventional loan, even with a similar down payment.
VA loans (for military members and veterans) and USDA loans (for rural properties) may allow 0% down if you meet the program requirements. These loans have no mortgage insurance requirement, which is why the down payment can be zero. Not everyone qualifies — VA loans require military service history, and USDA loans require the property to be in a designated rural area and your income to fall within limits.
What your down payment amount means for your monthly payment
The larger your down payment, the smaller your loan, and the smaller your monthly payment. On a $300,000 house with a 30-year mortgage at 7% interest:
| Down Payment | Loan Amount | Monthly Payment (Principal & Interest) | PMI (if applicable) |
|---|---|---|---|
| 3% ($9,000) | $291,000 | ~$1,939 | ~$145/month |
| 10% ($30,000) | $270,000 | ~$1,797 | ~$135/month |
| 20% ($60,000) | $240,000 | ~$1,596 | None |
These numbers are examples only — your actual payment depends on your interest rate, loan term, property taxes, homeowners insurance, and HOA fees if applicable. The point is that every percentage point of down payment reduces both your loan amount and your monthly obligation.
Putting down 20% eliminates PMI entirely, which saves you money every month. But it also means having $60,000 in cash available for a $300,000 home. Many buyers don't have that much saved and choose a lower down payment instead, accepting the PMI cost as the trade-off for buying sooner.
How much cash you actually need to bring to closing
Your down payment is not the only money you need at closing. You'll also pay closing costs — fees for the appraisal, title search, underwriting, attorney, and other services. Closing costs typically run 2% to 5% of the loan amount, or roughly $6,000 to $15,000 on a $300,000 home.
Some of these costs can be rolled into the loan or negotiated with the seller, but most lenders require you to bring the down payment in cash. You cannot borrow the down payment itself. Some first-time buyer programs allow gifts from family members to cover part or all of the down payment, but the gift must come from a relative and you typically need to document it in writing.
Before you commit to a down payment amount, talk to a lender about the total cash you'll need at closing. Many buyers are surprised to learn that the down payment is only part of the upfront cost.
When a smaller down payment makes sense
Putting down less than 20% is not a mistake if it fits your situation. If you have $30,000 saved and the choice is between putting down 10% now or waiting three years to save $60,000, buying now often makes more financial sense — especially if home prices are rising or you're paying rent that could go toward a mortgage instead.
PMI is temporary. Once you've paid down the loan to 80% of the home's original value, you can request that PMI be removed. If your home appreciates or you make extra payments toward principal, you may reach that point faster than the standard 30-year schedule. Some buyers reach 20% equity in 5 to 10 years.
The real cost of PMI is worth comparing against the cost of waiting. If you're paying $1,500 a month in rent and could buy a home with a $2,000 mortgage (including PMI), the extra $500 a month might be worth it to build equity instead of paying rent. That's a personal calculation, not a universal rule.
Down payment information programs and gifts
If you don't have enough saved for the down payment you want, several options exist. Down payment information programs are offered by some state and local governments, nonprofits, and employers. These programs may provide grants (money you don't repay) or low-interest loans specifically for down payments. Requirements vary widely — some are limited to first-time buyers, some to certain income levels, and some to specific geographic areas.
Family gifts are another common source. A parent, grandparent, or other relative can gift you money for a down payment. The lender will ask you to sign a gift letter stating that the money is a gift, not a loan you have to repay. The gift must come from someone related to you by blood or marriage; lenders won't accept gifts from friends or employers.
Some employers offer down payment information as part of their benefits package, especially for employees in high-cost areas. Ask your HR department whether your company has a program. If you're a veteran, you may also have access to VA loan benefits that eliminate the down payment requirement entirely.
How to decide what down payment to aim for
Start by calculating what you can actually save without draining your emergency fund. Your down payment should not leave you with no cash reserves — you'll need money for repairs, maintenance, and unexpected expenses once you own the home. Most financial advisors suggest keeping 3 to 6 months of living expenses in savings separate from your down payment.
Next, talk to a lender about what down payment percentage they'll accept given your credit score, income, and debt. A lender might require 10% down if your credit is fair, but only 5% if your credit is excellent. There's no point saving for 20% down if you can buy with 5% and use the extra money for something else.
Finally, compare the cost of PMI against the benefit of buying sooner. If you're paying high rent or home prices are rising in your area, a smaller down payment now might cost less in the long run than waiting to save more. If you're in a stable rental situation and home prices are flat, waiting to save more might make sense.
Frequently Asked Questions
Can I put down less than 3% on a conventional loan?
Some lenders offer 2% down conventional loans, but they're uncommon and usually require excellent credit (740 or higher) and a debt-to-income ratio below 43%. You'll pay higher interest rates and PMI. Ask your lender what the minimum is for your specific situation.
What happens if I put down more than 20%?
You can put down as much as you want — 25%, 30%, or even 50%. A larger down payment reduces your loan amount, your monthly payment, and the total interest you pay over the life of the loan. There's no penalty for putting down more than 20%.
Can I remove PMI before I reach 20% equity?
You can request PMI removal once you've paid the loan down to 80% of the home's original purchase price. If your home appreciates significantly, you may reach that point faster. Some lenders will remove PMI earlier if you refinance or if the home's value increases enough to justify a new appraisal.
Do I have to put down 20% to avoid PMI?
On conventional loans, yes — 20% is the standard threshold. FHA loans charge mortgage insurance regardless of down payment. VA and USDA loans have no mortgage insurance requirement even with 0% down. Your loan type determines whether PMI is required.
What if I can't save a down payment?
Explore down payment information programs through your state or local housing authority, check whether your employer offers information, ask family members about gifts, and look into VA or USDA loans if you may have access to. Some nonprofits also offer down payment help for low-income buyers. Your options depend on your location and circumstances.