The down payment you'll see most often is 20 percent of the purchase price, but you can put down less
A 20 percent down payment is the standard benchmark because it's the point where most lenders stop requiring you to pay mortgage insurance on top of your monthly payment. On a $300,000 house, that's $60,000. On a $500,000 house, it's $100,000. But "standard" does not mean "required" — most mortgages allow down payments between 3 and 10 percent, and some programs go lower.
The actual amount you put down depends on three things: what the lender will accept, what you can afford to save, and whether you're willing to pay mortgage insurance. A smaller down payment means a larger loan, which means higher monthly payments and insurance costs. A larger down payment means you borrow less and pay less interest over time, but you need more cash upfront.
The range varies by loan type. Conventional loans (the most common kind) typically require 3 to 20 percent down. FHA loans, which are backed by the Federal Housing Administration, allow as little as 3.5 percent down. VA loans for military members often require zero down. USDA loans in rural areas also often require zero down. Each has different rules about what else you need to may have access to.
Key Takeaways
- A 20 percent down payment avoids mortgage insurance but is not required — most lenders accept 3 to 10 percent.
- Putting down less than 20 percent means you'll pay mortgage insurance as part of your monthly payment, adding hundreds of dollars per month depending on the loan size.
- FHA loans allow down payments as low as 3.5 percent; VA and USDA loans often require nothing down if you meet other requirements.
- The down payment amount you choose affects your monthly payment, total interest paid, and how quickly you build equity in the home.
How mortgage insurance changes the math
If you put down less than 20 percent on a conventional loan, you'll pay private mortgage insurance (PMI) until you reach 20 percent equity in the home. This insurance protects the lender if you stop paying, but you pay for it. The cost is usually 0.5 to 1.5 percent of the loan amount per year, divided into your monthly payment.
On a $300,000 house with a 10 percent down payment ($30,000), your loan is $270,000. PMI might add $135 to $405 per month to your payment. That's money that doesn't go toward the house — it goes to the insurance company. Once you've paid the loan down to $240,000 (80 percent of the original price), you can request PMI removal, though the exact rules depend on your lender and loan terms.
FHA loans work differently. They require mortgage insurance premium (MIP) instead, which is mandatory for the life of the loan if you put down less than 10 percent. If you put down 10 percent or more on an FHA loan, you can have it removed after 11 years. This is a real cost difference — FHA mortgage insurance is often higher than PMI, so the monthly payment is higher even though the down payment is lower.
Down payment amounts by loan type
| Loan Type | Minimum Down Payment | Mortgage Insurance Required | Who Can Use It |
|---|---|---|---|
| Conventional | 3 to 5 percent | Yes, if under 20 percent | Anyone who meets credit and income requirements |
| FHA | 3.5 percent | Yes, for life of loan if under 10 percent down | First-time and repeat homebuyers; lower credit scores accepted |
| VA | 0 percent | No mortgage insurance | Active military, veterans, surviving spouses |
| USDA | 0 percent | No mortgage insurance | Rural property buyers meeting income limits |
What happens if you can't save 20 percent
Most first-time homebuyers put down between 5 and 10 percent, not 20. The gap between what you can save and what lenders want is real, and it's why mortgage insurance exists — to let people buy homes before they've saved for a decade.
If you're putting down 5 to 10 percent, your monthly payment will be higher because you're borrowing more and paying insurance. But you're building equity from day one, and you're not renting. The trade-off is worth it for many people. Some lenders also offer down payment information programs through nonprofits or employer benefits, though these vary widely by location and employer.
If you're far from any down payment you can afford, look at FHA loans (3.5 percent minimum) or check whether you may have access to for USDA or VA programs. These exist specifically because the 20 percent standard locks people out of homeownership.
How your down payment affects the total cost
A larger down payment reduces the total amount you pay over the life of the loan because you're borrowing less and paying less interest. On a $300,000 house at 7 percent interest over 30 years, the difference is substantial.
With a 5 percent down payment ($15,000), you borrow $285,000. With a 20 percent down payment ($60,000), you borrow $240,000. The difference in total interest paid over 30 years is roughly $50,000 to $60,000, depending on exact rates and terms. That's real money. But it assumes you have the $45,000 difference sitting in savings right now, and that putting it into the house is the best use of it.
Sometimes it makes sense to put down less and invest the difference elsewhere. Sometimes it makes sense to save longer and put down more. The math depends on your interest rate, your other debts, your job stability, and what else you could do with that cash.
Down payment sources and what lenders accept
Lenders want to know where your down payment money came from. They'll ask for bank statements showing the funds have been in your account for at least two months (this varies by lender). They want to see that you saved it, not borrowed it.
Money from your own savings, a gift from a family member, or an inheritance all count. Some programs allow down payment information from nonprofits or government programs. What doesn't count: a loan from a friend, a credit card advance, or borrowed money you haven't disclosed. Lenders are checking that you have the financial stability to handle a mortgage, and undisclosed debt works against that.
If you're getting a gift, the lender will ask for a letter from the gift-giver stating it's a gift, not a loan, and that they don't expect repayment. This is standard and takes five minutes to write.
Frequently Asked Questions
Can I put down less than 3 percent?
Conventional loans rarely go below 3 percent, but FHA allows 3.5 percent and VA and USDA allow zero. If you have less than 3 percent saved, look at FHA, VA, or USDA programs first. Some lenders also offer first-time homebuyer programs with lower minimums, though these vary by state and lender.
Does a bigger down payment always mean a better deal?
Not always. A bigger down payment lowers your monthly payment and total interest, but it ties up cash you might need for emergencies or other investments. If you're choosing between putting down 20 percent and having no emergency fund, the smaller down payment is smarter. The best down payment is the one that doesn't leave you broke.
What if I put down 15 percent instead of 20 percent?
You'll pay PMI until you reach 20 percent equity, which adds $100 to $300 per month depending on the loan size. Once you've paid the loan down enough, you can request PMI removal. Some lenders let you remove it automatically when you hit 20 percent equity; others require you to ask.
Can I use my 401k or IRA for a down payment?
Some retirement accounts allow withdrawals for first-time homebuyers, but this has tax consequences and you lose years of compound growth. Talk to a tax professional before doing this — the down payment savings might cost you more in retirement later.
Do all lenders require the same down payment?
No. Different lenders have different minimums, and the same lender might offer different terms based on your credit score, income, and debt. Shop around — a lender that requires 10 percent might exist next to one that accepts 5 percent.