Down payment percentages vary, but most lenders want between 3 and 20 percent of the home's purchase price
The down payment is the money you put toward the house yourself when you buy it. The rest comes from a loan (the mortgage). How much you need to put down depends on the type of loan you're getting and the lender you're working with.
A conventional loan — the most common type from a private bank — typically requires 5 to 20 percent down. A Federal Housing Administration (FHA) loan, which is backed by the government and designed for first-time buyers, often accepts 3.5 percent down. A Veterans Affairs (VA) loan for military members and veterans may require zero percent down. Some lenders will go as low as 3 percent on a conventional loan, but this is less common and usually comes with higher costs.
The percentage matters because it changes how much you borrow and how much you pay in interest over time. A larger down payment means a smaller loan, lower monthly payments, and less interest paid overall. A smaller down payment means you borrow more, pay more each month, and pay more in total interest — but you need less cash upfront.
Key Takeaways
- Conventional loans typically require 5 to 20 percent down, while FHA loans often accept 3.5 percent and VA loans may require nothing.
- The percentage you put down is calculated from the home's purchase price, not the loan amount.
- Putting down less than 20 percent usually means paying mortgage insurance, which adds to your monthly payment.
- Your credit score, income, and savings affect how much down payment a lender will accept.
How the percentage is calculated
The down payment percentage is straightforward math: take the amount you're putting down and divide it by the total purchase price of the home. If you're buying a house for $300,000 and putting down $60,000, that's 20 percent ($60,000 ÷ $300,000 = 0.20, or 20%).
The lender uses this percentage to decide how much you can borrow. If you put down 10 percent on a $300,000 house, you're putting down $30,000 and borrowing $270,000. The lender will check whether you can afford the monthly payment on that $270,000 loan based on your income and debts.
Why 20 percent is often mentioned
Twenty percent is a threshold that matters because it's where mortgage insurance usually goes away. Mortgage insurance is an extra monthly fee that protects the lender if you stop paying. If you put down less than 20 percent, you'll pay this insurance on top of your regular mortgage payment.
For example, on a $300,000 house with 10 percent down, mortgage insurance might add $200 to $400 per month to your payment. With 20 percent down, that fee disappears. This is why lenders and real estate agents often talk about 20 percent as a goal — it saves you money over time. But it's not a requirement. Many people buy homes with 5 or 10 percent down and accept the mortgage insurance cost.
Down payment percentages by loan type
| Loan Type | Typical Down Payment Range | Who It's For |
|---|---|---|
| Conventional | 3 to 20 percent | Buyers with good credit and stable income |
| FHA | 3.5 to 10 percent | First-time buyers or those with lower credit scores |
| VA | 0 to 5 percent | Military members, veterans, and surviving spouses |
| USDA | 0 percent | Buyers in rural areas with moderate income |
What affects the percentage a lender will accept
Lenders don't just pick a percentage randomly. They look at your credit score (your payment history), your debt-to-income ratio (how much you already owe compared to what you earn), and how much cash you have saved. A buyer with a credit score above 740, low existing debt, and substantial savings might get approved with 3 percent down. A buyer with a score of 620 and higher debt might need 10 percent or more.
Your job stability and income also matter. If you've been in the same job for two years and earn a steady salary, lenders see you as lower risk. If you're self-employed or changed jobs recently, they may ask for a larger down payment to offset that uncertainty.
The real cost of a smaller down payment
Putting down 5 percent instead of 20 percent saves you $45,000 upfront on a $300,000 house. But over the life of a 30-year mortgage, you'll pay more in interest and mortgage insurance. On that same house, the difference in total interest paid could be $50,000 to $100,000 or more, depending on interest rates.
This doesn't mean you should wait years to save 20 percent. Home prices and interest rates change, and waiting might cost you more in the long run. The right down payment percentage depends on your situation: how long you plan to stay in the house, current interest rates, and whether you'd rather have cash in savings for emergencies.
Frequently Asked Questions
Can I put down less than 3 percent?
Some lenders offer 2 percent down programs, but they're rare and usually come with higher interest rates and mortgage insurance costs. Most mainstream lenders start at 3 percent for conventional loans. FHA loans at 3.5 percent are often a better deal if you're putting down very little.
What happens if I put down more than 20 percent?
You'll avoid mortgage insurance and borrow less money, which lowers your monthly payment and total interest paid. The tradeoff is having less cash available for emergencies or other needs. Some buyers put down 25 or 30 percent; others prefer to keep extra savings liquid.
Do I have to put down the same percentage as my friend did?
No. Your down payment percentage depends on your credit, income, debts, and the loan type you choose. Two buyers can purchase the same house with different down payment amounts. What matters is what works for your finances.
Does the down payment percentage affect my interest rate?
Yes, usually. A larger down payment often qualifies you for a lower interest rate because the lender is taking on less risk. The difference might be 0.25 to 0.5 percent, which adds up significantly over 30 years. Ask your lender for rate quotes at different down payment levels.