The range is 3 to 20 percent of the home's purchase price, and where you land depends on your loan type, credit profile, and what you can afford to save.
A down payment is the cash you hand over at closing, expressed as a percentage of what the house costs. If you buy a $300,000 home and put down $60,000, that is 20 percent. The rest comes from a mortgage loan you repay over 15 or 30 years.
The minimum down payment varies by loan program. Federal Housing Administration (FHA) loans allow 3.5 percent down. Conventional loans backed by Fannie Mae or Freddie Mac typically require 3 to 5 percent for borrowers with decent credit. Veterans Affairs (VA) loans and some USDA loans in rural areas allow zero down. Anything below 20 percent usually triggers private mortgage insurance (PMI), a monthly fee that protects the lender if you stop paying.
Most first-time buyers put down between 5 and 10 percent. Most repeat buyers put down 15 to 20 percent or more. The difference usually reflects how much time they had to save and whether they have equity from a previous home sale.
Key Takeaways
- Down payments range from zero (VA and some USDA loans) to 20 percent or more, with 5 to 10 percent common for first-time buyers.
- Any down payment below 20 percent triggers private mortgage insurance, which adds $100 to $300+ per month depending on the loan size and your credit score.
- Your loan type determines your minimum: FHA requires 3.5 percent, conventional loans typically start at 3 percent, and VA loans allow zero down.
- The down payment you choose affects your monthly payment, total interest paid over the life of the loan, and whether you can afford the home at all.
How down payment size affects your monthly payment and total cost
A smaller down payment means a larger loan, which means higher monthly payments and more interest paid over time. On a $300,000 home at 7 percent interest over 30 years, the difference is stark:
| Down Payment | Loan Amount | Monthly Payment (Principal + Interest) | Total Interest Paid |
|---|---|---|---|
| 3% ($9,000) | $291,000 | $1,938 | $408,680 |
| 10% ($30,000) | $270,000 | $1,797 | $377,000 |
| 20% ($60,000) | $240,000 | $1,597 | $335,000 |
This table shows principal and interest only. Your actual monthly payment also includes property taxes, homeowners insurance, and PMI (if your down payment is below 20 percent). Those costs vary by location and lender, but PMI alone typically adds $150 to $300 per month on a $300,000 loan.
The larger your down payment, the less you borrow and the less interest you pay over 30 years. But a larger down payment also means more cash sitting in the lender's pocket instead of yours, which matters if you need that money for emergencies, home repairs, or other goals.
What lenders look for when you put down less than 20 percent
When your down payment is below 20 percent, lenders scrutinize your credit score, income, and debt-to-income ratio more carefully. They are taking on more risk because you have less skin in the game—if the home value drops, you could owe more than it is worth.
Most lenders require a credit score of at least 620 for FHA loans and 640 to 680 for conventional loans with a small down payment. Your debt-to-income ratio (the percentage of your monthly income that goes to debt payments) usually cannot exceed 43 to 50 percent, depending on the program. If you have recent late payments, collections, or a bankruptcy, lenders may ask for a larger down payment or deny you altogether.
Lenders also verify your down payment came from your own savings, not a loan. If you borrowed the down payment money, you are borrowing to borrow, and most lenders will not allow it. Gifts from family members are usually fine, but you may need a letter from the gift-giver stating it is a gift, not a loan.
When a smaller down payment makes sense
Putting down 3 to 5 percent instead of 20 percent makes sense if home prices are rising faster than you can save, if you need liquidity for emergencies or business opportunities, or if your money earns more in investments than the mortgage interest costs you. It also makes sense if you are a first-time buyer and waiting five more years to save 20 percent means missing out on a home you can afford now.
The math changes if mortgage rates are high. At 7 or 8 percent interest, the cost of borrowing an extra $50,000 is steep, and saving longer to put down more may be worth it. At 3 or 4 percent interest, borrowing is cheaper, and a smaller down payment is less costly.
A smaller down payment also makes sense if you expect your income to rise significantly in the next few years. You can refinance to remove PMI once you have paid down the loan to 80 percent of the home's value, or once the home appreciates enough that your equity reaches 20 percent.
When a larger down payment makes sense
Putting down 20 percent or more makes sense if you have the cash available and do not need it for other goals, if you want to avoid PMI, or if you want the lowest possible monthly payment. It also makes sense if you are buying in a market where homes are appreciating slowly or if you plan to stay in the home for 10+ years.
A larger down payment reduces your risk if your income becomes unstable or if you face a job loss. Your monthly payment is lower, which gives you more breathing room if your circumstances change. It also means you build equity faster and own more of the home outright from day one.
The downside is opportunity cost. If you put $100,000 down instead of $20,000, that $80,000 is no longer available for emergencies, home repairs, or investments. If you lose your job or face a medical crisis, you cannot easily access that money without taking out a home equity loan or refinancing.
Down payment information programs and where to find them
Many states, counties, and nonprofits offer down payment information to first-time buyers, teachers, healthcare workers, and low-income households. These programs may cover part or all of your down payment and closing costs, either as a grant (money you do not repay) or a second mortgage (money you repay, usually with no interest).
The best place to start is your state housing finance agency, which maintains a list of programs available in your area. You can find it by searching "[your state] housing finance agency" or by calling 211, a free referral service that connects you to local housing resources. Your lender may also know about programs; ask them directly.
Common programs include the Community Development Block Grant (CDBG), which funds local down payment information; state-specific programs like California's CalHFA or New York's Homes and Community Renewal; and nonprofit programs run by organizations like NeighborWorks America. may be able to access varies by program, but most require you to be a first-time buyer, have a household income below a certain threshold, and complete a homebuyer education course.
Frequently Asked Questions
Can I put down less than 3 percent?
Yes, if you may have access to for a VA loan (zero down) or a USDA loan in a rural area (zero down). Conventional loans rarely go below 3 percent. FHA loans allow 3.5 percent. If you have no down payment saved, a VA or USDA loan, or a down payment information program, may be your path forward.
What happens if I put down 15 percent instead of 20 percent?
You will pay PMI until your loan balance drops to 80 percent of the home's original value. Depending on your credit score and loan size, PMI costs $150 to $300+ per month. Once you reach 80 percent equity, you can request PMI removal. If the home appreciates, you may reach that threshold faster.
Can I use a gift for my down payment?
Yes. Most lenders allow gifts from family members, but you will need a signed letter from the gift-giver stating it is a gift, not a loan, and that they expect no repayment. The gift must come from a bank account, not cash, so the lender can trace it.
Is it better to put down 10 percent or wait and save 20 percent?
It depends on home prices, interest rates, and your timeline. If prices are rising faster than you can save, putting down 10 percent now may be smarter than waiting. If prices are stable or falling, waiting to save more reduces your PMI costs. Run the numbers with a lender to see which path costs less over time.
What if I cannot save any down payment?
Explore VA loans (if you are a veteran), USDA loans (if you are buying in a rural area), down payment information programs through your state or county, or nonprofit homebuyer programs. Many first-time buyers use a combination of a small down payment and information to reach the minimum required by their lender.