The typical down payment is between 10 and 20 percent of the home's purchase price, though you can put down less or more depending on the loan type and your situation.
If you are buying a house for $300,000, a 20 percent down payment would be $60,000. A 10 percent down payment would be $30,000. These are the ranges you will hear most often, but the actual amount varies based on what kind of mortgage you get, how much cash you have available, and what the lender requires.
The down payment is the money you hand over at closing. The rest of the purchase price is borrowed through the mortgage. A larger down payment means a smaller loan, which typically means lower monthly payments and less interest paid over the life of the loan. A smaller down payment means you keep more cash in your pocket now, but you will pay more in interest later and may have to pay an additional monthly fee called mortgage insurance.
Key Takeaways
- Most conventional mortgages require between 10 and 20 percent down, though some lenders accept as little as 3 percent.
- FHA loans, backed by the Federal Housing Administration, typically require 3.5 percent down but charge a mortgage insurance premium that stays on your loan for the full term.
- VA loans and USDA loans, for military members and rural buyers respectively, often require zero down payment.
- If you put down less than 20 percent on a conventional loan, you will pay private mortgage insurance (PMI) until you reach 20 percent equity in the home.
- The down payment amount you choose affects your monthly payment, total interest, and whether you may have access to for the loan at all.
How down payment size changes by loan type
Conventional mortgages — loans not backed by a government agency — usually want to see 10 to 20 percent down. Some lenders will go as low as 3 to 5 percent, but this is less common and usually comes with higher interest rates and the requirement to pay mortgage insurance. The larger your down payment, the better your interest rate tends to be, because the lender's risk is lower.
FHA loans, insured by the Federal Housing Administration, require a minimum of 3.5 percent down. This makes them popular with first-time buyers who do not have much saved. However, FHA loans charge a mortgage insurance premium (MIP) that is built into your monthly payment and does not go away — even after you have paid off 20 percent of the loan. This makes the true cost of an FHA loan higher than the down payment alone suggests.
VA loans are available to military members, veterans, and some surviving spouses. They typically require zero down payment. You still pay a funding fee (usually 1 to 3.3 percent of the loan amount), but this can be rolled into the loan itself, so you do not need cash at closing.
USDA loans are for buyers in rural areas and also typically require zero down payment. Like VA loans, they charge a may provide fee that can be included in the loan amount.
What happens when you put down less than 20 percent
If you put down less than 20 percent on a conventional loan, your lender will require you to pay private mortgage insurance (PMI). This is a monthly fee added to your mortgage payment — usually between 0.5 and 1.5 percent of the loan amount per year, depending on your credit score and how much you put down. A $300,000 home with a $30,000 down payment (10 percent) might cost you $150 to $250 extra per month in PMI.
PMI protects the lender if you stop paying, not you. You can request to have it removed once you reach 20 percent equity in the home — meaning you have paid down the loan to 80 percent of the original purchase price. Some lenders will remove it automatically once you hit that mark, but you may need to ask. Keep track of your loan balance and home value so you know when you are close.
FHA loans work differently. They charge mortgage insurance upfront (a one-time fee at closing) and then an annual premium added to your monthly payment. This insurance does not go away, even after you reach 20 percent equity, unless you refinance into a conventional loan.
The trade-off between down payment size and monthly cost
A larger down payment lowers your monthly payment because you are borrowing less money. It also means you pay less interest over the life of the loan. On a $300,000 home at 7 percent interest over 30 years, the difference between 10 percent and 20 percent down is roughly $150 to $200 per month, plus the cost of mortgage insurance if you put down 10 percent.
A smaller down payment lets you buy sooner and keeps cash available for emergencies, home repairs, or other needs. The trade-off is higher monthly payments and more interest paid overall. There is no single right answer — it depends on your financial situation, how stable your income is, and whether you have other debts.
Some buyers put down as little as possible to preserve cash. Others put down 20 percent or more to avoid mortgage insurance and lower their monthly obligation. Both approaches are reasonable; the choice depends on what makes sense for your circumstances.
Down payment information and other sources of funds
If saving a down payment feels out of reach, several paths exist. Some employers offer down payment information as part of their benefits package. Some states and cities run down payment programs for first-time buyers or buyers in certain income ranges. Nonprofits and community development organizations sometimes offer grants or low-interest loans for down payments.
You can also ask family members for a gift. Lenders allow down payment gifts from relatives, though they usually require a signed letter stating it is a gift and not a loan you have to repay. The gift does not count as income, so it does not affect your debt-to-income ratio.
Borrowing from a 401(k) or taking a loan against it is another option, though this has tax and retirement planning consequences worth discussing with a financial advisor. Some first-time buyers can withdraw up to $35,000 from certain retirement accounts without penalty, but rules vary by account type and your age.
How lenders decide if your down payment is enough
Lenders look at your down payment as one part of the overall picture. They also examine your credit score, debt-to-income ratio, employment history, and the home's value. A 10 percent down payment with a strong credit score and stable income may be approved more easily than a 20 percent down payment with poor credit and recent job changes.
The home itself matters too. Lenders use an appraisal to confirm the home is worth what you are paying for it. If the appraisal comes in lower than the purchase price, your down payment percentage changes — and you may need to put down more cash or renegotiate the price.
Frequently Asked Questions
Can I buy a house with no money down?
Yes, if you may have access to for a VA loan or USDA loan. VA loans are for military members and veterans. USDA loans are for buyers in rural areas who meet income limits. Both require no down payment, though you will pay a funding or may provide fee. Conventional and FHA loans require at least some down payment.
What is the minimum down payment most lenders accept?
Conventional lenders typically accept 3 to 5 percent minimum, though 10 percent is more common. FHA loans go as low as 3.5 percent. The lower your down payment, the higher your interest rate and the more you will pay in mortgage insurance.
Does a bigger down payment always mean a better interest rate?
Usually yes, but not always by much. A 20 percent down payment might get you 0.25 to 0.5 percent lower interest than 10 percent down, depending on the lender and market conditions. The bigger benefit is avoiding mortgage insurance, which saves more money over time than the interest rate difference alone.
What if I cannot save 20 percent?
You can buy with 10 percent, 5 percent, or even 3 percent down. You will pay mortgage insurance and a higher interest rate, but you can still get a mortgage. Many first-time buyers put down less than 20 percent and pay off the mortgage insurance later by refinancing or building equity faster.
Can I use a gift for my down payment?
Yes. Lenders allow down payment gifts from family members. You will need a signed letter from the person giving the money stating it is a gift and not a loan. The gift does not count as your income and does not affect your debt-to-income ratio.