The down payment is usually between 3 and 20 percent of the home's purchase price, depending on the loan type you choose.
If you are buying a house for $300,000, a 20 percent down payment would be $60,000. A 5 percent down payment on the same house would be $15,000. The percentage you pay upfront affects how much you borrow, how much interest you pay over time, and what your monthly payment looks like.
The percentage is not fixed by law — it is a choice you make when you decide which loan program to use. A conventional loan (the kind most people think of) often requires 20 percent, but many lenders will accept 5 or 10 percent. Government-backed loans like FHA loans can go as low as 3.5 percent. The lower the percentage, the less cash you need on hand right now, but the more you will owe the lender and the more you will pay in interest over 15 or 30 years.
Key Takeaways
- Down payment percentages range from 3.5 percent on FHA loans to 20 percent on conventional loans, with 5 to 10 percent common in between.
- A lower percentage means less money out of your pocket today but a larger loan balance and higher total interest paid over the life of the mortgage.
- Putting down less than 20 percent usually triggers mortgage insurance, an extra monthly cost that protects the lender if you stop paying.
- The percentage you choose depends on how much cash you have saved, what loan programs your lender offers, and how much monthly payment you can afford.
Why the percentage matters more than the dollar amount
The percentage is what determines your loan-to-value ratio, or LTV. This is the lender's way of measuring risk. If you put down 20 percent, the lender is only lending you 80 percent of the home's value. If you put down 5 percent, the lender is lending you 95 percent. The higher the LTV, the riskier the loan looks to the lender, and the more they will charge you in interest or require you to pay in insurance.
This is why a 3 percent down payment on a $300,000 house ($9,000) and a 3 percent down payment on a $500,000 house ($15,000) are treated differently by lenders. The dollar amounts are different, but the risk profile is the same — you are borrowing 97 percent of the home's value in both cases.
How mortgage insurance changes the math when you put down less than 20 percent
If your down payment is less than 20 percent, most lenders will require you to pay mortgage insurance. This is a monthly fee added to your mortgage payment. It protects the lender, not you — if you stop paying the mortgage, the insurance covers part of the lender's loss.
Mortgage insurance typically costs between 0.5 and 1.5 percent of your loan amount per year, split into monthly payments. On a $285,000 loan (after a 5 percent down payment on a $300,000 house), mortgage insurance might add $120 to $360 per month to your payment. This cost stays on your bill until you have paid down the loan enough that your remaining balance is 80 percent of the home's original value, or until you refinance.
This is why comparing down payment percentages requires looking at the full monthly payment, not just the down payment itself. A 10 percent down payment with mortgage insurance might cost you more per month than a 15 percent down payment without it.
Common down payment percentages and what they mean for your loan
Different loan types come with different standard percentages. An FHA loan, backed by the Federal Housing Administration, often accepts 3.5 percent down. A VA loan, for borrowers who served in the military, can go to 0 percent. A conventional loan from a private lender typically starts at 5 percent but often prefers 20 percent to avoid mortgage insurance.
The percentage you choose also depends on your situation. If you have saved $50,000 and are buying a $300,000 house, you could put down 16.7 percent and avoid mortgage insurance on some loan types. If you have saved $15,000, you are looking at 5 percent and will pay mortgage insurance. If you have saved $60,000, you can put down 20 percent and skip insurance entirely.
The trade-off between a larger down payment and keeping cash on hand
Putting down a larger percentage lowers your monthly payment and saves you money in interest and insurance over time. But it also means tying up more of your savings in the house right now. After closing, you will still need money for repairs, emergencies, and living expenses. Many financial advisors suggest keeping three to six months of expenses in savings even after buying a home.
A 20 percent down payment is often called the "safe" choice because it avoids mortgage insurance and shows lenders you have substantial savings. But a 5 or 10 percent down payment can make sense if it lets you buy sooner, if interest rates are low, or if you have other uses for that cash that will earn you more than the interest you would save.
How to calculate your down payment percentage
The math is straightforward. Divide the dollar amount you plan to put down by the home's purchase price, then multiply by 100.
If the house costs $350,000 and you plan to put down $52,500, the calculation is: ($52,500 ÷ $350,000) × 100 = 15 percent. If you plan to put down $70,000, that is ($70,000 ÷ $350,000) × 100 = 20 percent.
Your lender will calculate this for you when you explore, but knowing how to do it yourself helps you understand what different savings targets mean in percentage terms. If you are saving toward a down payment, thinking in percentages helps you compare loan options across different price ranges.
Frequently Asked Questions
Is 20 percent down payment required to buy a house?
No. Twenty percent is common and avoids mortgage insurance, but many loans accept 3.5 to 10 percent. FHA loans go as low as 3.5 percent, and VA loans can be 0 percent. Your lender will tell you what percentages they offer for your situation.
What happens if I put down less than 20 percent?
You will likely pay mortgage insurance, an extra monthly fee. Your interest rate might also be slightly higher. Both protect the lender because you are borrowing a larger percentage of the home's value. The insurance stays on your bill until your loan balance drops to 80 percent of the home's original purchase price.
Can I put down more than 20 percent?
Yes. Putting down 25, 30, or even 50 percent is possible if you have the savings. A larger down payment lowers your monthly payment and total interest paid, but it also means less cash in your pocket after closing. Make sure you keep enough savings for emergencies and home repairs.
Does the down payment percentage affect my interest rate?
Usually yes, though the effect is smaller than the effect on mortgage insurance. A 20 percent down payment often gets a slightly lower interest rate than a 5 percent down payment, because the lender's risk is lower. Ask your lender to show you rates for different down payment percentages so you can compare the full cost.
What if I save more money after I buy — can I remove mortgage insurance?
Yes, but you have to refinance the loan or reach a certain threshold. Once your loan balance drops to 80 percent of the home's original purchase price through regular payments, you can ask the lender to remove mortgage insurance. You can also refinance into a new loan with a higher down payment if you have saved more money and rates are favorable.