How Much Down Payment Do You Need to Buy a House?
One of the biggest myths in home-buying is that you need 20% down. You don't — many buyers purchase with far less. But how much you put down has a big effect on your monthly payment, whether you'll pay mortgage insurance, and how much the loan costs overall. Here's what the common down-payment levels actually mean.
The common down-payment levels
| Down payment | What it means |
|---|---|
| 3% – 3.5% | Minimum for many conventional and FHA loans. Lowest upfront cost; you'll pay mortgage insurance. |
| 5% – 10% | A middle ground — smaller loan, still usually requires PMI until you reach 20% equity. |
| 20% | Avoids PMI entirely, lowers the monthly payment, and often gets a better rate. |
| 0% | Possible with VA loans (eligible veterans) and USDA loans (eligible rural buyers). |
The case for putting less down
A smaller down payment lets you buy sooner rather than spending years saving. In a market where home prices and rents are rising, buying earlier can sometimes cost less than waiting — and you start building equity now instead of later. The trade-off is a larger loan, a higher monthly payment, and usually private mortgage insurance until you build enough equity.
The case for putting 20% down
Twenty percent is the threshold where private mortgage insurance (PMI) is no longer required on a conventional loan, which removes an extra monthly cost. A bigger down payment also shrinks the loan, lowers the monthly payment, reduces total interest, and can earn you a slightly better rate. If you can reach 20% without draining your emergency savings, it's usually the cheaper long-term path.
Don't forget closing costs and reserves
Your down payment isn't the only cash you'll need. Closing costs typically run a few percent of the purchase price, and lenders often want to see that you have some savings left over after closing (called reserves). It's wise to budget for these on top of the down payment rather than putting every dollar toward it.
So how much should you put down?
There's no single right answer. Put down enough to keep the monthly payment comfortable and, if you can, enough to avoid or minimize PMI — but not so much that you're left with no emergency cushion. The best approach is to run a few scenarios with your real numbers and see which down payment gives you a payment you're happy with while keeping savings intact.
This article is general information, not financial advice. Loan programs and requirements change and vary by lender — a licensed lender can tell you what you qualify for.