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How Much Down Payment Do You Need for a House?
The 20% down payment is a myth for most buyers. You can buy a home with as little as 0% down (VA and USDA) or 3% down (conventional). The real question is how much you should put down — and the answer depends on your situation more than any rule of thumb.
The short answer
Minimum down payments range from 0% (VA/USDA) to 3% (conventional) to 3.5% (FHA). You don’t need 20% — but putting down less than 20% on a conventional loan adds PMI, which costs $100–$300/month until you reach 20% equity.
The 20% rule is not a requirement — it’s the threshold that eliminates PMI on conventional loans
0%VA & USDA loansFor eligible borrowers
3%Conventional minFannie/Freddie programs
3.5%FHA minimumWith 580+ credit score
20%PMI eliminationConventional loans only
Minimum Down Payment by Loan Type
| Loan Type | Minimum Down | Credit Score Needed | PMI / Mortgage Insurance |
|---|---|---|---|
| VA Loan | 0% | No official min (620+ typical) | No PMI. One-time funding fee (2.15% for first use) |
| USDA Loan | 0% | 640+ | Annual guarantee fee 0.35% — cheaper than PMI |
| Conventional (3%) | 3% | 620+ (740+ for best terms) | PMI required until 20% equity; cancels automatically at 22% |
| FHA Loan | 3.5% | 580+ | Upfront MIP 1.75% + annual MIP 0.55% — permanent if <10% down |
| FHA Loan (<580 score) | 10% | 500–579 | MIP cancels after 11 years with 10% down |
| Conventional (20%) | 20% | 620+ | No PMI |
| Jumbo Loan | 10–20% | 700–740+ | Varies by lender; typically no PMI with 20%+ |
The Real Cost of Putting Less Than 20% Down
PMI on conventional loans typically costs 0.5%–1.5% of the loan amount annually. On a $360,000 loan, that’s $150–$450 per month. The good news: unlike FHA MIP, conventional PMI automatically cancels once you reach 22% equity — and you can request cancellation at 20%.
| Down payment % | On $450K home | Loan amount | Est. monthly PMI | PMI cancels at yr |
|---|---|---|---|---|
| 3% | $13,500 | $436,500 | ~$306/mo | Year 10–11 |
| 5% | $22,500 | $427,500 | ~$278/mo | Year 9–10 |
| 10% | $45,000 | $405,000 | ~$213/mo | Year 7–8 |
| 15% | $67,500 | $382,500 | ~$144/mo | Year 4–5 |
| 20% | $90,000 | $360,000 | $0 | N/A — no PMI |
PMI Calculator — Cost & Removal Timeline
Enter your home price and down payment to see your exact monthly PMI cost and the date it drops off
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20% Down: Worth It or Not?
Putting 20% down eliminates PMI and gives you a lower monthly payment — but it’s not always the smartest financial move. Consider the trade-offs:
Arguments for 20% down
- No PMI — saves $150–$450/month
- Lower loan amount means lower total interest paid
- Better negotiating position — sellers prefer buyers with larger down payments
- Immediate equity cushion protects against price dips
- Sometimes unlocks better interest rates
Arguments against waiting for 20%
- Home prices may appreciate while you save — costing you more than PMI would have
- The down payment money could earn 7–10% in index funds while you wait
- In hot markets, delaying purchase is often more expensive than PMI
- PMI on conventional loans is temporary — it cancels, unlike FHA MIP
- First-time buyer programs often provide down payment assistance that changes the math entirely
The bottom line: In most US markets, waiting to save 20% costs more than buying with 5–10% down and paying PMI for a few years — especially when home prices are appreciating. The exception: if you’re in a stagnant or declining market, or if the PMI cost would strain your budget.
Down Payment Assistance Programs
Most states offer down payment assistance through their Housing Finance Agency (HFA). These programs provide grants or low-interest second loans of $5,000–$25,000 to qualifying first-time buyers. Income and purchase price limits apply but are often more generous than people expect.
| State | Program | Max assistance | Notes |
|---|---|---|---|
| California | CalHFA MyHome | 3% of purchase price | Deferred payment second mortgage |
| Texas | TSAHC Home Sweet Texas | 5% of loan amount | Grant (no repayment required) |
| Florida | Florida HFA Advantage | 3% of first mortgage | Zero interest, deferred |
| Georgia | Georgia Dream | $10,000 | 0% interest, due on sale |
| North Carolina | NC Home Advantage | $15,000 | Forgiven after 15 years |
| Colorado | CHFA SmartStep | 3% of first mortgage | Grant — no repayment |
| Virginia | Virginia Housing DPA | 2–2.5% of purchase price | Grant available |
| Tennessee | THDA Great Choice Plus | $6,000 | Deferred 30-year second loan |
Down Payment Savings Planner
How long until you can afford to buy? Enter your monthly savings and target home price to get your exact purchase timeline
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Frequently Asked Questions
Can I use gift money for a down payment?
Yes — all major loan types allow gift funds for the down payment from family members. FHA and VA are the most flexible; conventional loans have varying rules depending on how much you’re putting down. The gift giver typically needs to provide a signed letter confirming the funds are a gift and not a loan. The money needs to be in your account (seasoned) for at least 60 days in most cases, though FHA is more lenient.
What is the minimum down payment for a $500,000 house?
With a conventional loan: $15,000 (3% down). With FHA: $17,500 (3.5% down). With VA or USDA if eligible: $0. Note that at $500,000, you’re near or above the conforming loan limit in many areas — check whether you need a jumbo loan in your county, as jumbo loans typically require 10–20% down.
Does a larger down payment get me a better interest rate?
Somewhat — but the main effect on your rate is your loan-to-value (LTV) ratio and credit score. Going from 5% to 20% down can reduce your rate by 0.1–0.3% on a conventional loan. The bigger benefit of 20% down is eliminating PMI, not the rate reduction. Your credit score has a far larger impact on your interest rate than your down payment percentage.
Disclaimer: This guide is for educational purposes only. Rates and requirements change frequently. Not financial advice. Always verify with lenders directly. Full disclaimer