How Much Down Payment Do You Need for a House?
The 20% down payment is a myth — or at least, it’s not the only option. Here’s what you actually need for different loan types and when it makes sense to put more or less down.
Minimum Down Payment by Loan Type
| Loan Type | Minimum Down Payment | PMI/MIP Required? |
|---|---|---|
| Conventional | 3% | Yes, until 80% LTV |
| FHA | 3.5% | Yes, for life of loan |
| VA | 0% | No |
| USDA | 0% | No (guarantee fee instead) |
| Jumbo | 10-20% | Varies |
Down Payment on a $350,000 Home
| Down Payment % | Amount | Loan Amount | Est. Monthly PMI |
|---|---|---|---|
| 3% | $10,500 | $339,500 | $240 |
| 5% | $17,500 | $332,500 | $235 |
| 10% | $35,000 | $315,000 | $223 |
| 15% | $52,500 | $297,500 | $210 |
| 20% | $70,000 | $280,000 | $0 |
Calculate your exact payment with any down payment amount using our PITI calculator.
The Real Cost of Different Down Payments
On a $350,000 home at 6.5%, 30-year loan:
| Down Payment | Monthly PITI | Total PMI Paid | Total Interest | Total Cost |
|---|---|---|---|---|
| 3% ($10,500) | $2,780 | ~$21,600 | $432,163 | $803,763 |
| 10% ($35,000) | $2,560 | ~$12,460 | $394,538 | $756,998 |
| 20% ($70,000) | $2,260 | $0 | $350,518 | $700,518 |
Putting 20% down instead of 3% saves $103,245 over the life of the loan. But it requires $59,500 more upfront.
Is 20% Down Worth It?
Arguments For 20% Down
- No PMI — Saves $200-$300/month
- Lower monthly payment — Smaller loan = smaller payment
- More equity from day one — Better position if market drops
- Better interest rates — Lenders offer better rates with more skin in the game
- Stronger offer — Sellers prefer buyers with larger down payments
Arguments Against Waiting for 20%
- Home prices keep rising — A 5% annual increase on a $350,000 home is $17,500/year. Waiting 3 years to save an extra $40,000 could cost you $52,500 in price appreciation.
- Opportunity cost — Money tied up in a down payment can’t be invested elsewhere
- PMI is temporary — It drops off once you hit 80% LTV
- Low down payment programs exist — FHA, VA, and USDA make homeownership accessible sooner
How to Save for a Down Payment
Set a Target
Decide on your target home price and down payment percentage. For a $300,000 home with 10% down, you need $30,000 plus $6,000-$15,000 for closing costs. Total target: $36,000-$45,000.
Automate Your Savings
Set up automatic transfers to a dedicated savings account. Even $500/month gets you to $30,000 in 5 years (plus interest).
Down Payment Assistance Programs
Many states and cities offer grants or low-interest loans for first-time buyers:
- State housing finance agencies — Most states have programs
- City and county programs — Often income-based
- Employer assistance — Some companies offer down payment benefits
- Gift funds — FHA and conventional loans allow gift money from family
Other Sources
- 401(k) loans — Borrow from your retirement (not ideal, but an option)
- IRA withdrawal — First-time buyers can withdraw up to $10,000 penalty-free
- Side income — Dedicate all side gig earnings to your down payment fund
What About Closing Costs?
Don’t forget: you need money for closing costs too. Budget 2-5% of the home price in addition to your down payment.
On a $350,000 home: $7,000-$17,500 in closing costs on top of your down payment.
You can sometimes negotiate seller-paid closing costs, especially in a buyer’s market.
Calculate Your Options
Use our mortgage calculator to compare different down payment amounts. Enter your home value and down payment to instantly see how it affects your monthly PITI payment, PMI costs, and total interest paid.
Related
- What Is PMI and How to Avoid It — deep dive on PMI costs and removal
- FHA vs Conventional Loan — different down payment requirements
- How Much House Can I Afford?
- Mortgage Payment on a $350K House — see the impact of different down payments