How Much Down Payment Do You Really Need to Buy a House?

Quick Answer: How Much Down Payment Do You Need?

Here’s the simple version:

• 0%–3% down can be possible with certain loan programs or eligibility (and usually higher monthly costs).
• 5% down is common for conventional buyers who want a manageable upfront cost while keeping payments reasonable.
• 10% down often reduces monthly payment pressure and can make PMI cheaper.
• 20% down usually avoids PMI entirely and gives you the most monthly-payment flexibility - but it’s not always the best use of cash.

The “right” down payment depends on your income stability, other debts, how long you plan to stay in the home, and how comfortable you want your monthly payment to feel.

If you want the big-picture framework for affordability and buying readiness, start with Home Buying Process & Affordability.

What a Down Payment Actually Does

A down payment isn’t just a box you check to get approved. It changes multiple pieces of your mortgage at once:

• It reduces your loan amount, which typically reduces your principal and interest payment.
• It affects your interest rate and pricing. Lower down payments can increase lender risk, which may impact the rate or fees depending on your credit and loan type.
• It impacts mortgage insurance (PMI/MIP). More down often means lower monthly insurance costs, and at 20% down you can often avoid PMI on conventional loans.
• It changes your “cushion” after closing. If you put too much down and drain your savings, you may become house-rich and cash-poor - which is where homeowners get squeezed.

That’s why we like a practical mindset: your down payment should lower the payment, but not empty your safety net.

0%, 3%, 5%, 10%, 20% Down: What Changes at Each Level

These are the most common down payment “breakpoints” and why people talk about them:

The “best” down payment is the one that gives you an affordable monthly payment and a strong cash buffer after closing.

Minimum Down Payment by Loan Type (FHA, VA, USDA, Conventional, Jumbo)

Loan programs vary by lender, borrower profile, and property type, but here’s the practical overview most buyers use when planning:

• Conventional: some options can be as low as 3% down for qualified borrowers; many buyers choose 5%–10% for better payment comfort.
• FHA: often allows low down payments for qualified buyers, with mortgage insurance rules that differ from conventional loans.
• VA: eligible borrowers can often buy with 0% down (program rules and lender overlays apply).
• USDA: may offer 0% down for eligible rural/suburban properties and qualified income levels.
• Jumbo: down payment requirements tend to be higher and more lender-specific (commonly 10%–20%+).

If you want the official, program-level details, these are good places to start:

• CFPB: Owning a Home (mortgage basics and costs)
• VA.gov: Home Loans

Even if you qualify for 0% down, we still recommend comparing scenarios with a budget-first lens - because the payment is what you live with.

PMI and MIP Explained (and How to Avoid or Remove It)

Mortgage insurance is one of the biggest reasons low down payments feel “more expensive” than buyers expect.

PMI (Private Mortgage Insurance) - common with conventional loans

PMI is usually required when you put less than 20% down on a conventional loan. The monthly cost depends on your credit score, down payment, and loan type.

• How to avoid PMI: put 20% down (or use a structure your lender offers that doesn’t require PMI).
• How to remove PMI: PMI can often be removed once you reach sufficient equity (rules vary).

MIP (Mortgage Insurance Premium) - tied to FHA-style insurance rules

Some programs use different mortgage insurance structures than PMI. The big takeaway is this: mortgage insurance isn’t automatically “bad,” but you should price it in. Buyers get into trouble when they plan for principal + interest but forget the insurance layer.

Want a clean way to compare “all-in” payments? Use our mortgage payment calculator and make sure your scenario includes taxes, insurance, and any mortgage insurance.

Don’t Forget Closing Costs and Prepaid Items

Many buyers obsess over the down payment and then get surprised by the cash needed to close. In addition to the down payment, you may also need cash for:

• Closing costs: lender fees, appraisal, title, escrow, recording, and other third-party costs.
• Prepaids: homeowners insurance, property taxes, and interest that get paid upfront depending on closing date and escrow setup.
• Escrow setup: many loans require funding an escrow account with a cushion for taxes/insurance.
• Moving + setup: utilities, repairs, furniture, and “new house” costs that hit fast.

This is a big reason we prefer a “cash safety net” approach. If you can put 20% down but it leaves you with almost nothing in the bank, that’s often a fragile plan.

How to Choose Your Down Payment (Rules vs Reality)

You’ll see rules like “20% down” or “spend 30% of your income on housing.” They can be helpful shortcuts, but they can also miss the reality of your budget - especially when taxes, insurance, and debt are different from average assumptions.

Here are the questions that matter more than a single percentage:

• Will the payment still work if taxes or insurance rise? (This happens more often than buyers expect.)
• Can you still save monthly? (Emergency fund, retirement, and future goals should keep moving.)
• How stable is your income? If income is variable, payment flexibility matters more.
• How long will you stay? Short stays can change the “best” choice dramatically.
• Do you have other high payments? Car loans, student loans, and childcare can make low down payments risky.

A helpful check is your debt-to-income ratio. Run scenarios with the DTI calculator and aim for a payment that feels comfortable even when life gets a little more expensive.

A Budget-First Method That Protects Your Cash Flow

Here’s a practical method we like because it reduces “payment shock”:

1. Set your maximum comfortable monthly payment (all-in: principal, interest, taxes, insurance, HOA, and mortgage insurance).
2. Choose a down payment target that gets you under that payment without draining your safety fund.
3. Reserve cash after closing for emergencies + home setup costs (repairs, utilities, moving).
4. Stress-test the scenario by increasing taxes/insurance and making sure the payment still works.
5. Only then decide whether saving for a larger down payment is worth the time tradeoff.

If you want a structured affordability workflow, our Home Buying Process & Affordability pillar walks through budgeting, approval limits, and real-world costs.

Real-World Examples: How Down Payment Changes the Monthly Payment

Below is the core concept to keep in mind: down payment changes the payment, but taxes/insurance can still dominate. That’s why “principal + interest only” estimates often understate the real monthly cost.

Example framework (not a quote): imagine the same home price with 3% down vs 10% down vs 20% down. Your loan amount shrinks as down payment grows, which lowers principal and interest. But PMI may apply at 3% and 10%, and property taxes/insurance may be similar across all three.

The right approach is to run your own scenario with your likely tax and insurance assumptions, then compare monthly totals. That’s where the “best” down payment often becomes obvious.

Use Calculators to Stress-Test Your Down Payment Choice

If you only do one thing after reading this guide, do this: run multiple down payment scenarios and compare the all-in payment. These tools make it fast:

• Mortgage Payment Calculator - estimate your full monthly payment (not just principal + interest).
• Mortgage Affordability Calculator - test how much house fits your budget with realistic costs.
• DTI Calculator - see how your payment fits lender-style ratios (and your comfort zone).

Tip: when you compare down payments, don’t just look at the payment today. Ask: what happens if taxes/insurance rise next year? That one stress test saves a lot of regret.

Down Payment FAQs