How Much Down Payment Do You Actually Need?
Conventional loans start at 3%; FHA at 3.5%; VA and USDA at 0%. But the right number depends on PMI, rate, and equity. See how down payment size changes your total cost.
By The RateFig Editorial Team · July 30, 2026 · reviewed against official mortgage and rate sources
The 20%-down rule is a myth that stops a lot of qualified buyers before they start. You can often buy with 3%–5% down — but the amount you choose changes your payment, your insurance, and your total cost. This guide covers the true minimums and the math of putting more down.
Minimums by loan type
| Loan | Minimum down | PMI / insurance | |------|--------------|-----------------| | Conventional | 3%–5% | PMI if <20% equity | | FHA | 3.5% (10% if score 500–579) | MIP (mostly for loan life) | | VA | 0% | No PMI | | USDA | 0% (eligible rural areas) | Guarantee fee |
Why 20% gets attention
Twenty percent down on a conventional loan means no PMI, and it gives you immediate equity so a price dip will not immediately put you underwater. But it is a floor for comfort, not a requirement to qualify.
How down payment size changes the math
Take a $350,000 home at a 6.5% rate, ignoring taxes/insurance for the comparison:
| Down | Loan | Monthly P&I | PMI (est.) | Notes | |------|------|-------------|-----------|-------| | 3% ($10,500) | $339,500 | ~$2,145 | ~$180 | Highest payment, PMI until ~20% equity | | 5% ($17,500) | $332,500 | ~$2,100 | ~$140 | Slightly lower, still has PMI | | 10% ($35,000) | $315,000 | ~$1,990 | ~$70 | PMI drops faster | | 20% ($70,000) | $280,000 | ~$1,770 | $0 | No PMI, lowest payment |
The 3%-vs-20% gap is about $375/month in P&I alone, plus PMI — over $135,000 in interest across 30 years. More down is the cheapest way to lower a payment, as long as it does not drain your emergency fund.
How to choose your number
- Tight cash / first-time buyer: use 3%–5% conventional or 3.5% FHA; keep reserves. Accept PMI as the cost of entry.
- Comfortable but not 20%: 10% is a sweet spot — lower payment, PMI ends sooner.
- Strong reserves: 20% skips PMI and gives the lowest payment and best rate.
- Eligible veteran / rural buyer: 0% down via VA/USDA is often the best deal available.
Sources of down payment
- Personal savings and investment withdrawals (document the source).
- Family gifts (with a gift letter).
- Down-payment assistance programs (grants or silent seconds).
- Retirement withdrawals for first-time buyers (check tax rules).
Key Takeaways
You rarely need 20% down, but each percentage point changes your payment, PMI, and total interest. Pick the amount that keeps you housed and liquid. Model it in the mortgage calculator with your real numbers, and see the savings-plan guide for building the fund faster.
Frequently Asked Questions
What is the minimum down payment to buy a house?+
It ranges from 0% to 3.5% for most buyers: VA and USDA loans allow 0% down for eligible buyers, FHA requires 3.5% (or 10% below 580 credit), and conventional loans commonly start at 3%–5%. You do not need 20% down to get a mortgage — 20% only lets you skip PMI.
Is 20% down required?+
No. Twenty percent is the threshold that avoids private mortgage insurance on a conventional loan and builds instant equity, but the majority of buyers put down less. The trade-off is monthly PMI until you reach 20% equity.
Does a bigger down payment lower my rate?+
Often, yes. A larger down payment lowers your loan-to-value ratio, which reduces the lender's risk and can improve your price. More importantly, it shrinks the loan, so you pay less interest and often drop PMI sooner.
What happens if I put down less than 20%?+
On a conventional loan you pay PMI until you reach 20% equity. On FHA you pay mortgage insurance regardless (it ends at 11 years only if you put 10%+ down). The monthly payment is higher, but you keep more cash for reserves and moving costs.
Can down payment come from a gift or assistance program?+
Yes. Family gifts are allowed with a gift letter, and many state and local programs offer down-payment assistance, often as a grant or a second lien. Lenders require documentation of the source so the funds are not counted as new debt.
Run the Numbers Yourself
Reading is the first step. The next is plugging your own numbers into a calculator that runs the same US-standard formulas in real time — no signup, no paywall, instant results.
Model your down payment→Key Takeaways
Use the calculator linked above to confirm how these concepts apply to your specific loan amount, rate, and term. Small changes in any one input can shift your monthly payment and total interest by thousands of dollars over the life of the loan.