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How Much Down Payment Do You Need?
The "you need 20% down" myth stops a lot of people from buying. In reality, many loans require far less — but there are trade-offs worth understanding.
Minimums by loan type
- Conventional: as little as 3% down for many qualified buyers.
- FHA: 3.5% down with a qualifying credit score.
- VA (eligible veterans/service members) and USDA (eligible rural areas): 0% down.
What 20% actually gets you
Twenty percent isn't a requirement — it's a threshold. Put down 20% or more on a conventional loan and you avoid private mortgage insurance (PMI), an extra monthly cost that protects the lender when your down payment is smaller. A bigger down payment also shrinks your loan, lowering your monthly payment and total interest.
The trade-off: smaller down payment vs. PMI
A smaller down payment lets you buy sooner and keep more cash on hand, but you'll pay PMI until you build enough equity (on conventional loans, PMI can typically be removed once you reach about 20% equity). A larger down payment costs more upfront but saves money monthly. Neither is "right" — it depends on how much cash you have and how soon you want to buy.
Don't forget the other cash you'll need
The down payment isn't the only money due at the finish line. Budget for closing costs (often roughly 2–5% of the purchase price) and try to keep reserves — a few months of expenses — after closing. Down-payment assistance programs exist in many areas and can help eligible first-time buyers.
Want to see how different down payments change the home price you can support? Adjust the down-payment slider in the What Can I Afford calculator, or start with a quick readiness check.
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Take the free readiness quiz →Frequently asked questions
Do I really need 20% down to buy a house?
No. Conventional loans can require as little as 3% down and FHA loans 3.5%, while VA and USDA loans may require nothing down. Twenty percent simply lets you avoid private mortgage insurance.
What is PMI and how do I get rid of it?
Private mortgage insurance is an added monthly cost on conventional loans when you put down less than 20%. It can typically be removed once you build about 20% equity in the home.
How much cash do I need beyond the down payment?
Plan for closing costs — often about 2–5% of the price — plus a reserve of a few months' expenses after closing so you're not left with no cushion.