• Homebuyers with excellent credit scores and strong financials may qualify for home loans with down payments as low as 3-5%. First-time buyers may qualify for an FHA loan with a down payment as low as 3.5%.
  • Special home loans offer 0% down options. These include VA loans, which are reserved for qualified veterans, military service members, and their spouses, and USDA loans, which are reserved for low-to-moderate-income buyers in qualified low-population-density areas. 
  • Putting down at least 20% can help you avoid mortgage insurance and potentially earn you a lower interest rate, helping you to save money over the term of the loan. 

Buying a home is an important milestone on the path to financial security, one that comes with many questions, particularly about the budgetary commitment. This article is dedicated to one of the most frequently asked homebuyer questions: How much do I need for a down payment?

The answer isn’t one-size-fits-all. It depends on multiple factors, including the price of the home, the type of mortgage you choose, and your financial profile. Each of these factors will be covered in detail to help you confidently determine how much you will need for a down payment. 

What Is a Down Payment?

A down payment is the portion of a home's purchase price that you pay upfront. A home mortgage loan is typically used to cover the balance of the purchase price.

For example, if a buyer puts 20% down, it means they paid 20% of the total price upfront and financed the remaining 80% with a loan.

Because the down payment is typically expressed as a percentage of the home's price, the exact dollar amount varies significantly. For example, a 10% down payment on a $200,000 home would be $20,000, while a 10% down payment on a $600,000 home would be $60,000. 

However, many buyers qualify for down payments of even less than 10%.  

How Much Do You Need for a Down Payment on a House?

Historically, homebuyers typically made down payments of at least 20%. However, the 20% rule of thumb has come down over the last few decades as home prices increased and more flexible home loan options became available.[1]

Minimum down payment requirements vary depending on factors such as:

  • Loan type. Different loan types offer different down payment minimums (as will be discussed in the next section).
  • Credit scores. A higher down payment may help offset a lower credit score, allowing you to qualify for a home loan with fair to poor credit. 
  • Debt-to-income (DTI) ratios. Your DTI is the amount of your monthly debt obligations as a percentage of your monthly income. Lower DTIs represent less risk for the lender and may be viewed favorably on a mortgage application. However, a higher down payment could offset a higher-than-average DTI. 

Given all of these factors, well-qualified buyers should plan to put at least 3-5% down on a home.[2]

However, as we’ll see shortly, there are compelling reasons to increase your down payment if you can. 

Down Payment Minimums by Loan Type

There are multiple mortgage loan types for buyers to choose from, each offering different terms and down payment requirements.  

Conventional Loans

Conventional loans have a minimum down payment of 3%, although you may need 5, 10, or even 20% to qualify for a conventional loan if you have any issues on your credit report.[3]

For homebuyers with good credit, conventional loans are a versatile option that can be used for a range of property types. 

FHA Loans

FHA loans were created by the Federal Housing Administration (FHA) under the U.S. Department of Housing and Urban Development (HUD) to make homeownership more accessible through lower credit and down payment requirements. The minimum down payment for an FHA loan is 3.5%.[4]

FHA loans are a popular choice among first-time buyers and buyers who do not have the credit score needed to qualify for a conventional loan.

Jumbo Loans

Jumbo loans are mortgages that exceed the loan limits for conventional mortgages. They are often used to buy homes that are more expensive than the average local home. The minimum down payment for a jumbo loan typically ranges between 15% and 40%, depending on your financial profile and the property being financed. 

0% Down Payment Loan Options 

You may have heard about programs that allow buyers to purchase a home with “zero down.” There are legitimate 0% down home loans, but you (and your new home) need to fit specific criteria to qualify for such programs. Here are two 0% down payment options. 

  1. VA loans. VA loans offer 0% down payment options for eligible military service members, veterans, and their spouses.[5]
  2. USDA loans. USDA loans offer 0% down payment options for well-qualified buyers purchasing a home in a qualified rural area.[6]

How Your Down Payment Affects Your Monthly Mortgage Payments

Before you decide to pay only the minimum required down payment, consider how your down payment affects your monthly mortgage payments and overall borrowing expense. 

A higher down payment provides the following financial benefits:

  • A lower loan amount. The lower loan balance is important because it directly translates into lower monthly mortgage payments. Furthermore, with a smaller loan amount, you’ll pay less in total interest expense over the term of the loan. 
  • A potentially lower interest rate. While you’ll already be paying less in interest because of the lower loan balance, you could also earn a lower interest rate by increasing your down payment, adding to the total interest savings.
  • Greater home equity from the beginning. Home equity is the portion of the home’s value you own (as opposed to the portion financed). Equity is valuable because it converts to cash when you sell, but it can also be converted into cash through a home equity loan or HELOC if you need funding in the future for a home renovation project, medical bills, or other large expense. Furthermore, equity provides a layer of protection from sudden drops in home values, which can leave some homeowners owing more on their mortgage than the property is worth.   
  • Potentially avoiding mortgage insurance. Mortgage insurance is typically required for buyers who put less than 20% down. This insurance policy protects the lender against default, allowing them to issue low-down-payment loans, despite the increased risk.[7] If you can put at least 20% down, you can avoid this requirement and the corresponding insurance premiums. 

How Much Should You Put Down on a House?

Deciding how much to put down on your new home requires several careful considerations:

  • How much will your bank require as the minimum down payment? 3-5% is standard in many cases, but you may need more if you have credit issues, less predictable income, or other financial complications.
  • How much can you afford to put down? It is important to have enough cash left on hand to cover your closing costs (which often total 3-6% of the loan amount) and moving expenses.
  • Do you want to put more down to reduce your monthly payment? The more you pay upfront, the less you’ll need to finance, and the lower your monthly mortgage payment will be. 
  • Do you want to put down more to reduce your interest expense? The lower your loan amount, the less you’ll pay in overall interest expense. Plus, you might qualify for a lower interest rate if you make a higher down payment.  
  • Do you want to put 20% or more down to avoid mortgage insurance? If you’re able to make a down payment of 20% or more, you may not need to pay mortgage insurance (which typically costs 0.58% to 1.86% of the original loan amount per year).

How to Save for a Down Payment

Here are some quick tips to help you save effectively for a down payment.

  • Open a dedicated high-yield savings account. Having a dedicated account will keep your down payment savings separate to avoid accidental spending. And by choosing a high-yield account, you can earn more interest on your savings, helping your balance grow over time. 
  • Automate your savings. Set up automatic transfers to your down payment account each payday. This will eliminate the need to remember to manually transfer funds and prevent you from spending the money before it gets to your dedicated savings account. 
  • Cut unnecessary expenses. Reduce discretionary spending like dining out, subscription services, and impulse purchases.
  • Increase your income. Take on a side hustle, freelance work, or ask for a raise to boost savings.
  • Save windfalls. Put tax refunds, bonuses, and gifts directly into your down payment fund.
  • Limit big purchases. Avoid buying new cars, furniture, or other large expenses while saving for your down payment.
  • Explore down payment assistance programs (DPAs). DPAs offer funding to help make homeownership more accessible by reducing the upfront expense of buying a home. Ask your lender about their DPA offerings and consider searching for state or local programs in your area.   

Calculate Your Down Payment and Start Saving Today

Use a down payment calculator to set your down payment savings goals. Then, open your dedicated high-yield savings account and start saving for your new home today.