2026-09-14T00:00:00|6.968|0.023|6.274|0.035|6.725|-0.009|6.623|0.032||
Down Payment Guide: How Much Do You Really Need?
Learn how down payments work, how much you need for different loan types, and strategies to save faster. Plus: down payment assistance programs that could help.
Down Payment Requirements by Loan Type
The “20% down payment” rule is a myth — many buyers put down far less. Several loan programs allow down payments ranging from 0% to 3.5%. Here is a simple comparison of common minimum down-payment requirements.
| Loan Type | Min. Down Payment | $350K Home | $500K Home | PMI/MIP? |
|---|---|---|---|---|
| Conventional | 3% (first-time) / 5% | $10,500 | $15,000 | Yes, until 20% equity |
| FHA | 3.5% | $12,250 | $17,500 | Yes, for loan life* |
| VA | 0% | $0 | $0 | No PMI (funding fee applies) |
| USDA | 0% | $0 | $0 | Guarantee fee (low) |
| Jumbo | 10–20% | $35,000–$70,000 | $50,000–$100,000 | Varies by lender |
How Down Payment Size Affects Your Mortgage
Lower Monthly Payment
A larger down payment means a smaller loan amount, which directly reduces your monthly payment. On a $400K home, going from 5% to 20% down saves ~$530/month.
Eliminate PMI
With 20% down on a conventional loan, you avoid PMI entirely — saving $100-$300/month. With less than 20% down, PMI is required until you reach 20% equity.
Better Interest Rate
Lenders often offer slightly lower rates with larger down payments (20%+) because the loan is less risky. This can save 0.125-0.25% on your rate.
Strategies to Save for a Down Payment
1
Set a Specific Savings Target
Use our affordability calculator to determine your target home price, then calculate 3-20% for the down payment plus 2-5% for closing costs.
2
Automate Your Savings
Set up automatic transfers to a dedicated high-yield savings account. Even $500/month adds up to $6,000 in a year, $18,000 in three years.
3
Explore Gift Funds
FHA and conventional loans allow gift funds from family members for the entire down payment. You will need a gift letter confirming no repayment is expected.
4
Look Into Assistance Programs
Many states and cities offer down payment assistance (DPA) grants or forgivable loans. See our buyer programs guide for available options.
Down Payment Sources Lenders Accept
Personal savings — bank and investment accounts (most common)
Gift funds — from family, with proper documentation
Down payment assistance — state/local grants and forgivable loans
Employer programs — some companies offer homebuyer assistance
401(k) loans — borrow from retirement (not ideal, but allowed)
IRA withdrawal — first-time buyers can withdraw up to $10,000 penalty-free
How Much Down Payment Do You Need?
Homebuyer Guides
Official Government Resources
CFPB — Owning a Home
Consumer Financial Protection Bureau guide to buying a home,
comparing loan offers, and understanding closing.
HUD — Buying a Home
Department of Housing & Urban Development resources for
homebuyers, including FHA program information.
VA — Home Loans
Official VA home loan program information, eligibility, and
Certificate of Eligibility requests.
Freddie Mac — Rate Survey
Weekly Primary Mortgage Market Survey, a benchmark for national
average mortgage rates.
FHFA — Loan Limits
Federal Housing Finance Agency conforming loan limits by county,
updated annually.
IRS — Mortgage Interest Deduction
IRS guidance on deducting home mortgage interest, points, and
eligible mortgage-related expenses.
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