You find a $400,000 home and immediately assume you need $80,000 before a lender will speak to you. That 20% figure is useful, but it is not a universal requirement. Some buyers may qualify for a conventional loan with 3% down, an FHA loan with 3.5% down, or an eligible government-backed mortgage with no down payment.
The real question is not only how much down payment for a house is required. It is how much you can put down without draining the savings you will need for closing costs, repairs, moving, and emergencies.
What Is a Down Payment?
A down payment is the part of the home’s purchase price that you pay upfront. Your mortgage covers the rest.
If a home costs $350,000 and you put down 10%, you pay $35,000 toward the price and borrow approximately $315,000. This does not include closing costs, prepaid property taxes, homeowners insurance, or other expenses due at settlement.
A larger down payment reduces the amount you need to borrow. It may also help you qualify for a better interest rate, lower your monthly payment, and avoid certain forms of mortgage insurance.
Do You Really Need 20% Down?
You do not usually need a 20% down payment to buy a house. The 20% figure is popular because it can help a conventional loan borrower avoid private mortgage insurance, commonly called PMI.
On a $400,000 home, 20% equals $80,000. A 10% down payment is $40,000, while 5% is $20,000 and 3% is $12,000.
Waiting until you have $80,000 may reduce borrowing costs, but it could also delay your purchase for years. Buying with $12,000 down may get you into a home sooner, but you would borrow more, pay a higher monthly amount, and probably pay mortgage insurance.
The right choice depends on the loan program, your income, credit, savings, and local housing market.
Conventional Loan Down Payment Requirements
A conventional loan is a mortgage that is not insured by a government program such as FHA, VA, or USDA. Some conventional programs allow qualified borrowers to put down as little as 3%.
Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs offer down payments as low as 3% for eligible borrowers. Freddie Mac’s HomeOne program also offers a 3% option for qualified first-time buyers.
Low-down-payment programs have eligibility rules, which may include income limits, first-time buyer requirements, property restrictions, or homeownership education.
A buyer purchasing a $300,000 home with 3% down would need $9,000 for the down payment and would borrow about $291,000. With 10% down, the buyer would need $30,000 and borrow $270,000.
FHA Loan Down Payment Requirements
An FHA loan is insured by the Federal Housing Administration and may allow a down payment as low as 3.5% for qualifying borrowers. FHA loans can be useful for buyers who have a smaller deposit or a credit profile that makes conventional financing more expensive.
A 3.5% down payment on a $350,000 home is $12,250. The starting loan amount would be approximately $337,750 before any financed upfront mortgage insurance premium.
FHA loans require mortgage insurance. This normally includes an upfront premium and an annual premium collected through the monthly mortgage payment. The insurance cost and how long it continues depend partly on the loan terms and the amount you put down.
An FHA loan is not automatically the cheapest choice. A borrower with strong credit and 5% or 10% down may receive a better overall deal from a conventional loan with PMI. Compare official Loan Estimates rather than choosing based only on the minimum deposit.
VA and USDA Loans May Require No Down Payment
Eligible service members, veterans, and certain surviving spouses may qualify for a VA-backed mortgage with no down payment. Most VA-backed purchase loans are made without one, although a lender may require money down in some situations.
VA loans do not require monthly mortgage insurance. A one-time VA funding fee may apply unless the borrower qualifies for an exemption. The fee varies based on factors such as the down payment and whether the benefit has been used before.
USDA-backed mortgages may also offer 100% financing to eligible borrowers buying qualifying homes in approved rural areas. Income and property requirements apply, and USDA loans include guarantee-related charges.
A zero-down loan does not mean buying a home with zero cash. You may still need money for inspections, closing costs, prepaid insurance, taxes, moving, and immediate repairs.
How Your Down Payment Affects the Monthly Payment
A larger down payment produces a smaller mortgage balance, which generally lowers principal and interest payments.
Consider a $400,000 home financed with a 30-year mortgage at a hypothetical 6.5% interest rate. With 3% down, you would borrow $388,000 and pay about $2,452 per month in principal and interest. With 10% down, the $360,000 loan would cost about $2,275 per month. With 20% down, the $320,000 loan would cost about $2,023 per month.
The difference between 3% and 20% down is roughly $429 per month before PMI, property taxes, homeowners insurance, or association fees.
These figures are examples, not loan quotes. Your actual payment depends on your rate, term, credit, lender fees, insurance, taxes, and loan program.
How PMI Changes the Cost
PMI protects the lender, not the homeowner, if a conventional mortgage borrower stops making payments. It is typically required when the down payment is less than 20%.
The cost depends on the loan size, credit profile, down payment, and insurer. Suppose PMI costs $150 per month. That adds $1,800 per year to the cost of owning the home.
For many conventional mortgages, you may request PMI cancellation once the loan balance reaches 80% of the home’s original value, provided you meet the applicable requirements. Automatic termination may occur later under federal rules if payments are current.
Do not confuse conventional PMI with FHA mortgage insurance. FHA loans follow different cancellation rules, and refinancing may be required to remove the insurance in some cases.
Do Not Forget Closing Costs
Your down payment is separate from closing costs. Closing costs commonly range from 2% to 5% of the purchase price, although the exact amount depends on the loan, lender, home, and location.
For a $400,000 property, that range equals approximately $8,000 to $20,000. A buyer making a 5% down payment could therefore need $20,000 for the deposit plus thousands more to close.
Imagine you have saved $35,000. Putting all $35,000 into the down payment may leave nothing for a $10,000 closing bill, a $2,000 move, or a broken water heater.
Estimate your full cash requirement before deciding how much to put down. Your Loan Estimate will provide a more detailed view once you apply for financing.
Should You Make the Largest Down Payment Possible?
A larger down payment can reduce interest, lower the monthly bill, and help you avoid PMI. It also turns liquid cash into home equity, which is harder to access quickly.
Suppose you have $70,000 and are buying a $300,000 home. Putting down $60,000 gives you 20% down, but leaves only $10,000 for closing and emergencies. Putting down $30,000 leaves more cash available, although you will have a larger mortgage and may pay PMI.
Consider your job stability, emergency savings, repair risk, and other financial goals. Homeownership can create sudden costs. A heating system, roof repair, or plumbing problem can easily cost several thousand dollars.
The strongest down payment is not always the largest one. It is the amount that creates an affordable mortgage without leaving you financially exposed.
Can You Get Down Payment Assistance?
State agencies, cities, nonprofit organizations, employers, and housing finance agencies may offer grants, deferred loans, forgivable loans, or second mortgages to eligible buyers.
Some programs focus on first-time buyers, certain professions, lower-income households, or specific locations. Assistance may come with income limits, home price limits, education requirements, or repayment conditions.
Family gifts may also be permitted under certain mortgage programs. The lender will normally require documentation showing where the money came from and whether repayment is expected.
Do not assume money described as a grant is completely free. Some assistance must be repaid if you sell, refinance, rent out the property, or move within a certain number of years.
The Bottom Line
How much down payment for a house you need can range from 0% to 20% or more. Some conventional loan programs allow 3% down, an FHA loan may require as little as 3.5%, and eligible VA or USDA borrowers may qualify with no down payment.
Putting down less can help you buy sooner, but it increases the mortgage balance and may add PMI or other insurance costs. Putting down more can reduce monthly expenses, but using every dollar of savings may leave you unprepared for closing costs and repairs.
Compare several loan options, calculate the total monthly payment, and keep a cash cushion after closing. The best down payment is one that makes both the purchase and the years after it affordable.
Frequently Asked Questions
Is $10,000 enough for a down payment on a house?
It may be enough for a low-down-payment mortgage on a modestly priced home. A 3% down payment on a $300,000 property is $9,000, but you would still need to cover closing costs and other expenses.
Is it better to put 5% or 20% down on a house?
Putting 20% down can reduce the loan balance and usually avoids conventional PMI. Putting 5% down preserves more cash, but it normally results in a larger payment and added mortgage insurance costs.
Can closing costs be included in the down payment?
No, the down payment and closing costs are separate. Some loans, lender credits, seller contributions, or assistance programs may help with closing costs, but the terms should be reviewed carefully.
Disclaimer: This article is for general educational purposes only and does not provide personalized financial, mortgage, tax, legal, or real estate advice. Loan requirements, insurance rules, rates, assistance programs, and buyer protections vary by lender, location, and borrower.
