There is no single down payment that is right for every buyer. The amount you need depends on the mortgage program, lender requirements, property, credit profile, and how much cash you want to keep after closing.
The CFPB notes that many buyers can purchase with less than 20% down. In many cases, at least 3% may be available, while many loan types and lenders require 5% or more. A larger down payment can reduce the amount borrowed and may reduce the interest rate or other loan costs.
Compare down-payment scenarios
Change the home price, down payment, taxes, insurance, and rate to see how each assumption affects the monthly payment.
Open Mortgage Calculator →Why 20% down is common, but not universal
Twenty percent is often discussed because conventional borrowers who put less than 20% down commonly pay private mortgage insurance. But 20% is not a universal minimum purchase requirement.
The practical question is not only "Can I reach 20%?" It is also whether using that much cash would leave enough for closing costs, moving expenses, repairs, and an emergency reserve.
How a larger down payment changes the loan
- Smaller loan balance: borrowing less reduces principal and interest at the same rate and term.
- Potential mortgage-insurance savings: on many conventional loans, a 20% down payment avoids borrower-paid PMI at origination.
- Potential pricing differences: lenders may price loans differently at different LTV levels.
- Less cash after closing: putting more down reduces the liquid funds you keep.
Low-down-payment options
Some conventional programs permit low down payments for eligible borrowers. FHA purchase financing can allow a maximum LTV of 96.5% for borrowers who meet the program's maximum-financing requirements, which corresponds to a 3.5% down payment before considering other transaction costs.
Eligible VA borrowers may have the option to buy with no down payment, subject to entitlement, lender approval, appraisal, and other program rules. Other programs, including USDA financing and state or local assistance, have separate eligibility requirements.
Do not confuse down payment with cash to close
Your down payment is only one component of the transaction. The amount due at closing can also reflect lender charges, title and settlement costs, prepaid interest, homeowners insurance, taxes, escrow funding, deposits already paid, and credits.
Use the Loan Estimate and Closing Disclosure for transaction-specific figures rather than relying only on a percentage rule of thumb.
A simple way to choose a down-payment range
- Estimate the monthly payment at several down-payment levels.
- Estimate closing costs and other cash needed at closing.
- Set aside money for moving and near-term property expenses.
- Preserve an emergency reserve appropriate for your household.
- Compare lender quotes using the same loan structure.
Example: $400,000 home
| Down payment | Cash down | Starting loan before financed fees |
|---|---|---|
| 3% | $12,000 | $388,000 |
| 5% | $20,000 | $380,000 |
| 10% | $40,000 | $360,000 |
| 20% | $80,000 | $320,000 |
This table only shows the down payment and starting principal. It does not include closing costs, mortgage insurance, taxes, insurance, points, or other fees.
Bottom line
Choose a down payment by comparing the total loan cost and monthly payment with the cash you will have left after closing. A smaller down payment can preserve liquidity; a larger one can reduce borrowing costs. The right trade-off is household-specific.