Key Takeaways
- A 20% down payment eliminates PMI, saving $100-300+ monthly
- First-time buyers can put as little as 3% down with conventional loans
- FHA loans require only 3.5% down with a 580+ credit score
- VA and USDA loans offer 0% down payment options for eligible buyers
- A larger down payment means lower monthly payments and less interest over time
What Is a Mortgage Down Payment?
| Loan Type | Minimum Down Payment | Borrower Requirement | Notes |
|---|---|---|---|
| Conventional (conforming) | 3% | Good credit (620+ score typically) | PMI required below 20%; best rates at 20%+ |
| Conventional (conforming) — typical | 5–10% | Moderate-to-good credit | Lower PMI cost than 3%; faster PMI removal |
| FHA Loan | 3.5% | Credit score 580+ | MIP (mortgage insurance premium) required; 0.55–1.05% annually |
| FHA Loan (lower credit) | 10% | Credit score 500–579 | FHA MIP still applies; harder to remove than PMI |
| VA Loan | 0% | Military service members, veterans, surviving spouses | No PMI; VA funding fee applies (1.25–3.3%) |
| USDA Loan | 0% | Rural/suburban properties; income limits apply | No PMI; guarantee fee applies; geographic eligibility required |
| Jumbo Loan | 10–20% | Loan above conforming limit ($766,550 in 2024) | Stricter underwriting; higher credit score typically required |
| Note: Down payment minimums are federal or lender minimums — your specific lender may require more. Higher down payment generally = lower interest rate, no PMI, lower monthly payment. The 20% down threshold is significant: it eliminates PMI, improves your debt-to-income ratio, and signals financial stability to lenders. | |||
| Down Payment % | Approximate PMI Rate | Annual PMI Cost on $300k Loan | Monthly PMI |
|---|---|---|---|
| 3% down | 0.8–1.2% | $2,400–$3,600 | $200–$300 |
| 5% down | 0.5–1.0% | $1,500–$3,000 | $125–$250 |
| 10% down | 0.3–0.7% | $900–$2,100 | $75–$175 |
| 15% down | 0.2–0.5% | $600–$1,500 | $50–$125 |
| 20%+ down | 0% | $0 | $0 |
| Note: PMI is private mortgage insurance required by lenders when you put less than 20% down on a conventional loan. It protects the lender (not you) against default. PMI is removed automatically when your loan balance reaches 78% of the original home value (Homeowners Protection Act). You can also request removal at 80% LTV if the home's value has increased. PMI rates vary by credit score, loan type, and lender. FHA loans use MIP (mortgage insurance premium), which works differently and is harder to remove. | |||
| Home Price | 3% Down | 5% Down | 10% Down | 20% Down |
|---|---|---|---|---|
| $200,000 | $6,000 | $10,000 | $20,000 | $40,000 |
| $300,000 | $9,000 | $15,000 | $30,000 | $60,000 |
| $400,000 | $12,000 | $20,000 | $40,000 | $80,000 |
| $500,000 | $15,000 | $25,000 | $50,000 | $100,000 |
| $600,000 | $18,000 | $30,000 | $60,000 | $120,000 |
| $750,000 | $22,500 | $37,500 | $75,000 | $150,000 |
| $1,000,000 | $30,000 | $50,000 | $100,000 | $200,000 |
| Note: These amounts are the down payment only and do not include closing costs (typically 2–5% of home price) or cash reserves that many lenders require. A $400,000 home with 10% down requires: $40,000 down + $8,000–$20,000 closing costs + 2–3 months reserves = $50,000–$65,000 total cash needed at closing. | ||||
A mortgage down payment is the upfront cash you pay toward the purchase of a home. It's expressed as a percentage of the total purchase price. For example, a 20% down payment on a $400,000 home would be $80,000.
The down payment reduces the amount you need to borrow from a lender. A larger down payment typically means:
- Lower monthly mortgage payments
- Better interest rates (lenders view you as less risky)
- No PMI requirement (if 20% or more)
- More equity in your home from day one
How Much Should You Put Down?
The "right" down payment depends on your financial situation, loan type, and goals:
Pro Tip: The 20% Sweet Spot
While 20% down isn't required, it's often the optimal target. You avoid PMI ($100-300/month savings), get better rates, and start with meaningful equity. But don't deplete your emergency fund to reach 20% - having 3-6 months of expenses saved is more important.
Understanding PMI (Private Mortgage Insurance)
PMI is insurance that protects the lender if you default on your mortgage. It's required when you put less than 20% down on a conventional loan.
Typical PMI costs: 0.5% to 1% of the loan amount per year, or about $50-100 per month for every $100,000 borrowed.
Good news: PMI isn't forever. Once you reach 20% equity (through payments or appreciation), you can request PMI removal. Lenders must automatically cancel it at 22% equity.
Down Payment Requirements by Loan Type
- Conventional loans: 3-5% minimum (3% for first-time buyers)
- FHA loans: 3.5% with 580+ credit score, 10% with 500-579 score
- VA loans: 0% for eligible veterans and active military
- USDA loans: 0% for rural property purchases
- Jumbo loans: 10-20% typically required
How to Calculate Your Down Payment
Use this simple formula:
Down Payment = Home Price x Down Payment Percentage
Example: $350,000 home x 10% = $35,000 down payment
Don't forget to budget for closing costs (2-5% of the loan amount) in addition to your down payment!