Most people do not need to put 20% down on a house. Depending on your loan type, you can buy a home with as little as 0% to 3.5% down. The 20% figure persists because it’s the threshold where you avoid paying private mortgage insurance, but it’s a cost-saving benchmark, not a requirement.
Minimum Down Payments by Loan Type
The amount you need upfront depends entirely on which mortgage program you use. Here are the main options:
- Conventional loans: As low as 3% for borrowers with solid credit. On a $350,000 home, that’s $10,500.
- FHA loans: 3.5% with a credit score of 580 or higher. Borrowers with scores between 500 and 579 need 10% down. FHA loans are backed by the Federal Housing Administration and are popular with first-time buyers.
- VA loans: 0% down for eligible veterans, active-duty service members, and surviving spouses. This is one of the most powerful mortgage benefits available.
- USDA loans: 0% down for buyers purchasing in eligible rural and suburban areas who meet income limits.
So the real minimum ranges from nothing at all to 3.5%, depending on your situation. The loan type you qualify for is the single biggest factor in how much cash you need at closing.
What Buyers Actually Put Down
Even though minimums are low, most buyers put down more. According to the National Association of Realtors’ 2025 profile, the median down payment across all buyers was 19%. First-time buyers put down a median of 10%, while repeat buyers (who often roll equity from a previous home sale) put down 23%. That 10% figure for first-timers is the highest since 1989, reflecting how competitive housing markets have pushed buyers to make stronger offers.
These numbers don’t mean you need to match them. They reflect a mix of financial circumstances, local markets, and competitive pressures. Plenty of buyers close with 3% to 5% down every year.
Why 20% Down Still Matters
Putting less than 20% down on a conventional loan triggers private mortgage insurance (PMI). PMI protects the lender if you default, and you pay for it. The cost typically ranges from 0.46% to 1.50% of your original loan amount per year. On a $300,000 mortgage, that works out to roughly $115 to $375 per month added to your payment.
PMI isn’t permanent. Once you reach 20% equity in your home, whether through payments or rising home values, you can request that your lender cancel it. On a conventional loan, your lender is required to automatically remove PMI once you hit 22% equity based on the original purchase price.
FHA loans work differently. They charge their own mortgage insurance premium, and if you put less than 10% down, that premium stays for the entire life of the loan. The only way to drop it is to refinance into a conventional loan once you have enough equity.
How Your Down Payment Affects Your Rate and Total Cost
A larger down payment generally gets you a lower interest rate. Lenders see less risk when you have more of your own money in the property. The Consumer Financial Protection Bureau notes that putting 20% or more down typically results in a lower rate compared to smaller down payments.
There’s a nuance worth knowing: a borrower putting down just under 20% might actually be offered a slightly lower rate than someone at exactly 20%, because the mortgage insurance they’re paying reduces the lender’s risk. But even with that rate advantage, the total cost of borrowing is higher once you factor in the monthly insurance payments. The math almost always favors the larger down payment if you can afford it without draining your savings.
The real tradeoff is between getting into a home sooner with less money down versus paying more over the life of the loan. A 3% down payment on a $350,000 home means financing $339,500 instead of $280,000 (at 20% down). That difference of nearly $60,000 in loan balance adds up significantly in interest charges over 30 years.
Down Payment Assistance Programs
If coming up with even 3% feels like a stretch, down payment assistance programs can help. There are roughly 2,000 to 2,500 of these programs across the country, run by state and local governments and nonprofit organizations. They come in four main forms:
- Grants: Free money that never has to be repaid.
- Standard loans: Second mortgages you repay monthly alongside your primary mortgage.
- Deferred loans: Second mortgages with no payments due until you sell, move, or refinance.
- Forgivable loans: Second mortgages that are forgiven after a set period, often five to 20 years, as long as you stay in the home.
Most programs are designed for first-time buyers, but the definition is broader than you might expect. If you haven’t owned a home in the past three years, you typically qualify as a “first-time buyer” for these programs. Other common requirements include buying a primary residence, falling within local income limits, staying under a purchase price cap, and working with an approved lender.
The U.S. Department of Housing and Urban Development (HUD) lists homeownership assistance programs on its website, organized by state, which is a good starting point for finding what’s available in your area.
Deciding How Much to Put Down
The right down payment depends on your financial picture, not a universal rule. A few factors to weigh:
Your emergency fund should survive the purchase. Draining every dollar of savings to hit 20% down leaves you vulnerable to unexpected repairs, job changes, or medical bills. Most financial planners suggest keeping three to six months of expenses in reserve after closing.
Consider your other debts. If you’re carrying high-interest credit card balances or student loans, putting less down on the house and using some cash to pay down that debt could save you more in total interest than avoiding PMI would.
Think about how long you plan to stay. If you expect to move within five years, the extra cost of PMI may be modest compared to the opportunity cost of tying up a large down payment. If you’re buying a long-term home, a bigger down payment reduces your monthly costs for decades.
Finally, your local market matters. In highly competitive markets, sellers sometimes favor buyers with larger down payments because they appear less likely to run into financing problems. In calmer markets, a smaller down payment with strong pre-approval may work just fine.