Many people believe you need 20% down to buy a house. For a $350,000 home, that would mean saving $70,000 before you even start, which is enough to make most buyers give up. The good news is that 20% is not a requirement. So how much down payment do you need in reality? Depending on the loan, it could be 3%, 3.5%, or even nothing at all.
In this guide, we break down the minimum down payment for each major loan type, show what different amounts mean in real dollars, and explain the pros and cons of putting down less or more.
Why 20% Down Is Not a Rule
The 20% figure comes from one specific benefit: on a conventional loan, putting down at least 20% means you don’t have to pay private mortgage insurance (PMI). That’s useful, but it’s a way to avoid an extra cost, not a requirement to get a mortgage.
In fact, many buyers, especially first-time buyers, put down much less than 20%. Waiting years to save a full 20% can also cost you, because home prices and rents may keep rising while you save.
How Much Down Payment Do You Need by Loan Type?
Here are the typical minimums for the five main loan types in the U.S.:
| Loan type | Minimum down payment | Who it’s for |
|---|---|---|
| 1. Conventional | 3% (for qualifying buyers) | Buyers with good credit; 3% is often for first-time buyers or special programs |
| 2. FHA | 3.5% with a 580+ credit score (10% with 500–579) | Buyers with lower credit scores or limited savings |
| 3. VA | 0% | Eligible veterans, active-duty service members and some surviving spouses |
| 4. USDA | 0% | Buyers in eligible rural and suburban areas who meet income limits |
| 5. Jumbo | Often 10%–20% | Loans above the conforming loan limit |
Conventional loans
Conventional loans are not backed by the government. Some programs, such as Fannie Mae’s HomeReady and Freddie Mac’s Home Possible, allow just 3% down, usually with income limits or for first-time buyers. If you put down less than 20%, you will pay PMI, but you can remove it later once you build enough equity.
FHA loans
FHA loans are insured by the Federal Housing Administration and are popular with buyers who have lower credit scores. With a score of 580 or higher, you need just 3.5% down. FHA loans charge mortgage insurance (MIP), including an upfront premium and an annual premium. If you put down less than 10%, the annual premium usually lasts for the life of the loan unless you refinance.
VA loans
VA loans are backed by the Department of Veterans Affairs and usually require no down payment and no monthly mortgage insurance. Most borrowers pay a one-time VA funding fee, which can often be added to the loan.
USDA loans
USDA loans also allow 0% down, but only for homes in eligible areas, which include many small towns and suburbs, not just farmland. There are household income limits, and you pay a guarantee fee instead of standard mortgage insurance.
Jumbo loans
Jumbo loans are for amounts above the conforming loan limit set each year. Because lenders take more risk, they usually ask for a larger down payment, commonly between 10% and 20%, plus strong credit and cash reserves.
What Different Down Payments Look Like in Dollars
Let’s take a $350,000 home and a 30-year fixed loan at a hypothetical 6.5% rate (not a current market rate). Here is how much down payment do you need in cash at each level, and what it means for your monthly payment:
| Down payment | Cash needed | Loan amount | Monthly principal and interest |
|---|---|---|---|
| 3% | $10,500 | $339,500 | about $2,146 |
| 3.5% | $12,250 | $337,750 | about $2,135 |
| 5% | $17,500 | $332,500 | about $2,102 |
| 10% | $35,000 | $315,000 | about $1,991 |
| 20% | $70,000 | $280,000 | about $1,770 |
Keep in mind:
- With less than 20% down on a conventional loan, you would also pay PMI, which adds to the monthly payment.
- Property taxes and homeowners insurance come on top of these figures.
- The difference between 3% and 20% down is about $376 per month in principal and interest alone, but it also means saving almost $60,000 more upfront.
Don’t Forget Closing Costs
Your down payment is not the only cash you need. Closing costs, which include lender fees, appraisal, title insurance and other charges, typically run between 2% and 5% of the loan amount. On a $340,000 loan, that could mean roughly $6,800 to $17,000.
Some ways to reduce what you pay at closing:
- Ask the seller to cover part of your closing costs (seller concessions)
- Compare Loan Estimates from several lenders
- Look into down payment and closing cost assistance programs in your state
Pros and Cons of a Small Down Payment
Advantages:
- You can buy sooner instead of spending years saving
- You keep more cash for emergencies, moving costs and repairs
- You start building equity earlier
Disadvantages:
- Higher monthly payments, because you borrow more
- Mortgage insurance (PMI or MIP) adds to your costs
- More total interest over the life of the loan
- Less equity at the start, which can be a problem if home prices fall and you need to sell
How to Decide How Much to Put Down
There is no single right answer to how much down payment do you need. It depends on your full financial picture. Ask yourself these questions:
- Will I still have an emergency fund after closing? Never empty your savings for the down payment. Most experts suggest keeping at least three to six months of expenses available.
- Can I comfortably afford the monthly payment? A bigger down payment lowers it. A smaller one gets you in the door sooner.
- How long do I plan to stay? If you plan to stay many years, a larger down payment saves more interest over time.
- Which loan do I qualify for? If you are eligible for a VA or USDA loan, a 0% down option may make sense even if you have savings.
Where Can the Down Payment Come From?
Besides your own savings, you can often use:
- Gift funds from family members, usually with a signed gift letter
- Down payment assistance programs from state and local housing agencies, often for first-time buyers
- Employer housing programs, offered by some companies
Be careful with borrowing from a 401(k) or other retirement accounts. It may be allowed, but it can reduce your retirement savings and carry risks if you change jobs.
Frequently Asked Questions
Can I buy a house with no money down?
Yes, if you qualify for a VA or USDA loan. You will still need money for closing costs in most cases, although some can be covered by the seller or assistance programs.
Is it better to put 20% down?
Not always. Putting 20% down avoids PMI on a conventional loan and lowers your payment, but if it leaves you with no emergency savings, a smaller down payment may be the smarter choice.
Can I remove PMI later?
On a conventional loan, yes. You can ask your lender to cancel PMI once your balance reaches 80% of the home’s original value, and it is removed automatically at 78%. FHA mortgage insurance works differently and often requires refinancing to remove.
Does a bigger down payment get me a better rate?
It can. Lenders often offer slightly better pricing when you borrow less compared with the home’s value, but your credit score usually has a bigger effect.
Final Thoughts
You don’t need 20% to buy a home. Conventional loans start at 3% down, FHA at 3.5%, and VA and USDA loans can require nothing at all. The right amount is the one that lets you afford the monthly payment comfortably while keeping a safety cushion for emergencies. When you’re ready, ask several lenders for quotes using different down payment amounts and compare the total costs. In the end, how much down payment do you need comes down to balancing your savings, your monthly budget and how soon you want to buy.
I’m José María, the author of Finanzasclave. I’m not a lender or a financial advisor, and I don’t sell mortgages. My goal is to take information from official sources, like the CFPB, HUD and the VA, and explain it in plain English, so you can plan your home purchase with realistic numbers and ask lenders the right questions.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial, legal or mortgage advice. Finanzasclave is not a lender, broker or financial advisor. Down payment requirements, loan limits, mortgage insurance costs and program rules change over time and vary by lender. Always confirm the details with a licensed mortgage professional before making any decision.
Last updated: October 2026