How Much Do I Need for a House Down Payment?

How Much Do You Need for a Down Payment?

Saving for a down payment is one of the biggest challenges for new homebuyers. Depending on home prices in your area and how much you plan to save, it can take years. A down payment is a percentage of the home’s purchase price. But how much do you actually need?

Many lenders and Realtors mention 20% as the standard. This amount is common for a conventional loan. However, some loan programs let you buy a home with a smaller down payment—or even none at all.

Conventional Loan With PMI

You can get a conventional loan with as little as 3% down. The trade-off is private mortgage insurance (PMI). This added monthly cost protects the lender if you stop making payments. Once you reach 20% equity, the PMI requirement ends.

FHA Loan

An FHA loan lets you buy a home with 3.5% down and a lower credit score. Since the loan is backed by the government, lenders are more flexible. You will pay a mortgage insurance premium for the full length of the loan.

VA Loan

VA loans are available to eligible veterans, active-duty service members, National Guard members, and some surviving spouses. These loans require no down payment and no mortgage insurance. The Department of Veterans Affairs backs the loan.

USDA Loan

If you buy a home in a qualifying rural or suburban area, you may qualify for a USDA loan. This loan offers no down payment and no mortgage insurance, but it is only available in approved locations.

Why a Larger Down Payment Helps

Putting more money down lowers your monthly payment and may help you secure a lower interest rate. Still, make sure you keep enough savings for emergencies and home repairs after you move in.

Down Payments for Second Homes and Investment Properties

Buying a second home or an investment property usually requires a larger down payment. Most buyers must use a conventional or commercial loan. Requirements vary by lender, but down payments of 20% to 25% are common—especially for multi-family properties.

Next Steps

If you already have your down payment saved, speak with your lender about your loan options. If you’re still saving, ask about programs that allow low or no down payments. You may be closer to buying a home than you think.