How Much Do You Need as a Down Payment on a House?

How much do you need for a down payment on a house? Many homebuyers assume they need 20% of the purchase price, but that’s not necessarily true. Depending on your qualifications and mortgage program, you may be able to purchase a home with as little as 3% down—or even no down payment. Understanding your options can help you determine how much cash you’ll need and which financing strategy makes the most sense.

All amounts are percentages of the overall purchase price of the home. This does not include closing costs such as lawyer’s fees, inspections, and appraisals.

• Conventional Loans (3%–5% Down): Many conventional mortgage programs allow qualified buyers to purchase a home with as little as 3% down. A 20% down payment is not required, although putting less than 20% down generally means paying private mortgage insurance (PMI).
• FHA Loans (3.5% Down): FHA financing allows qualified borrowers to purchase a home with as little as 3.5% down. These loans can be particularly helpful for buyers with lower credit scores or limited savings. FHA loans require mortgage insurance.
• VA Loans (0% Down): Eligible veterans, active-duty service members, and certain surviving spouses may qualify for a VA loan with no down payment. VA loans generally do not require monthly mortgage insurance.
• USDA Loans (0% Down): Qualified buyers purchasing eligible properties in designated rural and certain suburban areas may qualify for USDA financing with no down payment. Income and property eligibility requirements apply.
• 20% or More Down: A larger down payment can reduce your monthly mortgage payment and eliminate conventional PMI. However, putting 20% down isn’t necessarily the best financial strategy for every buyer.

Can I put down a lower down payment?

Absolutely. Many conventional mortgage programs allow qualified buyers to purchase a home with less than 20% down. Depending on the program, your down payment could be as little as 3%.

When you put less than 20% down on a conventional mortgage, private mortgage insurance (PMI) is generally required. PMI protects the lender if the borrower defaults, but it also allows buyers to purchase a home without waiting years to accumulate a larger down payment.

The important consideration isn’t simply how much you put down. It’s how your down payment affects your monthly mortgage payment, closing costs, available savings, and overall financial flexibility.

Can I put down a higher down payment?

Absolutely. Making a larger down payment can reduce your monthly mortgage payment, lower your total borrowing costs, and potentially improve your loan terms. With a conventional mortgage, putting at least 20% down generally eliminates the need for private mortgage insurance (PMI).

However, a larger down payment isn’t always the best financial decision. Using too much of your available cash could leave you with limited savings for unexpected expenses, home improvements, or future investment opportunities.

For example, a buyer purchasing a $400,000 home might compare putting 5%, 10%, or 20% down. Each option creates a different monthly payment, cash-to-close requirement, and amount of money remaining in savings.

The goal isn’t necessarily to put the most money down. It’s to find the right balance between an affordable monthly payment and maintaining financial flexibility.

Buying Your First Home in Austin or Central Texas?

Understanding your down payment options is an important first step toward homeownership. If you’re preparing to purchase your first home, explore my Austin first-time home buyer guide to learn more about available mortgage programs, down payment requirements, and how to prepare financially for your purchase.