How much down payment do I need to buy a house?

Short answer: you can buy a house with as little as 0–3.5% down depending on the loan type — 3% for conventional loans, 3.5% for FHA loans, and 0% for VA and USDA loans. The 20% figure is a myth as a requirement; it's just the threshold where you avoid mortgage insurance.

Somewhere along the way, "20% down" hardened into folk wisdom, and it stops a lot of would-be buyers before they start. On a $350,000 home, 20% is $70,000 — a number that takes years to save and feels impossible for many renters. The good news is that almost nobody is required to hit it. The more useful question is what a smaller down payment costs you over time.

What each loan type actually requires

For conventional loans backed by Fannie Mae and Freddie Mac, the minimum down payment is 3% for qualified first-time buyers (through programs like HomeReady and Home Possible), and typically 5% otherwise. You'll generally need a credit score of at least 620, and individual lenders can set higher bars.

FHA loans, backed by the Federal Housing Administration, allow 3.5% down with a credit score of 580 or higher. If your score is between 500 and 579, you can still qualify with 10% down. FHA is the most forgiving major loan program for buyers with thinner credit or smaller savings.

VA loans for eligible veterans, active-duty service members, and qualifying spouses require 0% down — no down payment at all, and no monthly mortgage insurance either. USDA loans for eligible rural and suburban properties also allow 0% down. If you qualify for either of these, they're usually the best deal available, full stop.

Note that these are program minimums. Individual lenders can impose stricter requirements — called overlays — so the same borrower might qualify at one lender and not another. It pays to shop around.

What 20% actually gets you

Twenty percent isn't a requirement, but it isn't meaningless either. It's the line where private mortgage insurance (PMI) drops off on conventional loans. Put down less than 20%, and you'll pay PMI — typically 0.5% to 1.5% of the loan amount per year — until your equity reaches 20%.

On a $300,000 home with 3% down, that's a $291,000 loan, and PMI might add roughly $145 to $365 a month to your payment. That's real money, but it's temporary: once you hit 20% equity through payments and appreciation, PMI cancels (automatically at 78% loan-to-value, or by request at 80%).

A larger down payment also means a smaller loan, which means lower monthly payments and less total interest paid over the life of the mortgage. On a 30-year loan, the difference between 3% and 20% down compounds into tens of thousands of dollars. But that has to be weighed against the cost of waiting years to save the difference while home prices and rents keep moving.

The hidden cost of small down payments

The trade-off for putting less down isn't just PMI. FHA loans charge mortgage insurance differently: an upfront premium of 1.75% of the loan amount (usually rolled into the loan) plus an annual premium that, with less than 10% down, typically lasts for the life of the loan unless you refinance. Over a decade, that can cost more than conventional PMI that eventually drops off.

Smaller down payments also mean less cushion. If home values dip 5% and you put 3% down, you're briefly underwater — owing more than the home is worth. That only matters if you need to sell, but life is unpredictable, and thin equity removes your margin for error.

And in competitive markets, a small down payment can weaken your offer. Sellers and their agents sometimes view low-down-payment offers as riskier, worrying the appraisal or financing might fall through. It's not fair, but it's real, and it's worth knowing going in.

There's also the appraisal gap to think about. If the home appraises below your offer price, the lender will only lend against the appraised value — and you have to cover the difference in cash. A buyer putting 20% down usually has cash reserves to bridge a small gap; a buyer stretching to make 3% work often doesn't. In bidding-war markets, this is one of the quietest ways small-down-payment buyers lose out, and it's worth discussing with your agent before you fall in love with a house.

Don't forget closing costs

Here's what trips up more buyers than the down payment itself: closing costs. These run roughly 2–5% of the purchase price and cover lender fees, appraisal, title insurance, prepaid taxes and insurance, and more. On a $300,000 home, that's another $6,000 to $15,000 in cash you'll need at closing — on top of the down payment.

So a buyer putting 3% down on a $300,000 home ($9,000) might actually need $15,000 to $24,000 in total cash to close. Many first-time buyers learn this late in the process, which is why getting a detailed estimate from your lender early — not the week before closing — matters so much.

Some buyers negotiate seller concessions (the seller covering part of closing costs) or use lender credits, but those have limits and trade-offs. The cash requirement is real, and it should be part of your savings target from the start.

Down payment assistance exists

If the cash requirement feels out of reach, look into down payment assistance programs before assuming you can't buy. Every US state has a housing finance agency offering some combination of grants, forgivable loans, or low-interest second mortgages for down payments and closing costs — often aimed at first-time buyers or buyers under certain income limits.

Many cities and counties run their own programs too, and some employers offer homebuying assistance as a benefit. These programs have real requirements and sometimes strings attached (like having to stay in the home for a set number of years), but they help thousands of buyers close the gap every year.

The catch: you have to find them. They don't advertise like mortgage lenders do. Your state's housing finance agency website is the best starting point, and a good local lender or housing counselor can point you to programs you qualify for.

Using gift funds for the down payment

Many buyers don't save the down payment alone — family helps. All major loan programs allow gift funds from family members toward the down payment, but they document it carefully. The donor typically needs to provide a gift letter stating the money is a gift, not a loan, plus bank statements tracing the transfer. Lenders do this to make sure you're not secretly borrowing the down payment, which would change your real debt picture.

Conventional loans are the most flexible here: with more than 5% down, the entire down payment can come from gifts. FHA allows the full 3.5% minimum to be gifted. VA and USDA, with their zero-down structure, mostly sidestep the question.

If family help is on the table, have the conversation early and get the paperwork right the first time. Gift funds that arrive as unexplained large deposits a week before closing can delay or derail a loan — underwriters are required to source every dollar. A heads-up to your loan officer before the money moves saves everyone a scramble.

How to decide your number

The right down payment is a balance between monthly affordability and opportunity cost. Run the numbers both ways: what does 5% down look like monthly versus 10% or 20%, including PMI? And what would it cost you — in rent paid, in potential appreciation missed — to wait another two or three years saving the difference?

A common-sense framework: put down enough that the monthly payment (including taxes, insurance, and PMI) fits comfortably within your budget — many advisors suggest keeping total housing costs under 28–30% of gross income — while keeping an emergency fund intact after closing. Draining every dollar of savings for the down payment and closing with nothing left is riskier than paying PMI for a few years.

Also consider your time horizon. If you'll stay put for seven to ten years, buying with a small down payment usually works out fine — appreciation and principal paydown build your equity. If you might move in two years, thin equity plus selling costs could mean writing a check at closing. The down payment decision and the how-long-will-I-stay decision are really the same decision.

You don't need 20% to buy a house, and waiting until you have it can cost more than the PMI you'd pay in the meantime. What you need is enough cash to cover the down payment plus closing costs, a monthly payment you can comfortably afford, and an emergency fund left over when the dust settles. Get those three right, and the exact percentage matters a lot less than the conventional wisdom suggests.