Down payment percentages vary by loan type and lender, but the most common range is 3% to 20% of the home's purchase price
The down payment is the cash you hand over at closing, expressed as a percentage of what you're paying for the house. A 20% down payment on a $300,000 home means you pay $60,000 upfront; a 5% down payment on the same house means $15,000. The percentage you pay depends on the type of loan you're getting, how much you have saved, and what the lender will accept.
Conventional loans (the kind not backed by a government agency) typically want 5% to 20% down, though some lenders will go as low as 3%. FHA loans, backed by the Federal Housing Administration, often accept 3.5% down. VA loans, for military borrowers, frequently require 0% down. USDA loans, for rural properties, also often require 0% down. The lower your down payment percentage, the more you borrow, and the more interest you pay over the life of the loan.
Key Takeaways
- Down payment percentages range from 0% (VA and USDA loans) to 20% or higher (conventional loans), depending on the loan type and lender.
- A smaller down payment percentage means a larger loan amount and higher total interest paid, but it lets you buy sooner with less cash on hand.
- Putting down less than 20% on a conventional loan usually triggers private mortgage insurance (PMI), which adds to your monthly payment until you reach 20% equity.
- Your credit score, income, and debt-to-income ratio affect which down payment percentages lenders will offer you.
- The down payment percentage you choose is a trade-off between how much cash you have now and how much you'll pay in interest and insurance over time.
How down payment percentage affects your monthly payment and total cost
The percentage you put down directly changes how much you borrow. On a $300,000 home, a 3% down payment means you borrow $291,000; a 20% down payment means you borrow $240,000. The difference in monthly principal and interest alone is roughly $300 to $400 per month, depending on your interest rate and loan term.
But the real cost difference is larger. When you put down less than 20% on a conventional loan, the lender requires you to carry private mortgage insurance (PMI). PMI protects the lender if you stop paying; it does not protect you. PMI typically costs 0.5% to 1.5% of your loan amount per year, added to your monthly payment. On a $291,000 loan, that's roughly $120 to $360 per month. You pay PMI until you reach 20% equity in the home—which takes years, even as you make payments, because equity builds slowly at first.
Over 30 years, the difference between a 3% down payment and a 20% down payment can easily exceed $100,000 in total interest and insurance costs. The trade-off is that a smaller down payment lets you buy now instead of waiting years to save more cash.
Down payment percentages by loan type
| Loan Type | Typical Down Payment Range | Notes |
|---|---|---|
| Conventional | 3% to 20%+ | PMI required below 20%. Credit score and debt-to-income ratio affect approval. |
| FHA | 3.5% to 10% | Mortgage insurance required for all loans. Lower credit scores accepted. |
| VA | 0% to 5% | 0% down available for may be able to access military borrowers. No PMI, but a funding fee applies. |
| USDA | 0% to 3% | 0% down for rural properties. Mortgage insurance required. Income limits apply. |
| Jumbo | 10% to 20%+ | For loans above conventional limits. Stricter requirements; higher down payments common. |
What affects the down payment percentage a lender will offer you
Your credit score is the first filter. Lenders offering 3% down conventional loans typically want a score of 620 or higher; some want 640 or 660. If your score is lower, you may be limited to FHA loans (which accept scores as low as 500 to 580, depending on the lender) or you may need to put down more cash to offset the risk.
Your debt-to-income ratio (DTI) matters equally. This is the percentage of your gross monthly income that goes to debt payments—mortgage, car loans, credit cards, student loans, everything. Most lenders want your DTI below 43% when you add the new mortgage payment. If you're already carrying high debt, you may need a larger down payment to may have access to, or you may need to pay off debt first.
The property itself affects the offer too. A home in a strong market with clear title and a recent appraisal is easier to finance with a smaller down payment. A fixer-upper, a property in a declining area, or a home that appraises below the purchase price may require a larger down payment or may not be financeable at all.
The 20% down payment myth and why it matters
Twenty percent is often cited as the "right" down payment because it eliminates PMI on a conventional loan. But 20% is not a requirement—it's a threshold. You can buy with 3%, 5%, 10%, or 15% down; you'll just pay PMI until you reach 20% equity.
The real question is whether waiting to save 20% costs you more than paying PMI while you own. If home prices in your area are rising 5% per year and you're paying 1% per year in PMI, buying now with 5% down and paying PMI for five years may cost you less than waiting two more years to save 20%. But if prices are flat or falling, waiting makes more sense. There's no universal right answer—it depends on your local market, your timeline, and your cash flow.
How to calculate your down payment in dollars
Multiply the home's purchase price by the down payment percentage you're considering. A $350,000 home with a 5% down payment is $350,000 × 0.05 = $17,500. With a 10% down payment, it's $35,000. With 20%, it's $70,000.
Remember that the down payment is only part of the cash you need at closing. You'll also pay for a home inspection (typically $300 to $500), an appraisal (typically $400 to $600), title insurance, property taxes, homeowners insurance, and closing costs (typically 2% to 5% of the loan amount). Total cash needed at closing is usually 5% to 10% of the purchase price, even if your down payment is only 3%.
Frequently Asked Questions
Can I put down less than 3% on a conventional loan?
Some lenders offer 2% down conventional loans, but they're rare and usually require a credit score above 680 and a DTI below 36%. Most lenders stop at 3%. If you have less than 3% saved, FHA loans (3.5% down) or VA/USDA loans (0% down, if you're may be able to access) are your options.
What happens to PMI once I reach 20% equity?
PMI drops automatically once your loan balance falls to 80% of the home's original purchase price. You can also request removal earlier if your home has appreciated and you've built equity faster. Some lenders require you to request it; others remove it automatically. Check your loan documents or call your servicer to confirm the process.
Is a larger down payment always better?
Not necessarily. A larger down payment reduces your monthly payment and total interest, but it ties up cash you might need for emergencies, home repairs, or other investments. If you have high-interest debt (credit cards, personal loans), paying that off first may save you more money than putting extra cash toward a down payment.
Do I have to put down the same percentage as my friend or family member?
No. Down payment percentages are based on your credit score, income, debt, and the loan type you choose. Two people buying the same house can put down different percentages and get different interest rates based on their individual financial situations.
Can I use a gift for my down payment?
Yes, but lenders have rules. Most require a signed gift letter from the person giving you the money, stating it's a gift and not a loan you have to repay. The gift giver usually cannot be someone with a financial interest in the property (like the seller). Ask your lender for their specific gift requirements before you accept money.