Down payment percentages vary by loan type and lender, but most commonly range from 3% to 20% of the home's purchase price
The percentage you put down depends on what kind of mortgage you're getting. Conventional loans typically require 5% to 20% down. FHA loans allow as little as 3.5% down. VA loans and USDA loans often require 0% down if you meet their may be able to access criteria. Some lenders will accept 3% down on a conventional loan, though you'll pay mortgage insurance if you go below 20%.
The purchase price is what you and the seller agree the home is worth. If you're buying a $300,000 house with a 10% down payment, you're putting $30,000 down and borrowing $270,000. The lender covers the rest through the mortgage itself.
Your down payment percentage affects how much you borrow, what your monthly payment will be, and whether you'll pay mortgage insurance. A larger down payment means a smaller loan, lower monthly payments, and no insurance requirement. A smaller down payment gets you into a home faster but costs more over time.
Key Takeaways
- Conventional mortgages typically require 5% to 20% down, while FHA loans allow 3.5% and VA or USDA loans may require nothing.
- Your down payment percentage is calculated from the home's purchase price, not the appraised value or what you think it's worth.
- Putting down less than 20% on a conventional loan means you'll pay private mortgage insurance (PMI) until you reach 20% equity.
- A 1% difference in down payment changes your monthly payment by roughly $3 to $5 per $100,000 borrowed, depending on interest rates.
- Some first-time buyer programs and state grants can cover part or all of your down payment, reducing the percentage you pay out of pocket.
How down payment percentage affects your monthly payment
The lower your down payment percentage, the more you borrow, and the higher your monthly payment. On a $300,000 home at a 7% interest rate over 30 years, a 3% down payment ($9,000) means borrowing $291,000 and paying roughly $1,935 per month in principal and interest alone. A 10% down payment ($30,000) means borrowing $270,000 and paying roughly $1,797 per month—about $138 less each month.
That difference compounds over 30 years. The lower down payment also triggers mortgage insurance, which adds another $150 to $300 per month depending on the loan amount and your credit score. So the real gap between a 3% and 10% down payment is often $300 to $400 per month.
Interest rates also shift the math. If rates rise to 8%, that same $300,000 home with 10% down costs roughly $1,980 per month instead of $1,797. Down payment percentage and interest rate both move the needle on affordability.
When mortgage insurance kicks in and how to avoid it
Private mortgage insurance (PMI) is required on conventional loans when your down payment is less than 20%. The insurance protects the lender if you stop paying, but you pay the premium—usually 0.5% to 1.5% of the loan amount per year, added to your monthly payment.
On a $270,000 loan (10% down on a $300,000 home), PMI might run $135 to $405 per month. You pay it until you reach 20% equity in the home. That happens through a combination of paying down the loan and the home appreciating in value. If you put 10% down and the home appreciates 10%, you've hit 20% equity without making extra payments.
You can remove PMI once you reach 20% equity by asking your lender to drop it. Some lenders will do this automatically; others require you to request it in writing. Refinancing to a new loan at a lower rate can also eliminate PMI if your home has appreciated enough.
Down payment percentages across different loan types
| Loan Type | Minimum Down Payment | Typical Range | Mortgage Insurance Required |
|---|---|---|---|
| Conventional | 3% | 5% to 20% | Yes, if below 20% |
| FHA | 3.5% | 3.5% to 10% | Yes, always |
| VA | 0% | 0% to 20% | No |
| USDA | 0% | 0% to 20% | No |
| Jumbo | 10% | 10% to 25% | Varies by lender |
FHA loans always require mortgage insurance, even at 20% down or higher. That insurance stays on the loan for the full 30 years if you put down less than 10%, or until you reach 20% equity if you put down 10% or more. VA and USDA loans don't require mortgage insurance at any down payment level, which is why they're popular with may be able to access borrowers.
Jumbo loans (mortgages above the conventional loan limit, which varies by county but is typically around $766,000) usually require 10% to 25% down and don't have a standard mortgage insurance product. Instead, lenders price the risk into the interest rate itself.
Down payment assistance and grants that reduce your percentage
Many first-time buyer programs, state housing agencies, and nonprofits offer down payment assistance that lowers the percentage you have to pay out of pocket. Some programs are grants (money you don't repay), others are forgivable loans (you repay only if you sell within a certain time), and others are second mortgages (a separate loan you repay).
The amount varies widely. Some programs cover 3% to 5% of the purchase price. Others cover up to 15% or 20%. may be able to access usually depends on your income, credit score, the home's location, and whether it's your first purchase. Your lender or a local housing authority can tell you what's available in your area.
If you receive a $15,000 grant on a $300,000 home purchase, your effective down payment is 5% ($15,000) plus whatever you contribute yourself. If you add $15,000 of your own money, your total down payment is 10% and you've used assistance to cover half of it.
How to calculate your down payment percentage
Take the amount you're putting down and divide it by the purchase price. Multiply by 100 to get the percentage. If you're putting $30,000 down on a $300,000 home: $30,000 ÷ $300,000 = 0.10, or 10%.
Use the purchase price, not the appraised value or the asking price. If the seller lists the home at $320,000 but you negotiate it down to $300,000 and agree on that price, $300,000 is your purchase price. Your down payment percentage is based on what you actually agreed to pay.
If you're receiving down payment assistance, add it to your own contribution to find your total down payment, then calculate the percentage. If you're putting $15,000 down and receiving a $10,000 grant, your total down payment is $25,000. On a $300,000 purchase, that's 8.3%.
Frequently Asked Questions
Can I put down less than 3% on a conventional loan?
Most conventional lenders require at least 3% down, though some require 5%. A few lenders will go lower, but it's rare and usually requires excellent credit and a strong income. Your best option for less than 3% is an FHA loan at 3.5% down or a VA or USDA loan at 0% down if you meet the requirements.
Does a larger down payment always mean a better interest rate?
Usually, yes. Lenders see a larger down payment as lower risk, so they often offer a slightly lower rate. The difference is typically 0.25% to 0.5%, which adds up over 30 years. However, rates also depend on your credit score, the loan type, and current market conditions, so compare offers before assuming a bigger down payment automatically gets you the best rate.
What happens if I put down more than 20%?
You avoid mortgage insurance entirely and borrow less, which lowers your monthly payment. You also build equity faster. The tradeoff is that you're using more cash upfront, which might be better invested elsewhere or kept as an emergency fund. There's no penalty for putting down more than 20%.
Can I use a gift for my down payment?
Yes, but lenders require documentation. You'll need a signed gift letter from the person giving you the money stating it's a gift, not a loan, and that they don't expect repayment. The gift giver usually can't be the seller or anyone with a financial interest in the sale. Lenders also typically require proof that the gift funds have been in your account for at least two months.
If I put down 5%, how long until I can remove PMI?
You can request PMI removal once you reach 20% equity. If the home appreciates and you make regular payments, this might take 5 to 10 years. If you refinance into a new loan when you have 20% equity, the new loan won't require PMI. Some lenders will remove PMI automatically once you hit the threshold; others require you to ask in writing.