Down payment percentages vary by loan type, but most lenders want between 3 and 20 percent of the home's purchase price

The percentage you pay upfront depends on the kind of mortgage you're getting. Conventional loans—the ones not backed by a government agency—typically require 5 to 20 percent down. Federal Housing Administration (FHA) loans allow as little as 3.5 percent. VA loans (for military members and veterans) and USDA loans (for rural properties) often require zero percent down. The lower your down payment, the higher your monthly mortgage payment and the more interest you'll pay over the life of the loan.

Down payment size also affects whether you'll pay private mortgage insurance (PMI). If you put down less than 20 percent on a conventional loan, your lender will require PMI—an extra monthly fee that protects the lender if you stop paying. On an FHA loan, mortgage insurance is required regardless of down payment size. Understanding this cost matters because PMI can add hundreds of dollars per year to your payment.

Key Takeaways

  • Conventional loans typically require 5 to 20 percent down, while FHA loans allow 3.5 percent and VA or USDA loans may require nothing.
  • Any down payment below 20 percent on a conventional loan triggers private mortgage insurance, which increases your monthly cost.
  • A larger down payment lowers your loan amount, reduces your monthly payment, and eliminates PMI once you reach 20 percent equity.
  • The down payment percentage you can afford depends on your savings, not on what lenders will accept—putting down too little strains your budget for closing costs and emergencies.

How down payment percentages work with different loan types

Conventional loans are mortgages sold to investors on the secondary market and not insured by a government agency. Most conventional lenders require a minimum of 5 percent down, though some accept 3 percent. A few lenders will go lower, but rates and fees climb as the percentage drops. At 20 percent down, you avoid PMI entirely and often may have access to for better interest rates.

FHA loans are insured by the Federal Housing Administration and designed for first-time buyers or people with lower credit scores. The minimum down payment is 3.5 percent of the purchase price. However, FHA loans always require mortgage insurance premiums—both an upfront fee (usually 1.75 percent of the loan amount, rolled into your mortgage) and an annual fee added to your monthly payment. This insurance stays on the loan for the life of the mortgage if you put down less than 10 percent.

VA loans are available to military members, veterans, and surviving spouses. The Department of Veterans Affairs guarantees the loan, which means many lenders will finance 100 percent of the purchase price with zero down. USDA loans work similarly for properties in may be able to access rural areas—zero down is common, though you'll pay an upfront may provide fee and an annual fee.

What happens to your monthly payment when you change the down payment percentage

A smaller down payment means a larger loan amount, which directly raises your monthly principal and interest payment. On a $300,000 home at current interest rates, putting down 3 percent instead of 20 percent can add $200 to $300 per month to your mortgage payment alone. Add PMI on top, and the difference grows to $400 or more monthly.

Over 30 years, that difference compounds. A $300,000 home with 3 percent down ($9,000) financed at 7 percent interest costs roughly $1,996 per month in principal and interest, plus PMI. The same home with 20 percent down ($60,000) costs roughly $1,596 per month with no PMI. The higher down payment saves you about $400 monthly and $144,000 over the life of the loan—even though you're spending $51,000 more upfront.

This is why lenders and financial advisors often recommend putting down as much as you can afford without draining your emergency savings. The monthly savings are real, but only if you can still cover closing costs, inspections, appraisals, and unexpected repairs after the down payment is made.

When PMI drops off and how to remove it

Private mortgage insurance on a conventional loan automatically cancels once you reach 20 percent equity in the home—the point where your loan balance equals 80 percent of the original purchase price. This happens through a combination of paying down the principal and (usually) your home gaining value over time. The timeline depends on your interest rate, loan term, and local market. On a 30-year mortgage, you might reach 20 percent equity in 8 to 12 years.

You can request PMI removal once you hit 20 percent equity, but your lender won't remove it automatically on most loans. Contact your servicer in writing and ask for cancellation. They may require an updated appraisal to confirm your home's current value. If your home has appreciated significantly, you might reach 20 percent equity faster than your amortization schedule suggests.

On FHA loans, mortgage insurance is permanent if you put down less than 10 percent. If you put down 10 percent or more, the insurance drops off after 11 years. This is one reason some borrowers refinance out of FHA loans once they have enough equity—to escape the insurance cost.

Balancing down payment size with your overall financial picture

The percentage you should put down is not the same as the percentage you can afford to put down. Lenders may accept 3 percent, but that doesn't mean 3 percent is right for your situation. After the down payment, you still need to cover closing costs (typically 2 to 5 percent of the purchase price), a home inspection, an appraisal, and title insurance. You also need an emergency fund separate from your down payment savings.

If putting down 20 percent wipes out your savings, a smaller down payment with PMI might be the smarter choice. PMI is temporary; an empty emergency fund is dangerous. A common approach is to put down enough to keep your monthly payment manageable—often 10 to 15 percent—while preserving 3 to 6 months of living expenses in savings.

Your credit score, debt-to-income ratio, and income stability also matter. A larger down payment can offset a lower credit score or higher existing debt, making your application stronger. Lenders view a 15 percent down payment from someone with a 620 credit score differently than the same percentage from someone with a 750 score.

How to calculate your down payment in dollars

To find the dollar amount, multiply the home's purchase price by the percentage you plan to put down. A $350,000 home with 10 percent down costs $35,000. With 5 percent down, it's $17,500. With 20 percent down, it's $70,000.

Once you know the down payment amount, add closing costs. These typically run 2 to 5 percent of the purchase price and cover the lender's origination fee, title insurance, appraisal, inspection, and attorney fees. On a $350,000 home, closing costs might be $7,000 to $17,500. Your total cash needed at closing is the down payment plus closing costs—anywhere from $24,500 to $87,500 in this example.

Some lenders and sellers offer closing cost assistance or credits, which can reduce what you need to bring to closing. Ask your lender and real estate agent whether these options are available in your market.

Down payment assistance programs and where to find them

Many states, counties, and nonprofits offer down payment assistance—grants or low-interest loans that help you cover part of the down payment or closing costs. These programs often target first-time buyers, low-income households, or people buying in specific neighborhoods. The amount varies widely: some programs cover a few thousand dollars, others up to 15 or 20 percent of the purchase price.

Your lender can point you toward programs you may be able to use. State housing finance agencies maintain lists of local programs. The National Council of State Housing Agencies (NCSHA) website has links to every state's agency. Local nonprofits and community development organizations also run assistance programs, often with fewer restrictions than government programs.

Be aware that some assistance programs require you to take a homebuyer education course, have a minimum credit score, or stay within income limits. Others have geographic restrictions—they only help buyers in certain neighborhoods or counties. Ask about these requirements before counting on a program.

Frequently Asked Questions

Is 20 percent down required to get a mortgage?

No. Most lenders accept 3 to 5 percent down on conventional loans, and FHA loans allow 3.5 percent. The 20 percent figure matters because it's the threshold where PMI drops off, not because it's a requirement. You can get a mortgage with much less.

Can I use a gift from family for my down payment?

Yes, most lenders allow down payment gifts from family members. You'll need a signed letter from the gift-giver stating the money is a gift, not a loan, and that they expect no repayment. The lender will verify the funds came from a legitimate source, usually by reviewing bank statements.

What if I don't have enough saved for the down payment I want?

Put down what you can afford without emptying your emergency fund, then explore down payment assistance programs in your area. A smaller down payment with PMI is better than stretching yourself too thin or delaying the purchase indefinitely. You can always refinance later if your situation improves.

Does a larger down payment always mean a better interest rate?

Usually, yes—lenders offer slightly better rates to borrowers with larger down payments because the loan is less risky. The difference is often 0.25 to 0.5 percent, which adds up over time. However, the rate also depends on your credit score, income, and current market conditions.

Can I remove PMI before reaching 20 percent equity?

On a conventional loan, you can request PMI removal once you reach 20 percent equity, but not before. Some lenders allow removal at 15 percent equity if you've made extra payments or your home has appreciated. Ask your servicer about their specific policy. On FHA loans, PMI cannot be removed early unless you refinance.