The 20% Myth
Twenty percent down is a helpful target because it lets you skip private mortgage insurance and gives you instant equity. But it is not a requirement. Most first-time buyers put down far less, and plenty of loan programs are built for smaller down payments.
Waiting years to save a full 20% can actually cost you money if home prices and rents keep rising while you save. The right move is to understand your options and choose the down payment that fits your finances today.
Minimum Down Payment by Loan Type
| Loan Type | Minimum Down | Best For |
|---|---|---|
| Conventional | 3% | Good credit, want to avoid PMI later |
| FHA | 3.5% | Lower credit scores |
| VA | 0% | Veterans and active military |
| USDA | 0% | Eligible rural and suburban areas |
| Jumbo | 10%–20% | High-value homes |
Each program has its own credit and income rules, and some charge their own mortgage insurance or funding fees. A lender can tell you which programs you qualify for.
Down Payment Examples by Home Price
Here is what different down payment percentages look like in real dollars on common home prices.
| Home Price | 3% Down | 10% Down | 20% Down |
|---|---|---|---|
| $250,000 | $7,500 | $25,000 | $50,000 |
| $350,000 | $10,500 | $35,000 | $70,000 |
| $450,000 | $13,500 | $45,000 | $90,000 |
| $600,000 | $18,000 | $60,000 | $120,000 |
Remember to budget for closing costs too, usually 2% to 5% of the home price on top of your down payment.
Pros of a Larger Down Payment
When a Smaller Down Payment Makes Sense
A smaller down payment can be the smarter choice when it lets you keep cash reserves or buy sooner in a rising market.
Never drain your entire savings for a down payment. You will still need money for closing costs, moving, immediate repairs, and an emergency fund. Being "house poor" with no cash cushion is risky, even with a paid-down loan.
How to Save for a Down Payment Faster
Automate a separate account
Set up an automatic transfer into a high-yield savings account earmarked only for your down payment.
Cut your biggest expense
Housing is usually the largest cost. A cheaper rental or a roommate for a year can free up thousands.
Bank windfalls
Tax refunds, bonuses, and raises are perfect to send straight to your down payment fund.
Look into assistance programs
Many states and cities offer first-time buyer grants and down payment assistance you may qualify for.
A dedicated savings target calculator can help you set a monthly amount and a realistic timeline for reaching your goal.