Down Payment: How Much Do You Really Need?

The 20% down payment rule is a myth for many buyers. Here's what you actually need.

The 20% Myth

While 20% down has advantages, it's not required. In fact:

• Average first-time buyer puts down 7%
• Average repeat buyer puts down 17%
• Many programs allow 3% or less

Down Payment Options by Loan Type

Conventional Loans

• **Standard**: 5% minimum
• **First-time buyers**: As low as 3%
• **Best terms**: 20%+ (avoid PMI)

FHA Loans

• **580+ credit**: 3.5% down
• **500-579 credit**: 10% down

VA Loans

• **Eligible veterans**: 0% down
• **No PMI required**

USDA Loans

• **Rural properties**: 0% down
• **Income limits apply**

Pros of Larger Down Payment

1. Lower monthly payments: Less principal = less to pay

2. Lower interest rate: Less risk for lender

3. No PMI: Avoid at 20%+ down

4. More equity: Buffer against market drops

5. Stronger offer: Sellers prefer larger down payments

Cons of Large Down Payment

1. Opportunity cost: Money could be invested elsewhere

2. Depletes savings: Less emergency fund

3. Delays purchase: Takes longer to save

4. Home appreciation: Works in your favor regardless

How to Decide

Consider These Factors:

• Current savings vs. emergency fund needs
• PMI costs vs. investment returns
• How soon you want to buy
• Job stability
• Local market conditions

The Math Example

$400,000 home, comparing 10% vs. 20% down:

Difference: $352/month, but you kept $40,000 in savings.

Down Payment Assistance

Many programs help with down payments:

• State/local programs
• Employer assistance
• Non-profit grants
• Gift funds from family

Calculate your scenarios using our Mortgage Calculator.