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How Much to Put Down on a House: 3% to 20% Scenarios with Real Numbers (2026)

The "save 20% or else" advice ignores the math for most buyers. Here is every down payment option from 0% to 20% with exact PMI costs, monthly payments, total cost comparisons, and the opportunity cost of waiting.

Down Payment Options on a $400,000 Home

Rate: 6.37% (30-year fixed, April 2026 avg). PMI estimated for 700+ credit score. Property tax 1.1%, insurance $1,800/year.

OptionCashLoanPMI/MIPMonthly PITIPMI Drops Off
0% (VA)$0$400,000*None$2,642N/A
3% (Conv)$12,000$388,000$162/mo$2,736~7 years
3.5% (FHA)$14,000$393,760**$177/mo$2,767Never***
5% (Conv)$20,000$380,000$158/mo$2,669~6 years
10% (Conv)$40,000$360,000$120/mo$2,478~4 years
15% (Conv)$60,000$340,000$85/mo$2,303~2 years
20% (Conv)$80,000$320,000None$2,167N/A

*VA loan includes 2.15% funding fee ($8,600) financed into loan. **FHA includes 1.75% upfront MIP financed. ***FHA MIP is permanent with less than 10% down.

Understanding PMI and How to Remove It

Private Mortgage Insurance (PMI) is required on conventional loans when you put less than 20% down. It protects the lender, not you, against default. PMI costs 0.3-1.5% of the loan amount annually, depending on your credit score and loan-to-value (LTV) ratio.

Automatic Termination

PMI drops off when your loan balance reaches 78% of the original purchase price, based on the payment schedule. No action needed.

Borrower Request at 80%

You can request PMI removal at 80% LTV. May require a new appraisal ($400-$600) to confirm the home value supports the 80% threshold.

Lender-Paid PMI

Some lenders offer a slightly higher interest rate (0.125-0.25%) instead of a separate PMI charge. No separate payment, but you pay the higher rate for the life of the loan.

The 20% Down Payment Myth

The math of waiting to save 20%

Home price today: $400,000. You have $20,000 saved (5% down). To reach $80,000 (20%), you need $60,000 more.

Saving $1,500/month, it takes 3.3 years to save $60,000.

During that time, you pay rent: 40 months x $1,800 = $72,000 in rent

At 3.5% annual appreciation, the $400,000 home is now worth $448,500. Your 20% target moved from $80,000 to $89,700.

Meanwhile, buying now with 5% down: $20,000 down + $158/month PMI for ~6 years = $11,376 total PMI cost. Your home has appreciated $48,500 and you have built ~$30,000 in equity through payments.

Waiting for 20% is not always wrong. It makes sense when home prices are declining, when you expect a significant income increase soon, or when the PMI cost is unusually high (low credit score + high LTV). But for most buyers in a stable or appreciating market, buying sooner with less down and paying PMI for a few years costs less than waiting.

Down Payment Assistance Programs

State HFA Programs

Every state has a Housing Finance Agency offering grants, forgivable loans, or low-interest second mortgages for down payment assistance. Income limits typically 80-120% of area median income. Search your state HFA website or visit the NCSHA directory.

FHA Gift Rules

100% of the FHA down payment (3.5%) can come from a gift. Eligible donors include family members, employers, labor unions, and close friends with documented relationships. A gift letter and paper trail of the transfer are required.

IRA First-Time Buyer Withdrawal

First-time buyers can withdraw up to $10,000 from a traditional IRA without the 10% early withdrawal penalty (taxes still apply). Roth IRA contributions (not earnings) can be withdrawn at any time without tax or penalty.

Employer Assistance Programs

Some employers offer down payment assistance as a benefit, particularly in high-cost areas. These range from forgivable loans to matching programs. Ask your HR department.

Closing Costs on Top of Down Payment

Closing costs run 2-5% of the loan amount, paid at closing in addition to your down payment.

Cost ItemTypical Range
Loan origination fee0.5-1% of loan ($1,900-$3,800)
Appraisal$400-$700
Title insurance$1,000-$3,000
Title search and exam$300-$600
Recording fees$100-$300
Prepaid property taxes2-6 months ($733-$2,200)
Prepaid homeowner insurance12 months ($1,800)
Escrow setup2-3 months taxes + insurance
Survey$300-$500

Seller concessions can cover some or all closing costs (up to 3-6% of sale price depending on loan type and down payment). Negotiate this in your offer.

Back to calculatorFHA vs conventionalFirst-time buyer guideAffordability guide

Frequently Asked Questions

What is the minimum down payment for a house?+
The absolute minimum is 0% for VA loans (eligible veterans) and USDA loans (rural areas). For conventional loans, the minimum is 3% through Fannie Mae HomeReady or Freddie Mac Home Possible programs. For FHA, the minimum is 3.5% with a 580+ credit score or 10% with 500-579. On a $400,000 home, the range is $0 (VA) to $80,000 (20% conventional). Most first-time buyers put down 3-10%.
Is it worth putting 20% down to avoid PMI?+
It depends on how long it takes to save the difference. If saving an additional $40,000-$60,000 means waiting 2-3 years while renting at $1,800/month, you are spending $43,200-$64,800 on rent while home values potentially appreciate 3-4% annually. PMI on a $380,000 loan is roughly $150-$190/month and drops off at 20% equity. Many buyers are better off buying sooner with less down, building equity through payments and appreciation, and eliminating PMI within 5-7 years.
How does PMI work and when does it go away?+
Conventional PMI is a monthly charge (0.3-1.5% of loan amount annually) that protects the lender if you default. It automatically terminates when your loan balance reaches 78% of the original purchase price, and you can request removal at 80% (based on original value or current appraised value). FHA MIP (mortgage insurance premium) works differently: if you put less than 10% down, MIP stays for the entire life of the loan. If 10%+ down, MIP drops after 11 years. This is the biggest long-term cost difference between FHA and conventional.
Can I use a gift for my down payment?+
Yes, with documentation. FHA loans allow 100% of the down payment to come from a gift from a family member, employer, or qualifying organization. Conventional loans allow gifts but may require the borrower to contribute a minimum amount from their own funds depending on the program. VA and USDA also allow gifts. You will need a gift letter stating it is a gift (not a loan), the donor's bank statement showing they have the funds, and a paper trail of the transfer.
What are down payment assistance programs?+
These are government and nonprofit programs that provide grants or low-interest loans to help with down payments. Programs vary by state and city but include: state housing finance agency (HFA) grants or forgivable loans, city-specific programs for first-time buyers, employer-assisted housing programs, and federal programs like the FHA's $10,000 IRA penalty-free withdrawal for first-time buyers. Many programs have income limits (often 80-120% of area median income) and require homebuyer education courses.
How much should I save beyond the down payment?+
Budget for closing costs (2-5% of loan amount, or $7,600-$19,000 on a $380,000 loan) plus cash reserves. Lenders want to see 2-3 months of mortgage payments in savings after closing. On a $2,400/month payment, that is $4,800-$7,200. Total cash needed: down payment + closing costs + reserves. On a $400,000 home with 10% down: $40,000 + $15,000 closing + $7,000 reserves = $62,000 minimum.