How much down payment for a house do you need?

When you’re planning to buy a home, your down payment is often the biggest question mark. While it’s common to hear that home buyers need to put down 20%, the truth is more nuanced — and you don’t always have to shell out that much. Thanks to evolving loan options and assistance programs, buying a home with less upfront cash is a common option.

In this guide, you’ll learn how much down payment for a house you need, depending on your financial goals and resources.

What is a down payment on a house?

When you buy a home, the down payment is the amount you pay upfront out of pocket. The rest is covered by your mortgage.

Down payments are usually a percentage of the home’s price. For example, if you’re buying a $500,000 home and put 10% down, that’s $50,000 upfront. You borrow the remaining $450,000 from a lender.

The more you put down, the less you borrow, which can lower your monthly mortgage payments. A bigger down payment can also help you lock in a better interest rate or sidestep extra costs like private mortgage insurance (PMI). Some loan types have set minimums, but there’s no universal amount that’s right for everyone.

Do you need a 20% down payment?

The idea that you have to put down 20% to buy a house comes from traditional lending rules and the goal of skipping PMI on conventional loans. While putting 20% down can lead to lower monthly mortgage payments and better loan terms, it’s not a strict requirement. In fact, most borrowers today put down less — in 2020, the average down payment for a home loan (conventional) was just 7% for first-time buyers.

Some conventional loans allow down payments as low as 3%, and government-backed loans like FHA loans, VA loans, and USDA loans have even more flexible options, from 10% all the way down to zero.

Benefits of putting 20% down

You don’t have to put down 20%, but if you have the financial breathing room, there are some valuable perks to a higher percentage. These include:

— Lower monthly payments: A bigger down payment means a smaller loan, which usually means lower monthly payments.

— No private mortgage insurance: Conventional loans often require PMI if you put down less than 20% as extra protection for the lender. Skip the PMI, and you could save a significant amount of money.

— Better loan terms: Lenders may offer lower interest rates to home buyers who put more down, since that means taking on less risk.

— More competitive offers: In a competitive market, sellers favor buyers with bigger home down payments because it signals financial strength and comes with fewer financing hurdles.

— More equity from the start: With 20% down, you start out owning more of your home. That can give you more flexibility down the line, whether you’re refinancing or selling.

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Is there a minimum down payment for a house?

There’s no mandatory minimum or normal down payment for a house — it all depends on the loan type. Some programs, like VA or USDA loans, have zero-down options. Others, like jumbo loans, which are loans for homes that cost more than specific limits set by Fannie Mae and Freddie Mac, usually come with higher minimums.

Minimum down payment requirements based on loan type

For easy reference at a glance, here’s a table showing typical down payment requirements for different types of loans:

Not sure what kind of loan you’ll qualify for or how much you might need to put down? With Better, you can explore your options and get pre-approved online in as little as three minutes. It’s a quick way to get clarity on your numbers before you start shopping.

How much down payment should you put down for a house?

The ideal down payment depends on your goals, savings, and budget. While a higher down payment can save you money, it’s important to look at your situation carefully before deciding how much to put down.

Here are the main factors to think about:

— Available savings: Don’t use every last dollar of your savings for the down payment. Maintain an emergency fund and reserves for maintenance or upgrades.

— Monthly budget: A lower down payment means a higher loan balance, which increases your monthly mortgage payments. Make sure you understand what you can comfortably afford each month before landing on a final figure.

— Closing costs: In addition to the down payment, you have to pay closing costs, which typically range from 2–5% of the home price. These include lender fees, title insurance, and other mandatory charges.

— Loan type: Programs like VA, FHA, and USDA loans allow lower down payments for certain home buyers. If you qualify for one of these programs, you could save a bundle.

Curious how your down payment affects your monthly costs? Better’s mortgage calculator lets you crunch the numbers to see how everything shakes out. Find out what’s realistic for your budget before you dive in.

Take the next step with Better

The right amount to put down depends on your budget, loan type, and long-term plans. While putting 20% down can reduce costs, you can still put down less and get competitive loan terms.

Not sure where to start? With Better Mortgage, you can compare loan options, see what different down payments mean for your monthly payments, and get pre-approved in as little as three minutes, all online. There are no hidden fees, and you can have cash in your account in as few as 7 days. Start your application today.

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Frequently asked questions

When do you pay the down payment on a house?

The down payment is due at closing. It’s part of the total funds due at settlement, alongside your closing costs. You’ll likely pay it via wire transfer or cashier’s check. 

Can you get a loan for a down payment?

Generally, lenders prefer the down payment to come from the home buyer’s personal funds. Using an unsecured loan (like a personal loan or credit card) to cover a down payment is not allowed. Some home buyers may use a secured loan — like a home equity loan on another property — but this is less common and adds to your overall debt burden.

Taking out a home down payment loan also affects your debt-to-income ratio, which can negatively impact your credit score. 

What’s the purpose of down payments?

The down payment shows the lender you have the finances to own a home and reduces the risk of default.

For buyers, down payments give you instant equity and ownership in your home from day one. They also lower the financing amount, which in turn lowers interest costs.

Can I buy my house with no down payment?

Yes, but only under certain circumstances. VA loans and USDA loans, for example, have 0% down options for qualified buyers. VA loans are available to current or former service members and eligible surviving spouses, while USDA loans require the property to be in an eligible rural area and the buyer to meet specific income limits.

Some local and state governments also offer down payment assistance programs for first-time home buyers. These programs provide grants or second loans to cover all or part of the required down payment — sometimes with 0% interest or deferred repayment.