The typical down payment is between 10% and 20% of the home's purchase price, though you can put down as little as 3% with certain loan types.

The amount you put down depends on the loan program you choose, your credit score, and how much cash you have available. A buyer purchasing a $300,000 home might put down $9,000 (3%) with an FHA loan, $30,000 (10%) with a conventional loan, or $60,000 (20%) with either type. The lower your down payment, the higher your monthly mortgage payment and the more interest you pay over the life of the loan — but you also need less cash upfront.

Down payment size matters because it changes your loan-to-value ratio, which is how much you're borrowing compared to what the home costs. A lower down payment means a higher loan-to-value ratio, which lenders see as riskier. That risk shows up as a higher interest rate, higher monthly payments, or a requirement to pay private mortgage insurance (PMI) — an extra monthly fee that protects the lender if you stop paying.

Key Takeaways

  • Down payments typically range from 3% to 20%, with 10% to 20% being most common among conventional loans.
  • FHA loans allow down payments as low as 3.5%, while VA and USDA loans may require no down payment at all if you meet program requirements.
  • Putting down less than 20% usually means paying private mortgage insurance, which adds $100 to $300+ per month depending on the loan size and your credit score.
  • Your down payment affects your interest rate, monthly payment, and total cost of the home over 30 years, so the difference between 5% and 20% down can mean tens of thousands of dollars.

How down payment size affects your monthly payment

A larger down payment lowers the amount you need to borrow, which directly reduces your monthly mortgage payment. On a $300,000 home with a 30-year fixed-rate mortgage at 7% interest, putting down 3% means borrowing $291,000 and paying roughly $1,935 per month (before taxes, insurance, and PMI). Putting down 20% means borrowing $240,000 and paying roughly $1,596 per month — a difference of $339 before PMI is added to the lower down payment scenario.

The real cost difference is larger because the 3% down payment triggers PMI. With a $291,000 loan, PMI typically runs $145 to $290 per month, depending on your credit score and the lender. That brings the total monthly payment to around $2,080 to $2,225 — roughly $500 more than the 20% down scenario. Over 30 years, that extra $500 per month adds up to $180,000 in additional cost.

However, a smaller down payment lets you buy sooner with the cash you have now, and mortgage rates may be lower in the future. Some buyers choose to put down 5% or 10%, accept PMI for a few years, and refinance later when they've built equity or rates drop. Others save longer to avoid PMI entirely. Both are reasonable strategies depending on your financial situation.

Down payment requirements by loan type

Conventional loans (not backed by a government agency) typically require 3% to 20% down, though some lenders require 5% or more. You'll pay PMI if you put down less than 20%. Your credit score matters: borrowers with scores below 620 may not may have access to, and those with scores between 620 and 680 often face higher rates and larger PMI payments.

FHA loans (backed by the Federal Housing Administration) allow down payments as low as 3.5% and accept credit scores as low as 500 to 580, depending on the lender. FHA loans always include mortgage insurance, even if you put down 20% or more. The insurance comes in two parts: an upfront fee (usually 1.75% of the loan amount, often rolled into your mortgage) and a monthly fee that stays for the life of the loan if you put down less than 10%.

VA loans (for military members, veterans, and surviving spouses) often require zero down payment and no PMI, though you pay a one-time funding fee (typically 1.4% to 3.6% of the loan amount). USDA loans (for rural homebuyers) also allow zero down payment with no PMI, though they include a may provide fee similar to VA loans. Both programs have income and property location limits.

Saving for a down payment

Most first-time homebuyers save for 2 to 5 years to accumulate a down payment. The amount you need depends on the home price in your area and the loan program you choose. In a market where median home prices are $400,000, saving 10% down means setting aside $40,000. In a market where median prices are $250,000, 10% down is $25,000.

Common sources for down payment funds include personal savings, gifts from family members, and proceeds from selling a previous home. Some employers offer down payment assistance programs. Some states and cities run down payment assistance programs that provide grants or low-interest loans to first-time homebuyers, though these vary widely by location and income level. A mortgage lender or local housing authority can tell you what's available in your area.

Borrowed money — from a personal loan, credit card, or home equity line of credit — typically disqualifies you from most mortgage programs. Lenders want to see that your down payment is your own money, not debt you're taking on. If you receive a gift from a family member, most lenders require a signed letter stating it's a gift and not a loan you'll repay.

The trade-off between down payment size and total cost

Putting down 20% eliminates PMI and gives you the lowest monthly payment, but it requires more cash upfront and delays homeownership. Putting down 3% to 10% lets you buy sooner with less cash saved, but you pay PMI and a higher interest rate, which costs more over time. The break-even point — where the money you save on PMI equals the extra interest you pay — typically happens 5 to 7 years into the loan.

If you plan to stay in the home for 10+ years, a larger down payment usually makes financial sense. If you might move or refinance within 5 years, a smaller down payment may be smarter because you won't pay PMI long enough for it to offset the benefit of keeping your cash. Your personal situation — job stability, family plans, local market conditions — matters as much as the math.

One strategy is to put down enough to avoid PMI on a conventional loan (usually 20%) or to choose an FHA loan with 3.5% down and accept the mortgage insurance as a cost of buying sooner. Another is to put down 10%, pay PMI for a few years, and refinance to remove it once you've built equity. Talk through these scenarios with a mortgage lender who can show you the actual numbers for your situation.

How down payment affects your loan approval

Lenders look at your down payment size alongside your credit score, income, and debt-to-income ratio to decide whether to approve your mortgage. A larger down payment makes approval easier because it shows you have savings and reduces the lender's risk. A smaller down payment requires stronger credit and income to offset the risk.

If your credit score is below 640 or your debt-to-income ratio is above 43%, putting down 10% or more instead of 3% can be the difference between approval and denial. Conversely, if you have excellent credit and low debt, you may may have access to for a 3% down conventional loan easily. The down payment is one lever among several that lenders use to manage risk.

Frequently Asked Questions

Can I put down less than 3%?

Some lenders offer 1% to 2% down conventional loans, but they're rare and usually require excellent credit (680+) and low debt. Most buyers' realistic minimum is 3% conventional or 3.5% FHA. VA and USDA loans allow zero down if you meet program requirements.

What happens if I can't save 20% down?

You can still buy with 3% to 10% down using a conventional, FHA, VA, or USDA loan. You'll pay PMI or mortgage insurance, which increases your monthly payment, but it's a normal part of homeownership for most first-time buyers. Many people pay PMI for 5 to 10 years, then refinance to remove it once they've built equity.

Can I use a gift 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 it's a gift and not a loan. The lender will verify the funds came from the gift-giver's account. Gifts from non-relatives or borrowed money typically don't work.

Does a bigger down payment mean a lower interest rate?

Usually yes, but not always by much. A 20% down payment typically gets you a rate 0.25% to 0.5% lower than a 3% down payment, depending on your credit score and the lender. The bigger savings come from avoiding PMI entirely, not from the rate difference alone.

What if I put down more than 20%?

Putting down 25%, 30%, or more is fine and lowers your monthly payment further, but the benefit per extra dollar decreases. Most financial advisors suggest stopping at 20% down and investing the remaining cash instead, since mortgage rates are usually lower than investment returns over time. However, some buyers prefer the psychological benefit of lower debt.