Down payments typically range from 3% to 20% of the home's purchase price, depending on the loan type and your financial situation

A down payment is the money you pay upfront when you buy a house. The rest of the purchase price comes from a mortgage loan. On a $300,000 house, a 10% down payment would be $30,000; a 20% down payment would be $60,000. The percentage you pay affects your monthly mortgage payment, how much interest you'll pay over time, and whether you'll need to pay mortgage insurance.

The amount you can afford to put down depends on your savings, your income, and what lenders will accept. There is no single "right" amount — it's a trade-off between what you have available now and what you can comfortably pay each month.

Key Takeaways

  • Conventional loans typically require 5% to 20% down, while FHA loans allow as little as 3.5% down and VA loans may require 0% down.
  • A smaller down payment means a larger monthly payment and mortgage insurance costs, but it lets you buy sooner with less cash on hand.
  • A larger down payment reduces your monthly payment and eliminates mortgage insurance, but ties up money you might need for repairs or emergencies.
  • Your down payment is separate from closing costs, which typically add another 2% to 5% of the purchase price.

How down payment size affects your monthly payment and total cost

The larger your down payment, the smaller your loan amount, and the lower your monthly mortgage payment. On a $300,000 house at current interest rates, putting down 3% instead of 20% can add $200 to $300 to your monthly payment — money that compounds over 30 years.

A smaller down payment also triggers mortgage insurance, which protects the lender if you stop paying. This insurance costs roughly 0.5% to 1.5% of your loan amount per year, added to your monthly payment. Once you've paid down your loan to 80% of the home's original value, you can request to have it removed — but that takes years on a small down payment.

A larger down payment saves money on interest and insurance, but it means less cash in your bank account for a new roof, a furnace replacement, or months without income. Many homeowners regret putting down more than they could comfortably afford.

Down payment requirements by loan type

Conventional loans (not backed by a government agency) typically require 5% to 20% down. Some lenders will go as low as 3%, but rates and terms are usually better at 10% or higher. You'll pay mortgage insurance if you put down less than 20%.

FHA loans (backed by the Federal Housing Administration) allow down payments as low as 3.5%. These loans are designed for first-time buyers or people with lower credit scores. FHA mortgage insurance is mandatory and typically costs more than conventional insurance, even after you've built equity.

VA loans (for military members, veterans, and surviving spouses) often require 0% down. USDA loans (for rural properties) also allow 0% down for borrowers who meet income limits. Both programs have their own insurance or may provide fees, so a 0% down payment doesn't mean zero extra costs.

Jumbo loans (for homes above the conventional loan limit, which varies by county) typically require 10% to 20% down and have stricter income and credit requirements.

How to figure out what you can afford to put down

Start by calculating your total liquid savings — money in checking, savings, and money market accounts that you can access quickly. Subtract an emergency fund of three to six months of living expenses. What's left is a realistic pool for a down payment and closing costs.

If that number is small, a 3% or 3.5% down payment may be your only option. If you have more, you still don't have to use it all. Many buyers put down 5% to 10% and keep the rest for repairs, property taxes, insurance, and unexpected expenses in the first year of ownership.

Talk to a mortgage lender before you decide. They can show you the exact monthly payment at different down payment amounts and tell you what you may have access to for based on your income and debt. This conversation costs nothing and takes an hour.

Down payment assistance programs and gifts

Some employers, nonprofits, and state or local governments offer down payment assistance — grants or forgivable loans that reduce the amount you have to save. These programs vary widely by location and employer. Your lender or a local housing counselor can tell you what's available in your area.

Family gifts are common and allowed by most lenders. The money must be a true gift, not a loan you'll repay. Lenders require a signed letter from the family member stating it's a gift and won't be repaid. Some programs require the gift to come from a relative; others allow gifts from anyone.

Borrowed money — personal loans, credit cards, or loans from friends — typically cannot be used for a down payment. Lenders see new debt as a red flag for your ability to repay the mortgage.

Down payment versus closing costs

Your down payment and closing costs are separate expenses. Closing costs cover the lender's fees, title search, appraisal, inspection, insurance, and taxes. They typically run 2% to 5% of the purchase price — on a $300,000 house, that's $6,000 to $15,000.

Some lenders allow you to roll closing costs into the loan, which means you don't pay them upfront but you pay interest on them for 30 years. Others require you to pay them at closing. Ask your lender what's included in their quote and whether any costs can be negotiated or waived.

Budget for both the down payment and closing costs when you're deciding how much house you can afford. Many first-time buyers are surprised by closing costs and end up with less cash on hand than they expected after closing day.

Frequently Asked Questions

Is 20% down required to avoid mortgage insurance?

Yes. With conventional loans, 20% down eliminates the requirement for mortgage insurance. Below 20%, you'll pay insurance until you reach 80% loan-to-value. FHA loans require mortgage insurance regardless of down payment size.

Can I use a 401(k) or IRA for a down payment?

Some plans allow withdrawals for a first-time home purchase. A traditional IRA lets you withdraw up to $10,000 penalty-free if you haven't owned a home in the past two years. A 401(k) may allow a loan against your balance. Talk to your plan administrator and a tax professional before withdrawing — you may owe taxes or penalties.

What happens if I put down less than 3%?

Most lenders won't go below 3% on conventional loans. If you have less saved, an FHA loan at 3.5% down is usually your next option. VA and USDA loans allow 0% down if you meet may be able to access requirements.

Can I negotiate my down payment with the seller?

No. Your down payment is between you and your lender. However, you can negotiate the purchase price itself, and a lower price means a smaller loan and down payment. You can also ask the seller to cover some of your closing costs, which frees up cash for your down payment.

Do I lose my down payment if the deal falls through?

It depends on why the deal falls through. If you back out without a valid reason, you typically lose your earnest money deposit (usually 1% to 3% of the purchase price). If the inspection reveals major problems or the appraisal comes in low, you may be able to renegotiate or walk away without penalty. Your purchase agreement spells out these conditions.