Find out how much down payment you need
There’s no hard-and-fast rule for how much down payment you need on a house. Twenty percent down used to be the norm, but these days you can buy a house with as little as 0-5% down.
The down payment you’ll need depends on the type of loan you qualify for and how much you plan to spend on your new home.
If you have a target price range, you can use the down payment calculator below to find out how much cash you’ll need and which loan types you might be eligible for.
How to use this down payment calculator
Our down payment calculator helps you figure out how much money you’d need to save to qualify for a mortgage loan.
By exploring the different down payment tiers, which range from 0% to 25%, you can see how much cash would be required and what types of loans are available based on your savings.
Keep in mind that a big down payment doesn’t guarantee you’ll qualify for a mortgage. You also need to meet a lender’s minimum requirements for:
- Credit score and credit history
- Debt-to-income ratio (DTI)
- Employment history and income
- Property type, condition, and loan amount
The down payment calculator is a good jumping off point; it’ll help you figure out whether you have enough cash saved to start thinking seriously about home buying.
But before you start house hunting, you’ll need to check your mortgage eligibility by getting pre-approved for a home loan.
A pre-approval letter shows you exactly how much money you’ll need for a down payment and closing costs, as well as your future interest rate and monthly payment.
How much down payment is required for a house?
Many home buyers think they need 20% down to buy a house. But you can get away with a lot less.
Today’s home loans allow as little as 3% down payment for most home buyers. And if you meet certain criteria, you might even be able to buy a house with no down payment.
Here’s the minimum down payment required for the five main types of home loans:
- Conventional loan — 3%. Typically backed by Fannie Mae or Freddie Mac, conventional or ‘conforming’ mortgages allow as little as 3% down with a minimum credit score of 620
- FHA loan — 3.5%. FHA mortgages are insured by the Federal Housing Administration. They allow a minimum down payment of 3.5% and only require a credit score of 580
- VA loan — 0%. VA loans, insured by the Department of Veterans Affairs, do not require a down payment. However, you must be a veteran, active-duty service member, or member of a related group to qualify
- USDA loan — 0%. USDA mortgages are insured by the U.S. Department of Agriculture. They allow zero down payment, but you must buy a home in an eligible rural area. You need a credit score of at least 640 and a low-to-moderate income
- Jumbo loan — 5-10%. A jumbo loan is a mortgage that exceeds conforming loan limits: currently $ in most areas. A few lenders offer jumbo financing with 5% down, but you’ll often need a 10% down payment or more and a FICO score of at least 680-700
Thanks to these low down payment loan options, borrowers no longer have to save for years and years to afford housing.
In fact, you might even qualify with the money already in your savings account.
Down payments and mortgage insurance
The size of your down payment helps determine your loan type and home affordability. But it affects your mortgage in other ways, too.
The biggest one is mortgage insurance.
Borrowers who put down less than 20% of the home’s value typically have to pay for mortgage insurance. This coverage protects the mortgage lender in case the borrower defaults on the loan.
There are two main types of mortgage insurance:
- Private mortgage insurance (PMI) — Required on conventional home loans with less than 20% down, PMI can be canceled once the homeowner has at least 20% equity
- Mortgage insurance premium (MIP) — Required on all FHA loans, regardless of down payment size. MIP cannot be canceled, but homeowners with 20% equity and good credit can often refinance out of their FHA mortgage and into a conventional loan with no PMI
USDA loans also charge ongoing mortgage insurance, although the rates are typically lower than for conventional and FHA loans.
VA mortgages have an upfront ‘funding fee,’ but no monthly mortgage insurance, which is one of the biggest benefits of VA financing.
Should I try to avoid PMI with a 20% down payment?
Many home buyers try to save a 20% down payment so they can avoid mortgage insurance. This might seem wise since PMI and MIP can be expensive — often $100-$300 per month.
But when you look at the long-term financial impact of PMI, it can actually have a great return on investment.
Mortgage insurance allows you to buy a home much sooner and start building equity. By contrast, if you wait to save a 20% down payment, you’ll continue paying rent and likely find yourself chasing higher home prices when you do buy.
That’s not to say a 20% down payment is a bad idea. But if it seems out of reach, you shouldn’t write off a low down payment loan just because it requires PMI or MIP.
Run the numbers — you’ll likely find the benefits of mortgage insurance far outweigh the cost.
Down payments and mortgage rates
The other thing your down payment amount will impact is your mortgage rate. But the effect varies by loan type.
Conventional loans have the biggest correlation between down payment and interest rate. If you put 20% down on a conventional mortgage — and have a FICO score above 720 — you should have access to some of the market’s lowest mortgage rates.
You can also avoid private mortgage insurance with 20% down, or at least lower your PMI cost by putting 10-15% down rather than the minimum down payment of 3-5%.
FHA loan rates are less impacted by down payment and credit score. You may get a lower interest rate if you make a bigger FHA down payment. But your mortgage insurance premium will remain the same, which means you’ll still have a higher annual percentage rate (APR).
USDA and VA loans generally have competitive rates regardless of down payment. VA mortgages, especially, have some of the lowest mortgage rates on the market even with 0% down.
Other housing costs to save for
When you’re budgeting for homeownership, it’s important to remember a down payment isn’t your only out-of-pocket cost.
You’ll also have to pay for mortgage closing costs upfront. These are fees associated with setting up your mortgage loan and transferring ownership of the home from seller to buyer.
Closing costs are typically around 2-5% of the loan amount. If you’re making a small down payment, this could nearly double your out-of-pocket costs — so make sure you’re budgeting appropriately.
For example, say you’re buying a $300,000 home. You opt for a conventional loan with a 5% down payment, and your total closing costs come out to 3%.
Here’s how much you’d need to save:
- Purchase price: $300,000
- Down payment: $15,000 (5%)
- Closing costs: $9,000 (3%)
- Total cash needed: $24,000
First-time home buyers are often taken by surprise when they learn how expensive closing costs are.
However, don’t give up on your home buying aspirations too early due to closing costs. There are creative ways to get your closing costs paid for you. More on this below.
Many home buyers are surprised that they can get 100% of their closing costs covered simply by using all the resources and programs available to them.
However you decide to handle closing costs, though, get a realistic estimate of how much yours will cost by getting pre-approved by a lender and looking closely at its Loan Estimate.
This standard document will list your future interest rate and mortgage payment as well as the total amount for down payment and closing costs, so you know exactly how much you need to save up.
Monthly mortgage payments
The other cost to plan for is your monthly mortgage payment.
This will include loan principal and interest payments, of course. But it will also include property taxes and homeowners insurance.
Property taxes and insurance are typically broken into 12 monthly payments and tacked onto your mortgage payment. This is paid as lump sum to your mortgage servicer, who will divvy up the appropriate amounts to the tax collector and insurance company.
You should account for these costs as part of your future mortgage payment, as they’ll change the loan amount you can afford on your monthly budget.
Other homeownership costs, like HOA fees, should also be included.
You can estimate your future payment using a mortgage calculator that includes taxes, insurance, and HOA fees.
Down payment and closing cost assistance
What if you’re having trouble saving for a down payment and closing costs? Even if you qualify for a low down payment home loan, it can be hard to save the cash required in today’s real estate market.
Luckily, you don’t have to go it alone. There are many different ways to get assistance with your upfront home buying costs.
Here are a few good strategies to explore:
- Down payment assistance programs (DPA) — DPA programs are run by state and local governments. They offer cash grants or low/no interest loans to help home buyers cover their down payment and closing costs. Ask your real estate agent or loan officer about down payment assistance in your area
- Lender credits — A ‘lender credit’ is when the lender covers part or all of your closing costs. In return, you pay a higher mortgage rate on your loan. This will increase your interest cost over the life of the loan — but in today’s low-rate market, it’s possible to use lender credits and still come out with an affordable loan
- Seller concessions — A seller concession is when the seller agrees to cover some or all of your closing costs. This is more common in a ‘buyer’s market’ – when sellers are having a hard time selling homes. But if sellers have the upper hand, sometimes you can offer to pay a slightly higher purchase price on the home in exchange for a credit
- Interested party contributions – The seller and lender aren’t the only ones who can give a credit. Your real estate agent, the seller’s agent, the builder, and just about any other party involved in the transaction can contribute toward closing costs up to allowable limits
- Down payment gifts — Most loan programs allow you to cover part or all of your down payment using gifted money from a family member or friend. The funds need to be properly documented to be eligible
- Subsidized mortgage loans — Some state and local governments offer subsidized mortgages that come with down payment and/or closing cost assistance for borrowers. Again, ask your real estate agent or loan officer about the availability of these first-time home buyer programs where you live
Most lenders are familiar with all these programs and willing to help borrowers who don’t have a big down payment saved up.
Your loan officer, broker, or agent can walk you through the steps to apply for and receive assistance.
Check your home loan eligibility
Use the down payment calculator above to estimate how much down payment you need for a house.
If you have enough cash saved up and you’re ready to start house hunting, your next step is to get pre-approved by a mortgage lender.
Pre-approval will solidify your loan type, loan terms, interest rate, and monthly payment — as well as the total amount you need for a down payment and closing costs.
Ready to get started?