How Much Down Payment for a House? Complete 2026 Guide

Minimum Down Payment by Loan Type

Your minimum down payment depends on the type of mortgage you choose. Here is what each major loan program requires in 2026.

Conventional Loans (3-5% Minimum)

Conventional loans are backed by Fannie Mae and Freddie Mac and are the most common mortgage type. Standard conventional loans require 5% down with no income limits. For income-qualified buyers, two programs offer even lower minimums:

• 3% down: Fannie Mae HomeReady and Freddie Mac Home Possible programs (income limits apply -- typically 80% of area median income)
• 5% down: Standard conventional loan with no income restrictions
• PMI required until you reach 20% equity (you can request removal at 80% LTV; lenders must automatically cancel at 78% LTV)
• Generally offers better interest rates than FHA for borrowers with credit scores of 720 or higher

FHA Loans (3.5% Minimum)

FHA loans are insured by the Federal Housing Administration and are designed for borrowers with lower credit scores or limited savings.

• 3.5% down with a 580 or higher credit score
• 10% down with a credit score between 500 and 579
• Mortgage Insurance Premium (MIP) is required: 1.75% upfront plus 0.55% annually
• MIP lasts the life of the loan if you put less than 10% down
• More lenient credit requirements and higher DTI allowances than conventional

For a complete breakdown of FHA qualification criteria, see our FHA Loan Requirements 2026 guide.

VA Loans (0% Down)

VA loans are available to veterans, active-duty service members, and eligible surviving spouses. They are among the most favorable mortgage programs available.

• No down payment required
• No PMI or MIP required
• VA funding fee applies (typically 2.15% for first use with no down payment; waived for veterans with service-connected disabilities)
• Competitive interest rates -- often lower than conventional

USDA Loans (0% Down)

USDA loans are backed by the U.S. Department of Agriculture for homes in eligible rural and suburban areas.

• No down payment required
• Income limits apply (typically 115% of area median income)
• Guarantee fee required (1.00% upfront + 0.35% annually -- similar to MIP)
• Geographic restrictions are the primary limitation -- the home must be in a USDA-eligible area

Down Payment Comparison Table

Sources: Fannie Mae, Freddie Mac, FHA/HUD, VA, USDA. Credit score minimums reflect program requirements; individual lenders may apply higher thresholds.

How Your Down Payment Affects Monthly Payments

Your down payment directly impacts three aspects of your mortgage: the loan amount, the monthly payment, and whether you pay mortgage insurance. Here is a real-world comparison using a $400,000 home.

Real-World Example: $400,000 Home

Assumes 6.5% interest rate, 30-year fixed term, PMI estimated at 0.5% of loan amount annually. Does not include property taxes or homeowner's insurance. Use our Mortgage Calculator for a complete PITI estimate.

The difference between 3% down and 20% down is approximately $591 per month. However, the 20% option requires $68,000 more in upfront savings. For many buyers, that tradeoff makes a smaller down payment the more practical choice.

The PMI Factor

Private mortgage insurance (PMI) is the monthly cost lenders charge when your down payment is less than 20%. Understanding PMI is essential to making a smart down payment decision.

• PMI typically costs 0.3% to 1.5% of the loan amount annually
• On a $380,000 loan, PMI ranges from approximately $95 to $475 per month depending on your credit score
• Conventional PMI is eliminated when you reach 20% equity (automatic cancellation at 78% LTV under the Homeowners Protection Act)
• Some lenders offer lender-paid PMI (LPMI) that is built into a slightly higher interest rate

For a deep dive into PMI costs and removal strategies, see our complete guide on Understanding PMI and How to Avoid It.

Do You Really Need 20% Down?

The 20% Myth vs. Reality

The idea that you "need" 20% down is one of the most persistent myths in home buying. Here is what the data actually shows:

• The National Association of Realtors reports that the median first-time buyer down payment is approximately 6-8% of the purchase price
• Repeat buyers typically put down 10-17%
• 20% avoids PMI, but it is not required for any major loan type
• Waiting to save 20% may cost more than the PMI you would pay with a smaller down payment

When 20% Down Makes Sense

• You have the savings without depleting your emergency fund (maintaining 3-6 months of expenses is critical -- use our Emergency Fund Calculator to check)
• You want to minimize monthly payments and avoid PMI entirely
• You are buying an investment property (20% is typically required for non-primary residences)
• You qualify for a better interest rate with the larger down payment

When Less Than 20% Makes Sense

• Home prices are rising faster than you can save
• You have strong income but limited savings (common in early career)
• You qualify for FHA, VA, or USDA programs
• The PMI cost is less than the appreciation you would miss while saving
• You have other high-value uses for the capital (building an emergency fund, paying off high-interest debt)

To understand how much house you can realistically afford at your current savings level, try our How Much House Can I Afford guide and calculator.

Down Payment Assistance Programs

If saving for a down payment feels overwhelming, you are not alone. Thousands of down payment assistance (DPA) programs exist at the state, county, and city level to help qualified buyers.

Types of DPA Programs

• Grants: Free money that does not need to be repaid. These are the most desirable but often have the strictest income and location requirements.
• Forgivable second mortgages: A second loan that is forgiven after a set period (typically 5-10 years) of living in the home.
• Deferred-payment second mortgages: A second loan with no monthly payments, due when you sell, refinance, or pay off the first mortgage.
• Employer-assisted housing programs: Some employers offer down payment help as an employee benefit, particularly in high-cost-of-living areas.

First-time buyers should also review our First-Time Home Buyer Guide 2026 for a complete checklist of available programs and strategies.

How to Save for a Down Payment

Building your down payment fund requires a plan. Here is a practical five-step approach:

Step 1: Set a Target Amount

Start by deciding which loan type you plan to use and your target home price. For a $350,000 home:

• 3% down (conventional HomeReady): $10,500
• 3.5% down (FHA): $12,250
• 5% down (conventional): $17,500
• 10% down: $35,000
• 20% down: $70,000

Add 2-5% of the home price for closing costs. On a $350,000 home, budget an additional $7,000-$17,500 for closing costs, inspections, and moving expenses.

Step 2: Open a Dedicated Savings Account

Keep your down payment fund in a high-yield savings account separate from your everyday spending. Current high-yield savings rates of 4-5% APY add meaningful growth. Use our Savings Calculator to see how quickly your fund can grow with regular contributions.

Step 3: Automate Monthly Transfers

Set up automatic transfers to your down payment account on each payday. Even $500 per month adds up to $6,000 per year -- enough for a 3% down payment on a $200,000 home in just one year.

Step 4: Consider Additional Sources

• Gifts from family: Most loan types allow gift funds. A gift letter confirming the money is not a loan is required.
• Retirement account access: First-time buyers can withdraw up to $10,000 from a traditional IRA penalty-free for a home purchase. Roth IRA contributions (not earnings) can be withdrawn anytime.
• Side income: Freelance work, selling unused items, or temporary second employment can accelerate your savings timeline.

Step 5: Explore DPA Programs

Before assuming you need to save the full amount yourself, check for down payment assistance programs in your area. Many buyers qualify for $5,000-$25,000 in grants or forgivable loans that reduce how much you need to save.

Down Payment Impact on Total Loan Cost

Your down payment does not just affect your monthly payment -- it significantly impacts the total amount you pay over the life of your mortgage. Here is how different down payment amounts compare on a $400,000 home at 6.5% over 30 years.

Assumes 6.5% interest rate, 30-year fixed term. PMI estimated at 0.5% annually, removed at 80% LTV. Total interest is approximate. Actual values depend on your specific rate and terms. For a more detailed payment breakdown including taxes and insurance, see our PITI Explained guide.

Moving from 3% down to 20% down saves approximately $104,200 in combined interest and PMI over the life of the loan. However, that savings comes at the cost of needing $68,000 more upfront -- capital that could alternatively be invested, used to build an emergency fund, or pay down high-interest debt.

To see how a specific income level translates into home buying power, explore our guide on How Much House Can I Afford on an $80K Salary.

Frequently Asked Questions

Key Takeaways and Next Steps

1. Minimum down payment ranges from 0% (VA/USDA) to 3.5% (FHA). A 20% down payment is NOT required to buy a home.
2. The average first-time buyer puts down 6-8% of the purchase price, according to the National Association of Realtors.
3. PMI costs $100-$300 per month and is required with less than 20% down on conventional loans. It can be removed once you reach 20% equity.
4. Down payment assistance programs can cover $5,000-$25,000 of your down payment through grants, forgivable loans, and employer programs.
5. Waiting to save 20% may cost more than the PMI you would pay with a smaller down payment, especially in a rising home price market.

The best down payment amount depends on your financial situation, the loan type you qualify for, and your local housing market. Start by running the numbers with our calculator to see how different down payment scenarios affect your monthly budget.

For more home buying guidance, explore our First-Time Home Buyer Guide 2026, learn about PMI strategies, or compare the full cost of renting versus buying with our Rent vs. Buy Decision Guide.

Sources

• National Association of REALTORS -- Profile of Home Buyers and Sellers (2025) (opens in new tab)
• Consumer Financial Protection Bureau -- Explore Loan Options (opens in new tab)
• Fannie Mae -- HomeReady Mortgage Program (opens in new tab)
• Freddie Mac -- Home Possible Mortgage Program (opens in new tab)
• HUD -- FHA Single Family Mortgage Insurance (opens in new tab)
• U.S. Department of Veterans Affairs -- Home Loans (opens in new tab)
• USDA Rural Development -- Single Family Housing Programs (opens in new tab)
• HUD -- Buying a Home / Down Payment Assistance (opens in new tab)