A down payment is the portion of a home’s purchase price that you pay upfront, in cash, rather than financing through your mortgage. It’s one of the first numbers buyers ask about — and one of the most misunderstood.
The 20% Myth
Many people believe you need to put down 20% to buy a home, but that’s not actually a requirement for most loan types. It’s simply the threshold at which you can typically avoid paying private mortgage insurance (PMI) on a conventional loan.
Minimum Down Payments by Loan Type
- Conventional loans: As low as 3% for qualified first-time buyers.
- FHA loans: As low as 3.5% with a qualifying credit score.
- VA loans: 0% down for eligible veterans and service members.
- USDA loans: 0% down for eligible rural properties.
Pros of a Larger Down Payment
Putting down more money upfront reduces your loan amount, lowers your monthly payment, may help you avoid mortgage insurance, and can make your offer more attractive to sellers in competitive markets.
Pros of a Smaller Down Payment
A smaller down payment lets you buy sooner without waiting years to save, and preserves cash for moving costs, repairs, furnishing, or an emergency fund.
The Bottom Line
There’s no single “right” down payment amount — it depends on the loan program you qualify for, your monthly budget, and how much cash you want to keep in reserve after closing.