Deciding on Your Home Down Payment: A Comprehensive Guide

The offers and details on this page may have updated or changed since the time of publication. See our article on Business Insider for current information.

Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate mortgages to write unbiased product reviews.

• You may need between 3% and 25% for a down payment, depending on which type of mortgage you get.
• The riskier the mortgage, the more you'll likely be required to put down.
• In America's 20 biggest cities, a 20% down payment ranges from $39,127 in Oklahoma City to $263,392 in San Jose, California.

Buying a home is probably one of the biggest purchases you'll ever make, and while most people use a loan to buy a home, you'll still likely need to bring some cash of your own to the table in the form of a down payment.

But exactly how much you'll need depends on your lender and which type of mortgage you get.

Introduction to down payments

The role of down payments in homebuying

Most mortgages require borrowers to put some of their own money toward the home purchase. This is called a down payment.

Making a down payment lowers the risk to the lender because it's lending less money overall and because the borrower is putting their own funds into the transaction, reducing the likelihood of default. Starting out with some equity in the home also provides a cushion to prevent ending up underwater, where you owe more on the mortgage than what the home is worth.

Down payment requirements can range from 0% to more than 20%. Conventional mortgage borrowers buying a home they plan to use as their primary residence can often get a mortgage with as little as 3% down, while someone getting a mortgage for an investment property may need to put as much as 25% down.

How down payments affect your mortgage

In general, the riskier the mortgage is for the lender, the more you'll need to put down.

Government-backed mortgages have some of the lowest down payment options available because they're guaranteed by certain federal agencies. This means that the government will cover a portion of the lender's losses if a borrower defaults on their mortgage. Because the risk to the lender is lower, they're able to accept low down payments.

You'll likely be able to get a more favorable mortgage rate by putting down more than the minimum. Because a larger down payment removes some of the risk the lender is taking on, it's able to offer you a lower rate in return.

See Business Insider's picks for the best mortgage lenders »

Minimum down payment by loan type

Conforming mortgage: 3%

The absolute lowest down payment you can make on a conforming mortgage — which is what you probably think of as a "regular mortgage" — is 3%. These are mortgages that conform to Fannie Mae and Freddie Mac standards, and these government-sponsored entities won't purchase mortgages with down payments lower than this.

On a $200,000 home, a 3% down payment means you'll need $6,000.

Depending on your lender and the details of your loan, you may need to put down at least 5% or 10% to get a conforming mortgage.

FHA mortgage: 3.5%

To get an FHA mortgage , you'll need at least a 3.5% down payment. However, if you have an especially low credit score, you may need to bring more money to the table to qualify for the mortgage. People with scores of 580 or better can put 3.5% down, but those with scores below that will need a down payment of at least 10%. The lowest score you can get an FHA loan with is 500.

VA mortgage: 0%

VA mortgages , which are only available to current service members and veterans who meet minimum service requirements, allow borrowers to get a home with no down payment.

Keep in mind, though, that you will need to pay the VA funding fee, which is equal to a percentage of your loan amount. The exact amount you'll pay depends on your down payment and whether you've gotten a VA loan previously. Unlike a down payment, though, this one-time fee can be financed into your loan amount.

USDA mortgage: 0%

USDA mortgages also don't call for any down payment. These mortgages are only available to low-to-middle income borrowers who live in eligible rural or suburban areas.

USDA mortgages come with an upfront guarantee fee that is equal to 1% of the loan amount. Like the VA funding fee, this guarantee fee can be rolled into the loan.

Second home or investment property mortgage: 10% to 25%

If you're getting a mortgage to purchase a second home or investment property , you'll likely be asked to make a larger down payment than if you were buying a primary residence.

The minimum down payment you'll need to make for one of these purchases is largely dependent on your lender, the type of property you're buying, and the number of units it has.

To buy a second home or vacation home, you may be asked to put down at least 10%. For an investment property, you may need as little as 15% for a single-unit property or as much as 25% for a two to four-unit property.

Jumbo mortgage: 5% to 20%

If you're buying a home that's priced above the conforming loan limit , you'll need to get a jumbo mortgage.

The down payment requirements for this can vary depending on your lender. Some lenders may offer jumbo mortgages with down payments as low as 5%, while other may require 10%, 15%, 20%, or more.

Calculating your down payment: How much you'll need in America's 20 largest cities

When it comes to planning for homeownership, knowing exactly how much you'll need for a down payment in dollars is generally more helpful than knowing the minimum percent required for a given loan.

But because home prices vary so much throughout the country, so do down payment amounts. Here's what you'll pay at different down payment levels in each of the 20 largest cities in the US, based on the Zillow's average home values as of January 2024.

Want an easy way to estimate how much you'd need to put down on a given house? Think about it in terms of how much you'd put down per $100,000. This means that with 20% down, you'd pay $20,000 for every $100,000 of the home's sales price. With 10% down, that's $10,000 for every $100,000, and 3% is $3,000 for every $100,000.

Factors influencing down payment size

If you have a lot of money saved up and aren't sure how much of it should go toward your down payment, here are some things to think about.

Financial stability and emergency funds

You shouldn't drain your accounts to make a larger down payment since that could jeopardize your overall financial health. As you evaluate your savings, think about how much of an emergency fund you need based on your monthly costs. Experts often recommend having three to six months worth of living expenses saved up.

You'll also want to set aside some money each year for home maintenance and repairs.

Loan type requirements

Unless you're getting a 0% down mortgage, you'll need to put some money down. If you're trying to keep your down payment small, look to a low-down-payment conventional loan or a government-backed mortgage.

Closing costs

Your down payment isn't the only cash you'll owe at the closing table. You'll also need to pay your closing costs , which are typically between 3% and 6% of the loan amount.

Private mortgage insurance (PMI) considerations

If you put down less than 20% on a conforming loan, you'll need to pay for private mortgage insurance .

PMI protects lenders on mortgages with high loan-to-value ratios , and it's added to the borrower's monthly mortgage payment. Once you hit 20% equity, you can ask your lender to remove PMI from your mortgage. It will be automatically removed at 22% equity.

FHA loans also come with their own form of mortgage insurance, which you'll pay up front and on a monthly basis.

Advantages of a larger down payment

Better rate

Lenders typically reward higher down payments with lower interest rates, which means you pay less each month and overall.

Reduced interest costs

Because you're borrowing less money and will likely have a lower interest rate, you could save thousands of dollars in interest over the life of your loan.

Lower monthly payments

Similarly, your monthly payment will go down with a larger down payment thanks to the lower loan amount and lower rate.

Avoid PMI

You might pay between $30 and $70 each month for every $100,000 you borrow, according to Freddie Mac . If you put 20% down, you'll avoid this cost.

Start with more equity

A larger down payment also starts you out with more equity in your home, which can prevent you from going underwater on your mortgage if there's a dip in the market.

Plus, it puts you in a better position for when you want to sell or refinance .

Advantages of a smaller down payment

Maintaining your savings

The first year of homeownership is often more expensive than most people expect. If you put all your savings toward your down payment, you could be risking your financial security after you've moved in. Have some money left over for emergency expenses and other costs.

Opportunity to invest elsewhere

Parking a bunch of money in your home isn't always a great idea, especially if you can get a larger return on those funds somewhere else, like in a brokerage account or an IRA.

Become a homeowner sooner

The sooner you buy a home, the sooner you'll start building equity. Home values generally trend up, so if you can buy a home now, you won't have to deal with higher prices down the road, and you'll benefit sooner from your home rising in value over time.

How to save for a down payment

Budgeting strategies

Saving for a down payment can take a while, and the more you can save each month, the faster you'll reach your goal.

Evaluate your monthly budget and see how much you can afford to save each month. Look for expenses that you could comfortably cut out or cut back on.

Some people borrow from their 401(k) to fund their down payment . But this can be risky, so be sure to consider the pros and cons.

High-yield savings accounts

Consider putting your down payment savings into a high-yield savings account , which will enable you to earn interest on your money.

You want to avoid putting your savings somewhere you could possibly lose money, like in the stock market. Certificates of deposit or money market accounts are other viable options.

Down payment assistance programs

Another option is to look for programs that will fund your down payment for you. Many lenders offer first-time homebuyer loans or mortgages geared toward low-income borrowers that come with down payment assistance. Your state's housing authority or local nonprofits may also offer assistance to those who qualify.

Down payment FAQs

Do you have to put 20% down on a house?

No, unless you're getting a less common type of mortgage like a jumbo loan or an investment property mortgage, you likely won't be required to put 20% down. However, you will need at least 20% down on a conventional loan if you want to avoid paying for private mortgage insurance.

What is a typical down payment for a home?

The typical down payment on a house is 8% for first-time homebuyers and 19% for repeat homebuyers, according to the National Association of Realtors .

How much of a down payment do I need for a $300,000 house?

It depends on what type of loan you're getting, but you may need between $9,000 and $60,000 for a down payment on a $300,000 house.

What is the minimum down payment for a conventional loan?

You'll generally need at least 3% for a down payment on a conventional loan, but it can vary depending on your lender.

Does a larger down payment guarantee a better mortgage rate?

A large down payment translates to less risk for the lender, which is why they often come with lower mortgage rates. But the lender will look at the risk of the loan overall, which includes your credit history and level of debt. If you have poor credit, you might not get a great mortgage rate, even with a large down payment.

Can I buy a house with no down payment?

If you qualify for a VA loan, USDA loan, or other zero down mortgage option, you may be able to buy a house with no down payment.

Is it a good idea to deplete your savings for a down payment?

You should always have at least a bit of money saved up for emergencies or unexpected costs, so it's generally considered unwise to completely empty your savings for a down payment.

How does PMI work, and can it be avoided?

PMI insures the mortgage lender in case you stop paying your mortgage. It's required on conforming mortgages with less than 20% down. Once you reach 20% equity in your home, you can have PMI removed.