How Much Do You Need as a Down Payment on a House?

You’ve been saving. Watching the market. Telling yourself you’ll buy when you have enough. But “enough” in your head is probably 20%. And if that number is keeping you on the sideline, I want you to read this before you wait another year.

How much down payment do you need to buy a house? For most buyers, the minimum is 3%. That’s it. You may already be closer than you think.

What You Need to Know

Conventional loans start at 3% down for first-time and repeat buyers
FHA loans require 3.5% down with a 580 or higher credit score
VA loans require 0% down for eligible veterans, with no monthly mortgage insurance ever
20% down eliminates PMI on a conventional loan, but it’s not required and most buyers don’t put that much down
On a $355,000 home, 3% down is $10,650. 20% is $71,000. That gap is real.

Not sure where you stand? Let’s look at your numbers together.

How Much Down Payment Do You Actually Need to Buy a House?

The minimum down payment depends on your loan type. For most buyers, it’s somewhere between 0% and 5%. Here’s how it breaks down.

Conventional loans go as low as 3% down. Fannie Mae confirms this for both first-time and repeat buyers. FHA loans require 3.5% if your credit score is 580 or above. VA loans, available to eligible veterans and service members, require no down payment at all and never charge monthly mortgage insurance.

That’s the real picture. Three percent. Not twenty.

The 20% threshold gets talked about because it’s the point where private mortgage insurance (PMI) goes away on a conventional loan. But most buyers I talk to don’t realize PMI is temporary. And the math on waiting to hit 20% often doesn’t work out the way people expect.

What Does Putting Less Than 20% Down Actually Cost You?

PMI is the fee a lender charges when you put less than 20% down on a conventional loan. It protects the lender, not you. But it’s not a penalty. It’s a cost with a finish line.

Here’s the deal: on a $355,000 home with 5% down, your loan balance would be around $337,250. PMI typically runs between 0.2% and 1.75% annually depending on your credit score. At 0.75%, that’s about $2,529 a year, or around $211 a month.

This is an estimate for illustration only. Actual PMI rates, payments, and eligibility vary based on your credit score, loan type, down payment, and current market conditions.

That $211 a month sounds like a lot until you compare it to the alternative. Waiting two or three more years to save from $17,750 up to $71,000 means paying rent the whole time. Rent that builds zero equity and keeps going up.

PMI on a conventional loan goes away automatically when your loan balance drops to 78% of the original home value. You can also request cancellation at 80% LTV with an appraisal, 12 months of on-time payments, and at least 12 months in the home. Always confirm with your loan servicer.

The point: PMI is not forever. Renting is not free.

Starting to build equity, even with a smaller down payment, is often the smarter move. The math depends on your specific situation. That’s why we model it out before making any recommendation.

Does It Ever Make Sense to Put More Down?

Yes. Sometimes it absolutely does. I want to be straight with you on this.

Putting more down lowers your monthly payment. It reduces your loan balance, which can also improve the rate you qualify for depending on the loan tier. If you’re sitting on savings well above your emergency fund and you want a lower payment from day one, a larger down payment can make long-term sense.

Here are a few situations where more down is worth considering.

You have six to twelve months of expenses saved and still have extra cash. You want a lower monthly payment more than you need liquidity. Or your credit profile puts you right on the edge of a pricing tier where a slightly larger down payment gets you a meaningfully better rate.

But there’s a catch. Putting every dollar you have into the down payment and leaving yourself with nothing in reserve is a risk. Homes have costs. A repair hits in month two and there’s nothing in savings to cover it. That’s a real situation I’ve seen too many times.

The goal isn’t the biggest down payment. It’s the right one.

How Do You Know What Down Payment Is Right for Your Situation?

This is where I push back on the idea that there’s one universal answer.

Your right number depends on your credit score, your savings, your monthly income, your goals, and how long you plan to stay in the home. It also depends on the loan type that fits your situation best. A buyer putting 3% down on a conventional loan with a 740 credit score has a very different picture than someone putting 3.5% down on an FHA loan.

We look at all of it. Stephanie and I model what each down payment option actually costs over one year, three years, and five years. Not just the monthly payment. The full picture.

If you want to compare your options side by side before you make any decisions, that’s exactly what we’re here for. Take a look at our low down payment loan options or learn more about VA loan benefits if you’ve served and see if a zero-down path makes sense for you.

Questions We Hear a Lot

Can I buy a house with less than 5% down? Yes. Conventional loans start at 3% and FHA loans start at 3.5%. VA loans require no down payment at all for eligible veterans. The right option depends on your credit score, loan type, and what you qualify for.

Is PMI tax deductible? PMI deductibility has changed several times over the years. As of 2026, the PMI deduction has been reinstated. Talk to a licensed tax preparer about how it applies to your situation. I’m not a CPA and this isn’t tax advice.

Does a bigger down payment always get me a better rate? Sometimes. Conventional pricing has thresholds where putting more down can improve your rate. But it’s not a guarantee. We run the actual numbers for each buyer before making a recommendation.

What if I don’t have 20% saved — should I wait? Probably not. The 20% myth has kept a lot of good buyers out of homes they could already afford. The question isn’t whether you have 20%. It’s whether you have enough for the right loan type and enough left over to be financially comfortable after closing.

The 20% myth has kept too many buyers waiting on the sideline for too long. The real question isn’t how much you can scrape together. It’s what actually makes sense for where you are right now.

If you’re ready to find out what your number looks like, let’s talk. We serve buyers in Minnesota, Wisconsin, and Florida, and the conversation doesn’t cost you anything.

Start here at kengraczak.com and let’s figure out your down payment together.

Written by Ken Graczak, NMLS #184394 | CFR Mortgage | Bloomington, MN