The typical down payment is between 10 and 20 percent of the home's purchase price, though you can put down less or more depending on the loan type and your situation.
If you are buying a $300,000 house, a 20 percent down payment would be $60,000. A 10 percent down payment would be $30,000. These are the ranges you will hear most often, but they are not rules — they are what lenders see most frequently because of how mortgage insurance works and what banks prefer to see.
The down payment is the money you bring to closing that reduces the amount you need to borrow. The rest comes from the mortgage loan itself. Your down payment size affects your monthly payment, how much interest you pay over the life of the loan, and whether you will pay mortgage insurance on top of your regular payment.
Key Takeaways
- Down payments typically range from 10 to 20 percent, but Federal Housing Administration (FHA) loans allow as little as 3.5 percent and some conventional loans accept 3 percent.
- The smaller your down payment, the higher your monthly mortgage payment and the more you will pay in interest over 30 years, because you are borrowing more money.
- Putting down less than 20 percent usually means paying private mortgage insurance (PMI), which adds $100 to $300+ per month depending on the loan size and your credit score.
- Your down payment comes from your own savings — not from the loan — so you need to have this money available before you make an offer.
- Some programs and employers offer down payment help, but this money still counts as your down payment and does not change how the lender calculates your loan amount.
Why 20 percent became the standard benchmark
Twenty percent is the threshold where lenders stop requiring private mortgage insurance (PMI). PMI protects the bank if you stop paying, but you pay the premium — typically 0.5 to 1.5 percent of your loan amount per year, added to your monthly payment. On a $240,000 loan (80 percent of a $300,000 house), PMI might cost $100 to $300 per month.
Because PMI is expensive and does not build your home equity, lenders prefer borrowers who can put down 20 percent. Borrowers prefer it too, because it means a lower monthly payment. But this preference does not mean you cannot buy with less — it means you will pay more per month if you do.
The 20 percent figure also reflects an older era when down payments of 10 to 30 percent were common across all loan types. Today, the actual median down payment for first-time buyers is lower, often in the 6 to 10 percent range, because FHA loans and other programs have made smaller down payments more accessible.
How different loan types change your down payment options
The type of mortgage you use determines the minimum down payment the lender will accept. Conventional loans (not backed by a government agency) typically require 3 to 20 percent down, depending on your credit score and debt-to-income ratio. FHA loans, insured by the Federal Housing Administration, allow down payments as low as 3.5 percent. VA loans, for may be able to access military members and veterans, often require zero down payment. USDA loans, for rural properties, also often require zero down.
A smaller down payment option does not mean you should choose it. Putting down 3.5 percent instead of 20 percent on a $300,000 house means borrowing an extra $49,500, which costs you tens of thousands more in interest over 30 years, plus years of PMI payments. The monthly payment difference is real and when ready.
| Loan Type | Minimum Down Payment | Mortgage Insurance Required? |
|---|---|---|
| Conventional | 3–20% | Yes, if under 20% |
| FHA | 3.5% | Yes, always |
| VA | 0% | No |
| USDA | 0% | No |
What happens to your monthly payment when you put down less
The lower your down payment, the larger your loan amount, and the larger your monthly principal and interest payment. On a $300,000 house at 7 percent interest over 30 years, the difference between a 20 percent down payment ($60,000) and a 10 percent down payment ($30,000) is roughly $240 per month in principal and interest alone. Add PMI on the 10 percent scenario, and you are looking at $340 to $540 more per month.
Over 30 years, that extra $340 per month adds up to $122,400 in additional payments. This is why financial advisors often suggest saving longer to put down more, rather than buying sooner with a smaller down payment — but this information assumes you have the option to wait, which many buyers do not.
Your actual monthly payment also depends on your interest rate, which depends on your credit score, the current market, and the loan type. A lower credit score can mean a higher interest rate, which makes the monthly payment even larger. This is why down payment size and credit score are both important to your final cost.
Where down payment money comes from and what counts
Your down payment must come from your own funds — savings, investments, gifts from family, or down payment information programs. It cannot come from the mortgage loan itself. Lenders verify the source of down payment money to prevent fraud and to confirm you actually have the funds.
If a family member gives you money for your down payment, most lenders require a gift letter stating that the money is a gift, not a loan you will repay. The lender wants to know your actual debt obligations, and a hidden loan would change your debt-to-income ratio and might disqualify you.
Down payment information programs — offered by nonprofits, employers, state housing agencies, and some lenders — provide money that counts as your down payment. This money reduces the amount you need to borrow, but it does not change how the lender calculates your loan or your monthly payment. If you receive $10,000 in information on a $300,000 house, you still need to bring $20,000 of your own money to reach a 10 percent down payment, or $50,000 to reach 20 percent.
The trade-off between saving more and buying sooner
Deciding how much to put down is a personal choice that depends on your financial situation. Putting down more means a lower monthly payment, less interest paid over time, and no PMI. But it also means waiting longer to buy, which means paying rent instead of building equity, and potentially missing out on a home you want.
Putting down less means buying sooner and starting to build equity in a home now, but at a higher monthly cost. If home prices in your area are rising faster than you can save, buying sooner with a smaller down payment might make financial sense. If prices are stable or falling, waiting to save more might be smarter.
There is no single right answer. The right down payment for you depends on your income, your savings rate, your local housing market, and how long you plan to stay in the home. A mortgage lender or financial advisor who knows your full situation can help you think through the trade-offs.
How to prepare your down payment funds before you make an offer
Before you start looking at houses, figure out how much you can realistically put down and get that money into a savings account where it will be accessible at closing. Lenders typically want to see that the money has been in your account for at least 60 days, so they can verify it is genuinely yours and not borrowed.
If you are receiving down payment information, start that process early — some programs have waiting lists or limited funding. If you are getting a gift from family, ask them to provide the gift letter and confirm the timing of the transfer. If you are saving on your own, set up automatic transfers to a dedicated account so the money is ready when you find a house.
Once you have an accepted offer, your lender will order an appraisal to confirm the house is worth what you agreed to pay. If the appraisal comes in lower than the purchase price, you may need to put down more money to keep the same loan amount, or renegotiate the price. This is why having extra savings beyond your planned down payment is a good idea.
Frequently Asked Questions
Can I borrow money for my down payment?
No. Lenders require that your down payment come from your own funds or from a gift. A loan you will repay counts as debt and increases your debt-to-income ratio, which can disqualify you or lower the amount you are approved to borrow. If a family member gives you money, get a gift letter to prove it is not a loan.
What if I can only put down 3 percent?
You can buy with a 3 percent down payment on a conventional loan if your credit score and debt-to-income ratio are strong enough. You will pay PMI for years, and your monthly payment will be significantly higher than if you put down 20 percent. An FHA loan at 3.5 percent down is another option, though FHA requires mortgage insurance for the life of the loan.
Does my down payment affect my interest rate?
Yes, indirectly. A larger down payment shows the lender you are a lower risk, which can result in a slightly better interest rate. But the interest rate is primarily determined by your credit score, the current market, and the loan type. A 1 to 2 percent difference in down payment might result in a 0.1 to 0.25 percent difference in rate.
Can I use my retirement account for a down payment?
Some retirement accounts allow withdrawals for a first home purchase without the usual early withdrawal penalty. A traditional IRA allows up to $10,000 lifetime; a Roth IRA allows withdrawals of contributions (not earnings) anytime. Consult a tax professional before withdrawing, because the rules are complex and withdrawals may have tax consequences.
What if the appraisal comes in lower than the purchase price?
If the house appraises for less than you agreed to pay, you have three options: renegotiate the price with the seller, put down more of your own money to keep the same loan amount, or walk away. Most buyers renegotiate. If you cannot agree on a new price, you can cancel the contract, though you may lose your earnest money deposit depending on the contract terms.