How Much Down You Really Need

20% is optional, not required

Most people delay buying for years to reach 20% — a number almost no first-time program actually asks for.

The real minimums are far lower. 20% is not a gate to entry; it is one option that changes your monthly cost. Know the difference and you can often buy sooner.

What each program actually asks

• VA & USDA — 0% down. Veterans and active duty (VA); eligible areas with income limits (USDA). No down payment.
• Conventional — 3% to 5%. First-time buyers can start at 3%; 5% is the standard floor otherwise.
• FHA — 3.5% down. Forgiving on credit. On a $350,000 home that is $12,250.
• Jumbo — usually 10–20%. Larger loans above conforming limits ask for more down, but not always the full 20%.

What the 20% mark changes

Putting 20% down is not about being “allowed” to buy — it is about three concrete benefits:

• No PMI. At 20% down on a conventional loan, you skip private mortgage insurance entirely.
• Lower payment. A smaller loan means a lower monthly principal and interest — for the whole term.
• Stronger offer. More money down can make your offer more competitive in a tight market.

None of these are required to buy. They are trade-offs — more cash now for less cost later. The right balance is personal.

PMI is not a penalty

Private mortgage insurance is what lets you put less than 20% down. It is a cost — but a manageable, often temporary one.

• Roughly 0.3–1.5% a year. Added to your payment. The stronger your credit and down payment, the lower it runs.
• It falls off — conventional. Conventional PMI cancels as you reach about 20% equity (automatically at 22%).
• FHA works differently. FHA mortgage insurance often stays for the life of the loan unless you refinance out.
• It buys you time in. A few years of PMI can beat years of rising rent and prices while you save.

The money need not be all yours

• Your own savings. Cleanest when the funds have been in your account for about 60 days.
• A gift from family. Allowed on every low-down program with a simple gift letter.
• Down payment assistance. State, county and city programs — grants and second loans toward the down payment.
• Retirement accounts. A 401(k) loan or IRA withdrawal can fund part or all of it.

The one rule: no unexplained money. Move any gift or transfer before you apply and keep the paper trail clean.

Finding your right down payment

1. Start with the minimum. See what your program actually requires — often far less than you assumed.
2. Weigh PMI vs. cash. Decide whether a few years of PMI is worth buying now instead of waiting.
3. Keep a reserve. Do not drain every dollar into the down payment; lenders want a cushion left.
4. Count help you can use. Gifts and assistance can lower your out-of-pocket without lowering your down payment.
5. Run the real numbers. We model a few scenarios side by side so you choose with the full picture.

There is no single right answer — only the one that fits your cash, your timeline and your monthly comfort.