Ask most people how much you need to put down on a home, and they'll say "20%." This number is deeply ingrained in homebuying lore — but it's largely a myth. While 20% has real advantages, millions of Americans buy homes every year with far less down. Here's what you actually need to know.
Why the 20% Myth Persists
The 20% figure exists for two reasons: it's the threshold that eliminates private mortgage insurance (PMI), and it reduces lender risk. But the mortgage market has evolved dramatically, and today there are numerous programs designed specifically for buyers who can't put 20% down.
In 2024, the median down payment for first-time buyers was just 8%, according to the National Association of Realtors. Repeat buyers put down a median of 19%.
Loan Programs by Down Payment Required
| Loan Type | Min. Down | Min. Credit | PMI? | Best For |
|---|---|---|---|---|
| Conventional | 3% | 620 | Yes (until 20%) | Good credit buyers |
| FHA | 3.5% | 580 | Yes (life of loan) | Lower credit scores |
| VA | 0% | None set | No | Veterans & military |
| USDA | 0% | 640 | Yes (reduced) | Rural/suburban areas |
| Jumbo | 10–20% | 700+ | Varies | High-cost areas |
The Real Cost of a Low Down Payment
While low-down-payment loans get you into a home sooner, there are tradeoffs:
- PMI (Private Mortgage Insurance): Typically costs 0.5–1.5% of your loan amount per year. On a $300,000 loan, that's $1,500–$4,500/year until you hit 20% equity.
- Higher interest rate: Lower down payments sometimes come with slightly higher rates.
- Higher monthly payment: A larger loan means more principal to pay off.
- Less equity cushion: If the market dips, you could end up underwater.
The Case FOR Putting Less Down
Counterintuitively, putting less down isn't always the worse financial decision:
- Keep your cash: Tying up $70,000 in home equity means that money can't earn returns elsewhere.
- Buy sooner: Home prices have historically risen. Buying now with 5% down might beat waiting 3 years to save 20%.
- Emergency fund: Draining your savings on a down payment leaves you vulnerable to unexpected repairs.
- Investment returns: If your investments return more than your mortgage rate, keeping cash invested could be mathematically superior.
First-Time Buyer Assistance Programs
Before you decide on a down payment amount, research programs in your state. Many offer:
- Grants (free money, no repayment required)
- Forgivable loans (forgiven if you stay in the home 5–10 years)
- Deferred-payment loans (repaid only when you sell)
- Matched savings programs
Visit your state's Housing Finance Agency website and search "first-time buyer assistance [your state]" to find programs you may qualify for.
How Much Should YOU Put Down?
The right answer depends on your situation. Put more down if: you have strong savings beyond the down payment, you hate the idea of PMI, or you want lower monthly payments. Put less down if: you're using a VA or USDA loan (skip PMI entirely), you have other high-interest debt to pay off, or your savings are limited.