The short answer
- Conventional loans start at 3% down, FHA loans at 3.5%, and VA and USDA loans can need nothing.
- Below 20% down, conventional loans charge PMI until the balance falls to 78% of the price; FHA charges its own mortgage insurance.
- On a $400,000 home at 7.25%, going from 3% to 20% down lowers the payment from $3,255 to $2,630 a month.
- Plan for closing costs too: Freddie Mac puts them at about 2% to 5% of the price.
Minimum down payments by loan type
| Loan | Minimum down | Mortgage insurance |
|---|---|---|
| Conventional (for example Freddie Mac Home Possible) | 3% | PMI below 20% down; ends at 78% of the price |
| Conventional, standard | 5% | PMI below 20% down |
| FHA, credit score 580+ | 3.5% | 1.75% upfront plus annual MIP |
| FHA, credit score 500 to 579 | 10% | 1.75% upfront plus annual MIP for 11 years |
| VA (eligible service members and veterans) | 0% | None; a one-time funding fee instead |
| USDA (eligible rural areas, income limits) | 0% | Upfront and annual guarantee fees |
3% conventional programs usually have conditions, such as being a first-time buyer or earning under an area income limit. Lenders can also set their own minimum credit scores above the program rules.
What each percentage costs
| Home price | 3% | 5% | 10% | 20% |
|---|---|---|---|---|
| $250,000 | $7,500 | $12,500 | $25,000 | $50,000 |
| $350,000 | $10,500 | $17,500 | $35,000 | $70,000 |
| $400,000 | $12,000 | $20,000 | $40,000 | $80,000 |
| $500,000 | $15,000 | $25,000 | $50,000 | $100,000 |
| $750,000 | $22,500 | $37,500 | $75,000 | $150,000 |
A worked example
Take a $400,000 home with a 30-year loan at 7.25%, 0.89% property tax, $1,800 of insurance a year and PMI at 0.5% of the loan.
- Down payment10% of the price$40,000
- Closing costs3% of the price$12,000
- Loan$360,000
- Principal and interest$2,455.83
- PMI0.5% of the loan a year, for 9 years 10 months$150.00
You need $52,000 at closing. With $15,000 saved and $1,000 a month going into a 4% savings account, you would have it in 34 months.
All five options compared
| Option | Cash to close | Loan | Monthly payment | PMI or MIP a month | Insurance lasts |
|---|---|---|---|---|---|
| 3% conventional | $24,000 | $388,000 | $3,255 | $161.67 | 12 years 10 months |
| 3.5% FHA | $26,000 | $392,755 | $3,302 | $176.14 | Life of the loan |
| 5% conventional | $32,000 | $380,000 | $3,197 | $158.33 | 12 years 1 month |
| 10% conventional | $52,000 | $360,000 | $3,053 | $150.00 | 9 years 10 months |
| 20% conventional | $92,000 | $320,000 | $2,630 | $0 | None |
Each step up in down payment lowers the payment, but the big drop comes at 20%, where PMI disappears. Over the full 30 years, interest falls from $564,864 with 3% down to $465,867 with 20% down.
PMI: the price of less than 20%
Private mortgage insurance protects the lender if you stop paying. Freddie Mac puts it at about $30 to $70 a month per $100,000 borrowed, roughly 0.35% to 0.85% of the loan a year, with smaller down payments and lower credit scores at the high end. The calculator uses one rate you choose; ask lenders for real quotes at each down payment.
PMI does not last forever. You can ask to cancel it once the balance reaches 80% of the original value, and it ends automatically at 78% on the original schedule. In the example, total PMI comes to $24,897 with 3% down, $17,700 with 10% down and $11,617 with 15% down. Our mortgage calculator shows how extra payments bring the cancellation date forward.
FHA's 3.5% option
FHA loans charge an upfront mortgage insurance premium of 1.75% of the loan, usually added to the balance, plus an annual premium. Under HUD’s current table, a 30-year loan with less than 5% down pays 0.55% a year for the life of the loan. In the example the upfront premium is $6,755, the loan becomes $392,755, and the first year’s MIP is $176 a month.
At the same rate, the FHA option costs $47 a month more than 3% conventional, and its mortgage insurance adds up to $49,386 over 30 years. FHA earns its place when your credit score would make conventional PMI expensive, or when you need its more flexible rules. Our FHA loan calculator models it in detail.
Cash to close
The down payment is only part of the cash you bring to closing. Closing costs cover lender fees, the appraisal, title insurance, recording fees and prepaid items such as the first year of homeowners insurance and some property tax. Freddie Mac puts them at about 2% to 5% of the price.
Two ways to bring this down: ask the seller for a credit toward closing costs as part of your offer, and compare Loan Estimates from several lenders. Our closing cost calculator lists each fee.
How long it takes to save
Starting from $15,000 saved and putting away $1,000 a month at 4% APY, here is how long each option takes (down payment plus 3% closing costs on $400,000):
| Option | Cash needed | Time to save |
|---|---|---|
| 3% conventional | $24,000 | 9 months |
| 3.5% FHA | $26,000 | 11 months |
| 5% conventional | $32,000 | 1 year 4 months |
| 10% conventional | $52,000 | 2 years 10 months |
| 15% conventional | $72,000 | 4 years 3 months |
| 20% conventional | $92,000 | 5 years 6 months |
How much you save each month matters far more than the interest rate. For the 10% option, $500 a month takes 61 months, $2,000 a month takes 18 months. At 0% interest, $1,000 a month takes 37 months instead of 34.
Saving to a deadline
If you know when you want to buy, work backward. To reach $52,000 from $15,000 at 4% APY, you need to save about $921 a month to buy in three years, or $510 a month to buy in five. Set the “Years you want to buy in” field under More options to see your own figure, or use our savings goal calculator for any other target.
Automate it
Set up an automatic transfer on payday into a separate account. Money you never see in your checking account is much easier to save.
Where to keep the money
Down payment money has a deadline, so it should not be exposed to the stock market. High-yield savings accounts paid around 4% in September 2026, while the FDIC’s national average for savings accounts was about 0.38%. Money market accounts and short CDs timed to your purchase are good options too. Keep each account at an FDIC-insured bank or NCUA-insured credit union, within the $250,000 coverage limit.
Gifts, assistance and retirement accounts
- Gifts from family are allowed on conventional, FHA and VA loans, usually with a signed gift letter and a paper trail.
- Down payment assistance from state housing finance agencies and some cities comes as grants or low-cost second loans, often for first-time buyers under an income limit.
- Retirement accounts: a first-time buyer can take up to $10,000 from an IRA without the 10% early withdrawal penalty (income tax still applies to traditional IRA money), and many 401(k) plans offer loans. Both set back your retirement saving, so treat them as a last resort.
Wait for 20% or buy sooner?
- Cash to close
- $32,000
- Monthly payment
- $3,197
- Time to save
- 1 year 4 months
- Cash to close
- $92,000
- Monthly payment
- $2,630
- Time to save
- 5 years 6 months
Waiting four more years saves $567 a month, but you pay rent in the meantime and the price may change. If prices rise faster than you save, the target moves away from you. Our rent vs buy calculator helps weigh the years of rent against the cost of buying sooner.
Keep a cushion
Do not empty every account to make the down payment bigger. New owners face moving costs, furniture and the first repairs, and lenders sometimes ask for a few months of payments left in savings after closing. Many planners suggest keeping three to six months of expenses as an emergency fund on top of the down payment.
Conforming limits and jumbo loans
Fannie Mae and Freddie Mac buy loans up to the conforming loan limit. For 2026 the FHFA set it at $832,750 for a one-unit home in most counties, up to $1,249,125 in high-cost areas. Loans above the limit are jumbo loans, which often need 10% to 20% down. The calculator flags a loan above the baseline limit.
Common mistakes
- Saving only for the down payment and forgetting closing costs.
- Keeping the down payment in stocks a year before buying.
- Assuming PMI is the same at every down payment: smaller down payments usually pay a higher rate.
- Opening new credit cards or a car loan while saving, which can hurt your score and your debt-to-income ratio.
- Waiting years for 20% when PMI for a few years would cost less than the rent paid while saving.
Using the calculator well
- Enter the price you are aiming for and pick the down payment you want to reach.
- Add what you have saved and what you can put away each month.
- Use a real rate quote, and a PMI quote at your credit score under More options.
- Read the table to compare all options, then try a target year to see the monthly saving needed.
- Check your full budget with our home affordability calculator.
Key numbers
| Item | Figure |
|---|---|
| Lowest conventional down payment | 3% |
| FHA minimum | 3.5% (score 580+), 10% (500 to 579) |
| FHA upfront and annual MIP (30 years, under 5% down) | 1.75% and 0.55% |
| PMI (Freddie Mac) | about 0.35% to 0.85% of the loan a year |
| PMI ends | 78% of the original value on schedule; ask at 80% |
| Closing costs (Freddie Mac) | about 2% to 5% of the price |
| 2026 conforming loan limit, one unit | $832,750 (up to $1,249,125) |