Many people believe they need 20% down to buy a home. In reality, lower down payments are common, though they come with extra costs.
Minimum down payments by loan type
Conventional loans can start at 3% down for qualified first-time or lower-income buyers. FHA loans require 3.5% down with a credit score of 580 or higher. VA loans for eligible veterans and USDA loans in eligible rural areas can require no down payment at all.
Why 20% still matters
Putting 20% down avoids private mortgage insurance on a conventional loan, lowers your monthly payment and gives you instant equity. It also makes your offer stronger in competitive markets. But draining your savings to reach 20% can leave you vulnerable if the furnace fails or you lose income.
Do not forget closing costs and reserves
Plan for closing costs of roughly 2%–5% of the price plus moving costs and a cash cushion after closing. A smaller down payment with a healthy emergency fund is often safer than a larger down payment that leaves you with nothing.
Try the numbers
Use our Mortgage Payment Calculator to see this in practice. With its default example (Home price: $400,000; Down payment: 20%; Interest rate: 6.5%), it shows total monthly payment: $2,539. Adjust the inputs to match your situation.
Key takeaways
- You can buy with as little as 0%–3.5% down on some loans.
- Less than 20% down usually means mortgage insurance.
- Keep an emergency fund after closing; do not use every dollar.
This article is for general education and is not personalized financial, tax or legal advice. Rules and limits change; confirm current figures with official sources such as IRS.gov, SSA.gov and StudentAid.gov, or consult a qualified professional. © 2026 FinanzCalc.