How Much Down Payment Do You Need for a House in 2026?
The '20% down or nothing' myth keeps many would-be homeowners renting longer than necessary. Here's what you actually need, by loan type.
Down payment requirements vary by loan type: conventional loans typically require 5-20%, FHA loans require as little as 3.5%, and VA loans for eligible veterans can require 0% down. A 20% down payment avoids private mortgage insurance (PMI) on conventional loans.
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Down Payment Requirements by Loan Type
| Loan Type | Minimum Down | Notes |
|---|---|---|
| Conventional | 3–20% | 20%+ avoids PMI |
| FHA | 3.5% | Requires mortgage insurance premium (MIP) |
| VA | 0% | Eligible veterans/active duty only |
| USDA | 0% | Rural areas, income limits apply |
The 20% Down Payment Myth
While 20% down avoids PMI, it's not required to buy a home. Many successful buyers purchase with 3-10% down and pay PMI temporarily — often a few hundred dollars per month — until reaching 20% equity through payments and home appreciation.
What Is PMI and How Much Does It Cost?
Private Mortgage Insurance protects the lender (not you) if you default. It typically costs 0.5-1.5% of the loan amount annually, divided into monthly payments, and can usually be removed once you reach 20% equity.
Should You Wait to Save 20%, or Buy Sooner?
This depends on your local market. In fast-appreciating markets, waiting years to save 20% may cost more in lost appreciation than the PMI you'd pay by buying sooner with a smaller down payment. Run the numbers for your specific situation.
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