How Much Down Payment Do You Need?
The down payment required depends on your loan type. Conventional loans typically need 5-20% down, FHA loans require as little as 3.5%, and VA loans for eligible veterans can require 0% down.
The 20% Down Payment Myth
While putting 20% down avoids PMI (private mortgage insurance), it's not required to buy a home. Many buyers successfully purchase with 3-10% down and pay PMI temporarily until reaching 20% equity through payments and appreciation.
Frequently Asked Questions
It depends on loan type: Conventional loans typically need 5-20%, FHA loans require as little as 3.5%, and VA loans for eligible veterans can be 0% down. A 20% down payment avoids PMI on conventional loans.
You'll typically pay private mortgage insurance (PMI), an extra cost of approximately 0.5-1.5% of the loan amount annually, until you reach 20% equity through payments and/or home appreciation.
It reduces monthly payment and total interest, but ties up more cash. Many financial advisors suggest keeping an emergency fund and not depleting all savings for a larger down payment — the right balance depends on your full financial situation.