How much down payment do you need to buy a house?

The minimum down payment depends on loan type: VA loans require 0% down (veterans/active military), USDA loans require 0% down (eligible rural/suburban areas), FHA loans require 3.5% down (580+ credit score), and conventional loans require 3% for first-time buyers or 5% for repeat buyers. To avoid private mortgage insurance (PMI), you typically need 20% down on a conventional loan. On a $400,000 home, the minimum down payment ranges from $0 to $80,000 depending on loan type.

What is PMI and how much does it cost?

Private mortgage insurance (PMI) is required on conventional loans when the down payment is less than 20%. PMI protects the lender — not you — if you default. In 2026, PMI typically costs 0.5%–1.5% of the loan amount per year, added to your monthly payment. On a $380,000 loan (5% down on a $400,000 home), PMI at 0.75% costs $237.50/month ($2,850/year). PMI cancels automatically when your loan balance reaches 78% of the original purchase price.

How long does it take to save a 20% down payment?

On a $400,000 home, a 20% down payment is $80,000. At a savings rate of $1,000/month, it takes 80 months (6.7 years) to accumulate $80,000 (excluding investment returns). At $2,000/month, it takes 40 months (3.3 years). Many buyers opt for the minimum down payment (3–3.5%) to get into a home sooner and build equity through appreciation, accepting the PMI cost in the short term.

Can you use gift money for a down payment?

Yes, gift funds are allowed for down payments — but rules vary by loan type. For FHA loans: the entire down payment can be a gift from a family member, employer, or charitable organization. For conventional loans: all 3% minimum can be a gift, or for 5% down, the full amount can be a gift. For VA and USDA loans: gifts are allowed. Gift funds require a gift letter stating the money is not a loan, the donor's relationship to the borrower, and the source of the funds. The lender will typically verify the gift deposit in your bank account.

What are down payment assistance programs?

Down payment assistance (DPA) programs provide grants or forgivable loans to help buyers cover the down payment and closing costs. Programs are offered by state housing finance agencies, local governments, nonprofits, and some employers. Common DPA types: grants (free money, no repayment), deferred payment loans (paid when you sell or refinance), and forgivable loans (forgiven after you stay in the home for a set period). Income and purchase price limits apply. Find programs at HUD.gov or your state housing finance agency website.

Down Payment Calculator Guide: How Much Do You Need to Buy a Home in 2026?

Your down payment determines your loan amount, monthly payment, whether you pay PMI, and how long you need to save before buying. In 2026, minimum down payments range from 0% (VA, USDA) to 3–3.5% (conventional, FHA) to 20% to avoid PMI. Understanding the trade-offs helps you decide when to buy and with how much down.

Down Payment by Loan Type (2026)

Loan Type	Minimum Down	Credit Score	Who Qualifies
VA loan	0%	None set (lenders typically 580+)	Veterans, active military, surviving spouses
USDA loan	0%	640+ (most lenders)	Eligible rural/suburban areas; income limits apply
FHA loan	3.5%	580+	Any buyer; lower score OK (10% down for 500–579)
Conventional (first-time buyer)	3%	620+	HomeReady/Home Possible programs
Conventional (repeat buyer)	5%	620+	Standard conventional loan
Conventional (no PMI)	20%	620+	Any buyer; no mortgage insurance required
Jumbo loan	10%–20%	720+	Loans above $806,500 (2026 conforming limit)

How Down Payment Affects Monthly Payment

On a $400,000 home purchase at 7% interest rate (30-year fixed):

Down Payment	%	Loan Amount	Monthly P&I	PMI/Month	Total P&I + PMI
$0 (USDA)	0%	$402,800*	$2,683	$117 (0.35%/yr)	$2,800
$14,000 (FHA)	3.5%	$391,230*	$2,643	$277 (0.85%/yr)	$2,920
$12,000 (Conv. 3%)	3%	$388,000	$2,582	$242 (0.75%/yr)	$2,824
$20,000 (Conv. 5%)	5%	$380,000	$2,528	$238 (0.75%/yr)	$2,766
$40,000 (Conv. 10%)	10%	$360,000	$2,395	$150 (0.50%/yr)	$2,545
$80,000 (Conv. 20%)	20%	$320,000	$2,129	$0	$2,129

*USDA and FHA amounts include upfront fees financed into the loan.

Monthly savings at 20% down vs. 3.5% FHA: $791/month less; over 5 years = $47,460 saved.

PMI Cost by Down Payment Tier

Private mortgage insurance (PMI) rates depend on credit score and down payment:

Down Payment	LTV	PMI Annual Rate	Monthly PMI (on $380K loan)
3%	97%	1.0%–1.5%	$317–$475
5%	95%	0.75%–1.0%	$238–$317
10%	90%	0.40%–0.70%	$127–$222
15%	85%	0.20%–0.40%	$63–$127
20%	80%	None	$0

When PMI cancels: Automatically at 78% LTV; you can request removal at 80% LTV. On a $400,000 purchase with 5% down ($380,000 loan), you reach 80% LTV when the balance drops below $320,000 — typically around year 7–9 at standard amortization.

How Long to Save Your Down Payment

Monthly savings required to reach each down payment goal on a $400,000 home:

Down Payment Goal	Amount Needed	Save $500/mo	Save $1,000/mo	Save $2,000/mo
3% (conventional)	$12,000	24 months	12 months	6 months
3.5% (FHA)	$14,000	28 months	14 months	7 months
5% (conventional)	$20,000	40 months	20 months	10 months
10%	$40,000	80 months	40 months	20 months
20%	$80,000	160 months	80 months	40 months

Strategy: If you can save $1,000/month, you can reach a 3.5% FHA down payment in 14 months, or a 5% conventional down payment in 20 months. Waiting to save 20% could take 7+ years — during which time home prices may appreciate, making the target even harder to reach.

Down Payment Assistance Programs

Program Type	What You Get	Typical Requirement
State HFA grant	2%–5% of purchase price, no repayment	Income limits; first-time buyer
Forgivable loan	3%–5% forgiven after 5–10 years in home	Must stay in home to avoid repayment
Deferred loan	0%–low interest; paid when you sell/refinance	Income limits; purchase price caps
Employer-assisted housing	$1,000–$10,000 toward purchase	Must work for eligible employer
Matched savings (IDA)	Your savings matched dollar-for-dollar	Income-based; restricted programs

Find programs by state at HUD.gov or your state housing finance agency website.

Gift Fund Rules by Loan Type

Loan Type	Gift Allowed?	Relationship Requirement	Documentation
FHA	Yes — 100% of down payment	Family member, employer, charitable org	Gift letter required
VA	Yes	Family member or related	Gift letter required
USDA	Yes	Family member	Gift letter required
Conventional (3% down)	Yes — 100%	Family member	Gift letter + bank statement showing deposit
Conventional (5%+ down)	Yes — 100%	Family member	Gift letter + bank statement

Your down payment size affects your mortgage rate, monthly payment, and whether you owe PMI — use the mortgage payment calculator to compare scenarios at different percentages. Closing costs are a separate upfront expense of 2–5% of the loan amount — see closing costs by state for average totals in your area. First-time buyers have access to programs that can reduce the minimum required — the first-time home buyer guide covers FHA, VA, USDA, and state-level options.

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy