You don't 20% down for most mortgages.
Eligible conventional loans can start at 3% down for qualifying buyers, FHA loans can require as little as 3.5%, and eligible VA and USDA loans don't have down payment requirements at all.
The 20% down payment recommendation is centered around private mortgage insurance, or PMI. A 20% down payment generally lets you avoid PMI conventional loan, but it isn't generally a requirement for buying a home. In fact, many mortgage options are designed around lower down payment options.
What Down Payment Do You Need to Buy a House?
| Loan Type |
Minimum Down Payment |
| Eligible conventional purchase loan |
3% |
| Conventional 97 |
3% |
| FHA |
3.5% |
| VA for eligible borrowers |
0% |
| USDA for eligible borrowers and properties |
0% |
| Jumbo |
Varies by lender and loan |
These are program-level minimums, not guarantees that every borrower will qualify with the minimum amount. Your required down payment can depend on the loan program, property, occupancy, underwriting findings and lender requirements.
Where Did the 20% Down Payment Rule Come From?
The idea that you need 20% down is closely tied to conventional mortgage insurance. If you take out a conventional mortgage with less than 20% down, you will typically need private mortgage insurance, or PMI. The CFPB explains that PMI protects the lender if a borrower stops making mortgage payments.
That makes 20% a meaningful financial threshold, but not a universal qualification requirement. Many mortgage programs are designed to allow qualified buyers to purchase with considerably less cash upfront.
If saving 20% would mean delaying a home purchase for several years, the better comparison is often between buying sooner with a smaller down payment and waiting while you continue to save. The answer depends on your finances, available loan programs, housing costs and the market where you plan to buy.
What Does Each Loan Type Actually Require?
Conventional Loans Can Allow 3% Down
Some conventional mortgages allow qualified borrowers to finance as much as 97% of a home's value. That leaves a down payment of just 3%. Fannie Mae's 97% LTV options, for example, include qualifying purchase loans secured by one-unit principal residences.
Not every conventional mortgage qualifies for 3% down. Property type, occupancy, borrower eligibility and the specific loan program can all affect the minimum. Conventional financing therefore includes different down payment requirements depending on the transaction.
For borrowers who qualify, buying a home with 3% down can significantly reduce the amount that must be saved before closing. Other low-down-payment loan options may be available as well, depending on your eligibility.
Conventional 97 Loans Require 3% Down
One of those conventional options is the Conventional 97 loan, which allows eligible borrowers to finance up to 97% of the home's value. Fannie Mae's standard 97% purchase option generally requires at least one borrower to be a first-time homebuyer, while HomeReady has a different set of eligibility requirements, including income limits.
The result is that 20% down is far from universal even within conventional lending. For certain borrowers, the difference between the program minimum and the traditional 20% benchmark is 17 percentage points.
FHA Loans Can Require 3.5% Down
FHA financing can require a minimum borrower investment of 3.5% of the property's adjusted value. FHA policy establishes that minimum, although borrowers must still meet the program's other requirements.
That makes the FHA minimum down payment only slightly higher than the lowest-down-payment conventional options.
FHA mortgage insurance also works differently from conventional PMI. Putting 20% down on an FHA loan does not automatically eliminate FHA mortgage insurance, so the conventional 20% threshold should not be applied across every loan program.
VA Loans Can Require No Down Payment
For eligible veterans, service members and certain surviving spouses, a VA loan may require no down payment. The VA states that no down payment is generally required when the sales price does not exceed the home's appraised value.
VA-backed purchase loans also do not require monthly PMI or FHA-style mortgage insurance. A VA funding fee may apply unless the borrower qualifies for an exemption.
USDA Loans Can Require No Down Payment
Qualified borrowers purchasing eligible properties can also use USDA financing with no down payment. USDA Rural Development allows 100% financing through its Single Family Housing Guaranteed Loan Program for eligible borrowers and homes in qualifying rural areas.
USDA eligibility includes household income and property-location requirements, so zero-down financing is not available for every borrower or every home.
Jumbo Down Payments Vary
Jumbo mortgages do not have one universal minimum down payment. These loans fall outside conforming loan requirements, and the amount required can vary based on the lender, loan size, property and borrower profile.
As a result, jumbo down payment requirements should be evaluated for the specific loan rather than treated as a fixed 10%, 15% or 20% rule.
What Does Putting Less Than 20% Down Actually Cost?
A smaller down payment can make buying a home possible with less cash upfront, but you are financing a larger share of the purchase price. That affects several parts of the mortgage.
You Borrow More
Putting less down means starting with a larger loan balance. If the interest rate and loan term are otherwise identical, borrowing more increases the monthly principal-and-interest payment and the amount of interest charged on that additional principal over time.
You May Pay Mortgage Insurance
Conventional borrowers who put less than 20% down will typically pay PMI. The actual cost depends on the loan and borrower characteristics rather than one universal percentage.
Our PMI calculator can estimate how that cost affects your monthly payment at different down payment levels, which makes it easier to compare the upfront savings from putting less down against the ongoing cost of mortgage insurance.
PMI also does not necessarily stay on a conventional mortgage for the life of the loan. Under federal rules, borrowers with many conventional mortgages can request cancellation when the principal balance is scheduled to reach 80% of the home's original value if applicable requirements are met. Automatic termination generally occurs when the scheduled balance reaches 78% and the borrower is current. The CFPB outlines those cancellation rules.
Changes in equity, loan structure or interest rates may also lead some homeowners to consider refinancing as a way to remove PMI, although refinancing creates a new mortgage and should be evaluated based on its full costs and terms.
You Start With Less Equity
Your down payment contributes directly to your initial equity. On a $300,000 home, 20% down equals $60,000, while 3% down equals $9,000.
Your equity can change after closing as you pay down the mortgage and the property's value rises or falls. A smaller down payment simply means that less of the home's purchase price is covered by your own funds at the outset.
What Does a 20% Down Payment Genuinely Get You?
Twenty percent may not be required, but that does not mean there are no advantages to reaching it.
You Can Usually Avoid PMI on a Conventional Loan
A conventional borrower who puts at least 20% down will generally avoid PMI at closing. That removes one potential component of the monthly housing payment.
You Have a Smaller Mortgage
A larger down payment also reduces the amount you need to borrow. With the same mortgage rate and term, a smaller principal balance produces a lower principal-and-interest payment.
You Start With More Equity
Putting 20% down gives you a larger initial equity position than putting 3%, 5% or 10% down. That can provide more of a buffer if home values decline after you buy.
Your Offer May Have More Financing Flexibility
A larger down payment can sometimes make an offer more attractive to a seller because the transaction relies on less financing. It does not guarantee acceptance, however. Sellers may also weigh the purchase price, contingencies, closing timeline and other terms.
There is also a trade-off. Every additional dollar placed into the down payment is a dollar that is no longer readily available for emergency savings, repairs, moving expenses or other costs after closing. Putting down as much as possible is not automatically the right financial decision.
Where Can Your Down Payment Come From?
Your down payment does not necessarily have to come entirely from money you saved yourself. Depending on the mortgage program, acceptable sources can include personal funds, eligible gifts, grants and qualifying down payment assistance.
Gift funds generally need to be documented so the lender can verify where the money came from and whether repayment is expected. The CFPB notes that mortgage programs may allow gifts when their source and status as a gift are properly documented.
FHA financing has its own rules for using gift funds toward a down payment, including requirements for acceptable donors and documentation.
The same documentation issue matters beyond FHA. When a gift will cover part of your down payment, coordinating the transfer and documentation before closing can help ensure the funds meet the requirements of the mortgage program being used.
What Can You Afford at Different Down Payment Levels?
Your down payment is only one part of determining how much house you can afford. Income, existing debt, mortgage rates, property taxes, homeowners insurance, mortgage insurance and other housing expenses also affect the monthly payment.
The amount you have available can therefore support very different purchase prices depending on the loan. With $10,000 available for a down payment, for example, the potential purchase price depends heavily on the percentage your loan requires and the mortgage amount you can otherwise qualify for.
The same principle applies when comparing a smaller down payment with buying with 20% down. A larger contribution lowers the amount financed, but it also requires substantially more cash upfront.
For borrowers who qualify for VA or USDA financing, buying with no down payment removes that particular upfront hurdle, but it does not remove the need to qualify for the mortgage or comfortably manage the resulting monthly housing costs.
The Bottom Line
You do not need 20% down to buy a house with many mortgage programs. Some conventional borrowers can qualify with 3% down, FHA financing can require as little as 3.5%, and eligible VA and USDA borrowers may be able to buy with no down payment.
Twenty percent remains a useful benchmark because it generally eliminates PMI on a conventional mortgage, reduces the amount you borrow and gives you more equity from the start. Whether reaching that threshold makes sense depends on the loan you qualify for, the resulting monthly payment, how much cash you want to retain after closing and your overall finances.
FAQ
Do You Need 20% Down to Buy a House?
No. Many mortgage programs allow qualified borrowers to buy with less than 20% down. Some conventional loans allow 3% down, FHA loans can require as little as 3.5%, and qualifying VA and USDA borrowers may be eligible for no-down-payment financing.
Is 20% Down Required for a Conventional Loan?
No. Some conventional purchase loans allow financing up to 97% of the home's value, which corresponds to a 3% down payment. Eligibility requirements apply. Conventional borrowers who put less than 20% down will typically need PMI.
What Is the Minimum Down Payment to Buy a House?
There is no single minimum that applies to every home purchase. Depending on the loan and your eligibility, the minimum can be 0% for qualifying VA or USDA financing, 3% for certain conventional loans or 3.5% for FHA financing. Other mortgage products may require more.
Is It Bad to Put Less Than 20% Down on a House?
Not necessarily. Putting less down allows you to keep more cash available and may let you buy sooner, but it also means borrowing more. Conventional borrowers putting less than 20% down will typically have PMI as well. The better comparison is the total cost and monthly payment of each option, along with the amount of cash you want to retain after closing.
What Happens if You Don't Put 20% Down?
It depends on the mortgage. On a conventional loan, you will typically pay PMI. FHA loans have separate mortgage insurance requirements that do not follow the conventional 20% threshold. Eligible VA and USDA borrowers may be able to finance 100% of the purchase price under their respective program requirements.
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