Putting 20% down can lower your monthly mortgage payment, eliminate private mortgage insurance on a conventional loan and give you substantial equity from the start.
But also requires a significant amount of cash. A 20% down payment is $60,000 on a $300,000 home, $80,000 on a $400,000 home and $120,000 on a $600,000 home.
How much house you can afford will still depend on your income, existing debts, mortgage rate, property taxes, homeowners insurance and homeowners association dues. You will also need to account for closing costs and the savings you want to retain after the purchase.
You can use our home affordability calculator to test different home prices, down payments and monthly debt amounts.
20% Down Payment Basics
| Home Price |
20% Down Payment |
Starting Loan Amount |
Conventional PMI |
| $200,000 |
$40,000 |
$160,000 |
Generally not required |
| $300,000 |
$60,000 |
$240,000 |
Generally not required |
| $400,000 |
$80,000 |
$320,000 |
Generally not required |
| $500,000 |
$100,000 |
$400,000 |
Generally not required |
| $750,000 |
$150,000 |
$600,000 |
Generally not required |
Estimate Assumptions
The estimates on this page assume: A 30-year fixed conventional mortgage at 6.55%, a 20% down payment, annual property taxes equal to 1.1% of the home price, annual homeowners insurance equal to 0.35%, no homeowners association dues and no other monthly debts.
The illustrative rate is based on Freddie Mac’s 30-year fixed mortgage average reported on July 16, 2026. Actual rates, taxes, insurance premiums and approval amounts vary.
Why Does 20% Down Matter?
A 20% down payment creates an 80% loan-to-value ratio. Loan-to-value, or LTV, compares the mortgage amount with the home’s value or purchase price.
For example, putting $80,000 down on a $400,000 home leaves a $320,000 mortgage:
$320,000 ÷ $400,000 = 80% LTV
The 80% threshold matters most for conventional mortgage insurance. Conventional borrowers who finance more than 80% of the home’s value generally pay private mortgage insurance.
You Can Generally Avoid PMI
Private mortgage insurance protects the lender if the borrower stops making payments. It adds to the monthly housing cost without reducing the principal balance.
Starting at 80% LTV generally allows a conventional borrower to avoid borrower-paid PMI. The exact loan structure and lender requirements still matter.
If you put less than 20% down, PMI does not necessarily remain for the entire loan term. Federal rules generally allow eligible borrowers to request cancellation when the principal balance is scheduled to reach 80% of the home’s original value. Automatic termination generally occurs at 78% when the loan is current.
Our PMI calculator can estimate how a smaller down payment would affect your monthly payment and how long PMI might remain.
You Borrow Less
A larger down payment reduces the starting mortgage balance. That lowers the principal-and-interest payment when the mortgage rate and term remain the same.
On a $400,000 purchase:
- 5% down leaves a $380,000 loan.
- 10% down leaves a $360,000 loan.
- 20% down leaves a $320,000 loan.
At the same interest rate, the 20%-down option has a lower principal-and-interest payment than either lower-down-payment option.
You Begin With More Equity
A 20% down payment gives you substantial equity at closing. That can provide more flexibility if you later sell, refinance or borrow against the property.
Home equity can change as you repay the mortgage and the property’s value rises or falls. Selling expenses can also reduce the amount you receive from a future sale.
Your Offer May Appear Financially Stronger
A larger down payment can show that you have substantial funds available for the purchase. It may also reduce financing risk because the loan amount is smaller relative to the home price.
A 20% down payment does not guarantee that a seller will accept your offer. Price, contingencies, closing timeline and local market conditions also affect the seller’s decision.
You May Receive Better Loan Pricing
Loan-to-value ratio is one factor used to price conventional mortgages. A lower LTV can reduce certain risk-based fees or improve the rate available to a borrower.
Your credit score, property type, occupancy, loan purpose and market conditions also affect mortgage pricing. Reaching exactly 20% down does not guarantee a particular rate.
How Much Cash Is 20% Down?
Multiply the purchase price by 0.20 to calculate a 20% down payment.
Home price × 0.20 = 20% down payment
| Home Price |
20% Down |
80% Mortgage |
| $150,000 |
$30,000 |
$120,000 |
| $200,000 |
$40,000 |
$160,000 |
| $250,000 |
$50,000 |
$200,000 |
| $300,000 |
$60,000 |
$240,000 |
| $400,000 |
$80,000 |
$320,000 |
| $500,000 |
$100,000 |
$400,000 |
| $600,000 |
$120,000 |
$480,000 |
| $750,000 |
$150,000 |
$600,000 |
| $1 million |
$200,000 |
$800,000 |
The down payment is separate from closing costs, prepaid taxes, homeowners insurance and initial escrow deposits. A buyer targeting 20% down should generally plan for additional cash unless permitted credits or assistance cover those expenses.
How Much House Can You Afford With 20% Down by Income?
The table below limits the estimated housing payment to 28% of gross monthly income. Each calculation assumes a 20% down payment and no other monthly debts.
| Annual Income |
Monthly Housing Budget |
Estimated Home Price |
Estimated 20% Down Payment |
| $50,000 |
$1,167 |
$185,000 |
$37,000 |
| $60,000 |
$1,400 |
$223,000 |
$45,000 |
| $75,000 |
$1,750 |
$278,000 |
$56,000 |
| $90,000 |
$2,100 |
$334,000 |
$67,000 |
| $100,000 |
$2,333 |
$371,000 |
$74,000 |
| $120,000 |
$2,800 |
$445,000 |
$89,000 |
| $150,000 |
$3,500 |
$556,000 |
$111,000 |
| $180,000 |
$4,200 |
$668,000 |
$134,000 |
| $200,000 |
$4,667 |
$742,000 |
$148,000 |
These are planning estimates rather than approval amounts. A lender will also consider your credit, assets, employment, property and total debt-to-income ratio.
Monthly auto loans, student loans, credit card minimums, personal loans, alimony and child support can reduce the amount available for housing. Higher property taxes, insurance premiums or HOA dues would also lower the estimated home price.
20% Down vs. Less: Is It Worth Waiting?
Waiting until you have 20% down can reduce your mortgage payment and remove conventional PMI. It can also take months or years, depending on your savings rate and target home price.
The right comparison is not limited to PMI. Consider the complete financial effect of buying now with less down versus waiting.
Reasons to Wait for 20% Down
- You can avoid conventional PMI.
- You will borrow less and pay less principal and interest each month.
- You will begin with more equity.
- A lower loan-to-value ratio may improve mortgage pricing.
- You may have more flexibility if the home’s value falls or you need to sell.
Reasons to Buy With Less Than 20% Down
- You can purchase sooner instead of continuing to rent or delay a move.
- You can keep more cash available for closing costs, repairs and emergencies.
- You may begin building equity sooner.
- You can avoid chasing a savings target that rises with home prices.
- Conventional PMI may be removable after you reach the applicable equity threshold.
Suppose you are considering a $400,000 home. A 20% down payment requires $80,000. A 10% down payment requires $40,000, leaving an additional $40,000 available for closing costs, reserves or other uses.
The 10%-down option creates a larger loan and generally includes PMI. The 20%-down option creates a lower payment but places more cash into the property.
Waiting also has an opportunity cost. While you save, home prices and mortgage rates may rise, fall or remain close to current levels. There is no reliable way to know whether waiting will produce a lower overall cost.
The down payment guide compares common minimum requirements across loan programs.
Worked Example: Buying a $400,000 Home With 20% Down
Assume you buy a $400,000 home with a 30-year fixed conventional mortgage and put $80,000 down.
| Payment Component |
Estimated Amount |
| Purchase price |
$400,000 |
| Down payment |
$80,000 |
| Down payment percentage |
20% |
| Loan amount |
$320,000 |
| Interest rate and term |
6.55% for 30 years |
| Principal and interest |
$2,033 per month |
| Property taxes |
$367 per month |
| Homeowners insurance |
$117 per month |
| Private mortgage insurance |
$0 |
| HOA dues |
$0 |
| Estimated monthly housing payment |
$2,517 |
A $2,517 housing payment equals approximately 28% of gross monthly income for a household earning about $107,900 per year.
The estimate assumes no other monthly debt and excludes maintenance, utilities and repairs. It also assumes the $80,000 down payment is separate from closing costs and prepaid expenses.
How Does 20% Down Compare With 10% Down?
The following example uses the same $400,000 purchase price and 6.55% rate. The 10%-down scenario includes estimated PMI of 0.60% of the loan balance annually.
| Cost |
10% Down |
20% Down |
| Down payment |
$40,000 |
$80,000 |
| Loan amount |
$360,000 |
$320,000 |
| Principal and interest |
$2,287 |
$2,033 |
| Estimated PMI |
$180 |
$0 |
| Estimated payment before taxes and insurance |
$2,467 |
$2,033 |
In this example, putting an additional $40,000 down reduces the estimated payment before taxes and insurance by about $434 per month.
The lower-down-payment option keeps $40,000 outside the home. Whether that tradeoff makes sense depends on your savings, investment plans, time horizon and tolerance for a higher required payment.
Should You Put 20% Down or Keep Some Cash?
A 20% down payment can improve the mortgage, but it should not leave you unable to cover other homebuying and ownership costs.
You may also need cash for:
- Closing costs and prepaid expenses
- Moving expenses
- Immediate repairs
- Furniture and appliances
- Required mortgage reserves
- Emergency savings
Suppose you have $90,000 available and are buying a $400,000 home. Putting $80,000 down would leave $10,000 for closing costs, repairs and reserves. That may not be enough for every transaction.
Putting 15% down would require $60,000 and preserve another $30,000. The tradeoff would be a larger loan and likely PMI.
The decision should account for the entire cash position after closing, not only the mortgage payment. A lower payment provides limited protection if the purchase empties your savings.
Is It Better to Put 20% Down or Invest the Difference?
Putting more money down provides a predictable benefit. It reduces the mortgage balance, lowers the required payment and avoids PMI on a conventional loan.
Investing the difference offers uncertain future returns. Investments can gain or lose value, while the mortgage payment remains due each month.
The comparison should include:
- The mortgage rate
- The PMI avoided
- Expected investment returns after taxes and fees
- Your investment timeline
- Your emergency savings
- Your ability to tolerate market losses
- The value of a lower required monthly payment
For some households, reducing debt and locking in a lower payment is the priority. Others may prefer to preserve liquidity or invest part of their available cash. Neither choice produces a guaranteed superior outcome in every market.
How to Reach a 20% Down Payment Faster
Set a Home Price Target
A specific price range turns 20% into a dollar goal. Saving for 20% of a $300,000 home requires $60,000. Saving for 20% of a $500,000 home requires $100,000.
Revisit the goal as prices, income and mortgage rates change.
Separate Closing Costs From the Down Payment
Create separate savings targets for the down payment, closing costs and post-closing reserves. This prevents you from reaching 20% on paper while lacking enough cash to complete the purchase.
Use Home-Sale Proceeds
Move-up buyers may use net proceeds from selling a current property. Home equity is the difference between the home’s value and the mortgage balance, but selling costs and other liens reduce the cash available for the next purchase.
Use Eligible Gift Funds
Many conventional loan programs allow eligible gift funds for a primary-residence purchase. The lender will document the donor, source, transfer and confirmation that repayment is not expected.
Consider Down Payment Assistance
Some assistance programs can be used with conventional mortgages. Eligibility may depend on income, location, first-time buyer status, homebuyer education and occupancy.
Assistance may come as a grant, forgivable loan, deferred loan or repayable second mortgage. The terms determine whether the funds create a future repayment obligation.
Compare a Lower Price Point
Lowering the target home price reduces both the down payment goal and the monthly mortgage payment. A $50,000 down payment equals 20% on a $250,000 home, while a $20,000 down payment equals 20% on a $100,000 home.
The affordability series also compares purchases with $20,000 down and $50,000 down.
Bottom Line
A 20% down payment can lower your mortgage payment, eliminate conventional PMI and provide substantial equity from the beginning. It requires $40,000 on a $200,000 home, $80,000 on a $400,000 home and $100,000 on a $500,000 home.
You do not need 20% down to qualify for many mortgage programs. Buying with less may allow you to purchase sooner and retain more cash, but it creates a larger mortgage and may add PMI.
Compare the payment savings with the effect on your cash reserves. Reaching 20% down is less useful when it leaves too little money for closing costs, repairs and emergencies.
FAQ
Do You Really Need 20% Down to Buy a House?
No. Eligible conventional loans may allow down payments as low as 3%, while FHA loans may allow 3.5%. VA and USDA loans can provide zero-down-payment financing for eligible borrowers and properties.
How Much House Can I Afford With 20% Down?
Your affordable price depends on your income, debts and housing expenses. Under the assumptions used here, annual income of $100,000 supports an estimated $371,000 home with about $74,000 down.
Does 20% Down Eliminate PMI?
A 20% down payment generally eliminates borrower-paid PMI on a conventional mortgage because the starting loan-to-value ratio is 80%. FHA, VA and USDA loans use different mortgage insurance or fee structures.
Is It Better to Put 20% Down or Invest the Difference?
Putting 20% down provides a predictable reduction in the loan balance and payment. Investing offers uncertain returns and carries the risk of loss. The decision depends on your reserves, investment timeline, risk tolerance and monthly budget.
Does Putting 20% Down Lower the Interest Rate?
It may improve mortgage pricing because loan-to-value ratio is one risk factor. Your credit, property, occupancy, loan type and market conditions also affect the rate and fees.
Should I Wait Until I Have 20% Down?
Waiting may reduce your payment and eliminate PMI, but it also delays the purchase. Compare the savings with potential changes in home prices, mortgage rates, rent and your personal housing needs.
Does 20% Down Include Closing Costs?
No. The down payment is separate from lender fees, title charges, prepaid taxes, homeowners insurance and other closing expenses unless credits or assistance cover them.
Can Gift Funds Be Used for a 20% Down Payment?
Yes, when the mortgage program permits gift funds and the donor and transfer meet documentation requirements. The funds must generally be a true gift without an expectation of repayment.
Can You Put More Than 20% Down?
Yes. A larger down payment further reduces the loan balance and monthly principal-and-interest payment. Consider the cash you will retain for closing costs, reserves and other financial goals.
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