A down payment is the cash you pay upfront when purchasing a home — the portion of the purchase price not covered by your mortgage. It represents your initial equity in the property and directly determines your loan-to-value ratio, monthly payment, interest rate, and whether private mortgage insurance is required. It is almost always the largest single cash requirement in a home purchase.

Minimum Down Payment by Loan Type

  • Conventional loans: Minimum 3% for first-time buyers, 5% for repeat buyers, though 20% is often the target to avoid PMI.
  • FHA loans: 3.5% with a credit score of 580+; 10% with scores between 500–579.
  • VA loans: 0% down for eligible veterans and active-duty service members.
  • USDA loans: 0% down for eligible rural and suburban properties.
  • Jumbo loans: Typically 10–20% minimum, varying by lender and loan size.

Use the Down Payment Calculator to determine how much you need to save and how long it will take at your current savings rate.

The Impact on PMI

On conventional loans, a down payment below 20% triggers PMI — private mortgage insurance that protects the lender if you default. PMI costs 0.5–1.5% of the loan amount annually, added to your monthly payment. On a $350,000 loan, that is $146–$438/month in added cost until you reach 80% LTV. Use the PMI Calculator to estimate your PMI cost and when you can cancel it.

How Down Payment Affects Your Interest Rate

Lenders use risk-based pricing, meaning borrowers with lower LTV (larger down payments) typically qualify for better interest rates. The difference can be 0.25–0.75% on the rate between a 5% and 20% down payment, depending on your credit score. A higher rate applies to the entire loan balance for the entire loan term — so even a small rate improvement from a larger down payment can save tens of thousands of dollars over 30 years.

Down Payment Assistance Programs

Many state and local housing finance agencies offer down payment assistance (DPA) programs — often as forgivable loans or grants for first-time buyers or buyers in target income brackets. Federal programs like HUD-approved counseling agencies and employer-sponsored DPA programs also exist. Eligibility varies widely by state, income, and property location. Check your state housing finance agency's website before assuming you must save the entire down payment independently.