How Much to Put Down on a House: 3%, 5%, 10% or 20%?

If you are deciding how much to put down on a house, there is no single percentage that works for every buyer. A larger down payment reduces the loan and may improve pricing. A smaller down payment can preserve cash and help you buy sooner, but it may increase the payment, mortgage insurance or other loan costs.

The right answer comes from comparing complete scenarios—not from assuming that 20% is mandatory or that the minimum allowed is automatically best.

Do you need 20% down to buy a house?

No. The required amount depends on the loan program, lender, property and borrower qualifications. The Consumer Financial Protection Bureau says that many loans require at least 3% down and many lenders or loan types require 5% or more. Some eligible borrowers may have access to programs with a lower or no down payment.

The importance of 20% is mostly about cost and risk. On many conventional mortgages, putting down less than 20% usually means paying private mortgage insurance. Other loan programs can use different insurance or funding-fee structures.

“You can buy with less than 20%” and “less than 20% is the best option for you” are different questions.

Compare 3%, 5%, 10% and 20% down

Assume a $350,000 home and a 30-year fixed mortgage at an illustrative 6.5% interest rate. The principal-and-interest calculations below exclude taxes, insurance, mortgage insurance and HOA dues.

Moving from 5% to 20% down lowers principal and interest by about $332 per month in this example. Any mortgage-insurance savings would be additional. However, it also requires another $52,500 upfront. Whether that tradeoff works depends on the buyer’s cash position and loan offers.

Benefits of a larger down payment

• Smaller loan: borrowing less reduces principal and interest.
• Lower monthly payment: a smaller balance usually makes the required payment easier to carry.
• Potentially better pricing: lenders may offer different rates or fees at different loan-to-value levels.
• Less mortgage insurance: reaching 20% may avoid PMI on many conventional loans.
• More starting equity: a larger equity cushion can reduce the chance of owing more than the home’s market value after a price decline.

CFPB guidance notes that lenders often evaluate down payments in 5-percentage-point increments. When comparing offers, request written Loan Estimates for specific scenarios such as 5%, 10%, 15% and 20% instead of assuming savings change smoothly at every percentage.

Reasons to keep more cash instead

Money used for the down payment becomes home equity. Accessing it later may require selling, refinancing or qualifying for another loan. Before increasing the down payment, protect money needed for:

• closing costs and prepaid taxes or insurance;
• moving and utility setup;
• immediate repairs, appliances or essential furnishings;
• an emergency fund for income loss or major home expenses;
• other near-term obligations that should not move onto a credit card.

Calculate your maximum down payment safely

Use this sequence rather than treating the entire bank balance as available:

1. Add cash and eligible funds genuinely available for the purchase.
2. Subtract the emergency reserve you intend to keep after closing.
3. Subtract estimated closing costs and prepaid expenses.
4. Subtract moving costs and money for known immediate work.
5. The remainder is the maximum cash available for a down payment—not necessarily the amount you should use.

Source-of-funds rules matter. If some money is a gift, grant or assistance, tell the lender early and ask what documentation is required. Be cautious about borrowing the down payment or withdrawing retirement money; taxes, penalties, repayment obligations and underwriting rules can change the economics.

Compare complete loan offers

A down payment changes more than the loan amount. Ask lenders for comparable written scenarios and review:

Do not evaluate a low-down-payment option only by its monthly mortgage insurance or a 20% option only by the lower payment. Compare total cash used, payment, rate, fees, remaining reserves and the expected time in the home.

A practical decision framework

Consider a larger down payment when

• you can reach a meaningful pricing threshold without draining reserves;
• the smaller loan materially improves monthly cash flow;
• the offer reduces mortgage insurance or fees enough to justify the cash;
• you still have money for closing and the first years of ownership.

Consider a smaller down payment when

• waiting would meaningfully disrupt a well-considered housing plan;
• the available loan is affordable after including insurance and all property costs;
• preserving an emergency and repair reserve is more important than reaching a round percentage;
• you have reviewed the long-term cost and accept the tradeoff.

Run at least three versions of the same purchase price, then repeat the calculation at a slightly cheaper home. Sometimes lowering the price produces a better balance than choosing between an extremely small down payment and depleted savings.

Frequently asked questions