Buying
Understanding Down Payments
The 20% rule is a myth for most buyers. Here's how to think about down payments strategically.
5 min read · Updated May 2026
The short answer
You rarely need 20% down. Options range from 0% (VA/USDA) to 3–5% (conventional and FHA). The right down payment balances your monthly payment, cash to close, mortgage insurance, and reserves.
Last reviewed May 2026
This is not a loan approval or commitment to lend. Final eligibility depends on full application, credit, income, assets, property, occupancy, lien position, and underwriting review.
How low can you go?
VA and USDA loans allow 0% down for eligible buyers. Conventional loans can start at 3%, and FHA at 3.5%. Larger down payments reduce your loan and may remove mortgage insurance.
The trade-offs
A smaller down payment keeps cash in your pocket but raises your payment and may add mortgage insurance. A larger one lowers your payment but uses more savings.
The smartest choice depends on your goals: minimizing monthly cost, minimizing cash to close, or preserving reserves.
Key takeaways
- 20% down is not required for most buyers.
- 0% options exist for VA and USDA borrowers.
- Balance payment, cash to close, mortgage insurance, and reserves.
Frequently asked questions
Is it better to put more money down?
Not always. A larger down payment lowers your payment but reduces savings. Sometimes keeping reserves and accepting mortgage insurance is the smarter move.
Can down payment assistance help?
Yes — many buyers qualify for assistance programs. We help you find and compare options for your area and profile.
Keep exploring
Continue your strategy — every step here leads somewhere useful.
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How Much Home Can You Afford?
Affordability is about your comfortable monthly payment, not just the maximum a lender approves. Start with your target payment, then work backward to a price using rate, taxes, insurance, and your other goals.
Mortgage Insurance, Explained
Mortgage insurance lets you buy with less than 20% down by protecting the lender. On conventional loans it can be removed around 20% equity; on FHA loans it usually requires a refinance to remove.