How much down payment do I need to buy a home?

Conventional loans can require as little as 3–5%. FHA loans require 3.5%. However, putting less than 20% down typically requires paying PMI (private mortgage insurance), adding $50–200/month to your payment.

What is PMI and when can I remove it?

PMI (Private Mortgage Insurance) protects the lender if you default. It's required when your down payment is under 20%. Once you reach 20% equity, you can request its removal under the Homeowners Protection Act.

Is a larger down payment always better?

A larger down payment lowers your monthly payment, eliminates PMI, and reduces total interest. However, depleting savings entirely can leave you without emergency funds. The optimal amount balances these factors.

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Planning Your Home Down Payment

The down payment is often the biggest hurdle to homeownership. Conventional wisdom recommends 20% to avoid private mortgage insurance (PMI), which can add $50–$200 or more to your monthly payment. However, many loan programs allow down payments as low as 3–5% for qualified buyers. Use our Mortgage Calculator to see exactly how your loan amount affects your monthly payment.

A structured savings plan is the best way to reach your down payment goal. Set a dedicated savings account and automate monthly transfers to stay on track. Even earning a modest return on your savings can reduce the time it takes to reach your goal. Our Savings Calculator can model how interest earnings accelerate your timeline.

Beyond PMI, a larger down payment means a smaller loan, lower monthly payments, and less interest paid over the life of the mortgage. However, depleting your emergency fund for a larger down payment can leave you financially vulnerable. Aim for a balance that achieves your desired monthly payment without leaving yourself cash-poor after closing.

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Take this calculation further

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For a related calculation, use Rent vs. Buy Calculator to compare the true long-term cost of renting versus buying a home with break-even analysis. Alternatively, use House Affordability Calculator to determine the maximum home price you can afford based on income and the 28/36 rule.

For the underlying method, read How to Calculate a Mortgage Payment: Principal, Interest, and the Real Monthly Cost or How Much House Can You Actually Afford?.