How Much Do I Need for a Down Payment on a New Home?

Buying a home is one of the biggest financial decisions most people will ever make—and naturally, one of the first questions that comes to mind is: “How much do I need for a down payment?” The good news is that the old rule of needing 20% upfront is no longer the standard. In today’s mortgage landscape, homebuyers have more options than ever, with some programs requiring as little as zero down.

This guide breaks down everything you need to know about down payment requirements, program options, pros and cons of different amounts, and how to choose what’s right for you.

What Exactly Is a Down Payment?

A down payment is the amount of money you contribute upfront toward the purchase of a home. The remainder of the purchase price is financed through a mortgage loan. Down payments serve two main purposes:

• They reduce the lender’s risk

• They help build instant equity in your new property

The amount required depends on the type of loan, your credit profile, and your long-term financial goals.

Do You Really Need 20%?

Let’s get this out of the way: No, you do not need 20% down to buy a home.

While a 20% down payment lets you avoid private mortgage insurance (PMI) and will lower your monthly payment, most buyers today put down far less. According to national data, the average first-time homebuyer puts down between 6% and 7%.

Common Loan Programs and Their Down Payment Requirements

Below is a breakdown of the most common mortgage programs and how much down you’ll need for each.

1. FHA Loans – 3.5% Down

FHA loans are popular with first-time buyers because of their flexible credit requirements and low down payment options.

• Minimum down: 3.5% (with a credit score of 580+)

• Who it’s best for: Buyers with limited savings, moderate credit, or higher debt-to-income ratios

2. Conventional Loans – 3% to 5% Down

Conventional loans offer the most flexibility and can have very low down payment requirements depending on income and credit.

• Minimum down: 3% for strong borrowers or qualified first-time buyers

• Typical range: 3%–5%

• Who it’s best for: Buyers with good credit who want competitive rates and lower long-term fees compared to FHA

3. VA Loans – 0% Down

VA loans are a top-tier benefit available to eligible veterans, active military personnel, and surviving spouses.

• Minimum down: 0%

• No PMI required

• Who it’s best for: Anyone who qualifies—these loans are among the best in the market

4. USDA Loans – 0% Down

Designed for rural and suburban homebuyers, USDA loans offer incredible benefits.

• Minimum down: 0%

• Location and income limits apply

• Who it’s best for: Buyers looking in designated rural areas

5. Jumbo Loans – 10% to 20% Down

For higher-priced homes that exceed conforming loan limits, jumbo loans typically require larger down payments.

• Minimum down: Usually 10%

• Who it’s best for: High-income buyers or buyers in luxury markets

How Much Should You Put Down?

While the minimum down payment gets you in the door, the right down payment amount depends on your goals, finances, and timeline. Consider the following:

Benefits of a Larger Down Payment

• Lower monthly payments

• Lower interest rate

• Avoiding PMI at 20% down

• More equity from day one

• Stronger offer in a competitive market

Benefits of a Smaller Down Payment

• You become a homeowner sooner

• You preserve cash for savings, repairs, emergencies, and investments

• You may qualify for special assistance programs

Many buyers manage their risk by putting down somewhere between 5% and 10%—balancing affordability with long-term savings.

Down Payment Assistance Programs

Many states, counties, and cities offer grants, forgivable loans, or low-interest second mortgages to help buyers cover the down payment and closing costs.

These programs may offer:

• Grants (free money you do not pay back)

• Deferred second mortgages

• Tax credits

• Closing cost assistance

If saving for a down payment feels overwhelming, these programs can dramatically reduce your upfront costs—even to zero in some cases.

Don’t Forget About Closing Costs

In addition to your down payment, you’ll need to budget for closing costs, which typically range from 2% to 5% of the purchase price. These include:

• Appraisal

• Title insurance

• Lender fees

• Taxes and recording fees

Some lenders offer credits, and sellers can sometimes contribute toward closing costs, depending on the loan type.

How to Decide What’s Right for You

Choosing the right down payment starts with evaluating:

• Your savings

• Your credit

• Your monthly budget

• Your long-term plans

• The type of mortgage you prefer

A good rule of thumb:
Aim for a down payment that gives you a comfortable monthly payment without draining your savings.

Many buyers choose a lower down payment to keep their financial cushion intact—especially first-time buyers.

Final Thoughts

You don’t need 20% down to buy a home—not even close. With today’s loan programs, many buyers purchase homes with 0% to 5% down, especially first-time buyers. The key is understanding your options and choosing the down payment amount that supports your long-term financial health.

Whether you’re early in the planning process or ready to get pre-approved, the most important step is connecting with a knowledgeable mortgage professional who can walk you through your exact numbers and options.