Minimums by loan type
- Conventional (Fannie/Freddie): as little as 3% down for first-time buyers (5% for repeat buyers on most programs). Requires PMI under 20% down.
- FHA: 3.5% down with a FICO of 580+ (10% down for 500-579). Requires an upfront and annual mortgage insurance premium (MIP) that, on most new FHA loans, stays for the life of the loan.
- VA: 0% down for eligible veterans, active-duty service members, and qualifying surviving spouses. No monthly mortgage insurance — just a one-time funding fee.
- USDA: 0% down in eligible rural and many suburban areas, with income limits. Carries an upfront and modest annual guarantee fee.
- Jumbo: loans above the conforming limit ($806,500 in most counties for 2026) typically need 10-20% down and stronger credit.
Where the 20% myth came from
Twenty percent is the threshold at which conventional lenders drop private mortgage insurance (PMI). For decades, it was simpler to repeat "20%" than to explain PMI, so it became cultural shorthand. In practice, the median first-time buyer in the U.S. puts down 6-9%. Putting down 20% is a preference, not a requirement.
The PMI tradeoff
On a conventional loan under 20% down, you'll pay PMI of roughly 0.5-1.5% of the loan amount per year, baked into your monthly payment. On a $400k loan that's $165-$500 per month. The federal Homeowners Protection Act requires lenders to automatically drop PMI when your loan-to-value reaches 78% based on the original schedule, and you can request cancellation at 80%.
The math: if PMI costs you $200/month for ~7 years (until you reach 80% LTV), that's $16,800. Saving an extra 15% down might take 4-5 years of rent — often more than $16,800 in rent paid and home-price appreciation missed. PMI is rarely the villain it's made out to be.
When a bigger down payment IS worth it
- You already have it saved and an emergency fund (3-6 months expenses) on top.
- You're buying near a loan-program threshold (e.g. moving from jumbo to conforming).
- Rates are high and you want a meaningfully smaller payment.
- You're self-employed or have variable income and want lower fixed costs.
When a smaller down payment is fine
- Rent in your area is high relative to a mortgage payment.
- You'd drain your emergency fund to hit 20%.
- You qualify for VA or USDA — those have no PMI even at 0% down.
How long does it take to save?
A useful rule: saving 10% of a $400,000 home ($40,000) at $1,000/month takes about 3.5 years. Doubling to 20% ($80,000) doesn't take twice as long — it takes about 7 years, because you're also fighting home-price appreciation. Run your own target with the mortgage calculator.