There is no single down payment amount that is right for every buyer.
Some buyers benefit from putting more money down. Others may be better off keeping additional cash available after closing. The right approach depends on your loan options, monthly payment goals, and overall financial situation.
Putting More Down Can Lower Your Monthly Costs
A larger down payment reduces the amount you need to borrow, which generally lowers your monthly principal and interest payment.
Putting more down can also reduce other costs. For example, on a conventional loan, putting 20% down typically eliminates private mortgage insurance (PMI), and a lower loan-to-value ratio can sometimes help you qualify for better loan pricing.
That can make a larger down payment attractive if your main goal is keeping your monthly housing expense as low as possible.
Putting More Down Means Less Cash Left Over
Your down payment is only one of the expenses involved in buying a home.
You may also need cash for:
- Closing costs
- Moving expenses
- Repairs or improvements
- Furniture and appliances
- Emergency savings
- Financial reserves
This is why putting every available dollar into the down payment is not always the best strategy.
Keeping more cash available after closing can also be valuable for repairs, appliances, furniture, and other unexpected expenses that tend to come up after a move.
Why 20% Down Isn’t Always Necessary
20% is often treated as the standard down payment, but many loan programs allow qualified buyers to purchase a home with significantly less.
- 30-Year Fixed-Rate Mortgage: 3% to 5% down payment options
- FHA Loan: As little as 3.5% down
- VA Loan: 0% down
- No PMI (Private Mortgage Insurance) Loan: As little as 3% down
- Adjustable Rate Mortgage (ARM) Loan: As little as 5% down
- Jumbo Loan: As little as 10% down, with the best rates often available at 25%+ down
- Investment Property Loans: As little as 15% down
Depending on the loan program, putting less than 20% down may come with mortgage insurance, which can add to your monthly payment. But that additional cost does not automatically mean putting more down is the better choice.
The important part is comparing the upfront cash required with the monthly payment and deciding which balance works best for you.
Thinking Beyond the Percentage
Instead of starting with, “Should I put 5%, 10%, or 20% down?” it can be more useful to start with your priorities.
If your priority is:
- Getting the lowest possible monthly payment:
- A larger down payment may make sense.
- Preserving savings:
- A smaller down payment may leave you with more flexibility after closing.
- Avoiding mortgage insurance:
- We can compare whether putting more down is worth the additional upfront cost.
- Using a specific amount of savings:
- We can help determine how much should go toward the down payment versus closing costs and reserves.
Two buyers purchasing homes at the same price can reasonably choose very different down payments.
Want to see how different down payments could affect your monthly payment? Compare different purchase prices, down payments, and estimated monthly payments with the calculator below.
