Short answer: on a $400,000 home, the minimum down payment is $0 with a VA or USDA loan, $12,000 (3%) with a conventional loan and $14,000 (3.5%) with an FHA loan — while 20% down is $80,000. The median first-time buyer puts down 10% (NAR, 2025 Profile of Home Buyers and Sellers) — $40,000 on a $400,000 home. At 7% over 30 years, 20% down costs $2,128.97 a month in principal and interest, against $2,856.21 a month with 3% down once mortgage insurance is included — a difference of $727.24 a month.
Try it now: open the free Mortgage Calculator and enter the home price, your down payment, the rate and the term. It works out the monthly payment, so you can test your own numbers against the figures in this guide.
Minimum Down Payment by Loan Type
There is no single minimum — it depends on the loan program. These are the floors set by Fannie Mae, Freddie Mac, HUD, the Department of Veterans Affairs and USDA Rural Development for 2026. A lender can ask for more, and your credit score, income and the home price affect which programs are open to you.
| Loan type | Minimum down payment | Who qualifies | Mortgage insurance |
|---|---|---|---|
| Conventional (HomeReady / Home Possible / 97% LTV) | 3% | First-time buyers; HomeReady and Home Possible cap income at 80% of the area median income | Private mortgage insurance (PMI) until 80% loan-to-value |
| Conventional (standard) | 5% | Any qualified buyer, within the conforming loan limit | PMI below 20% down |
| FHA | 3.5% with a credit score of 580+; 10% with 500–579 | Primary residence; within the county FHA limit (2026 floor $541,287 for a one-unit home) | 1.75% upfront + 0.55% annual MIP, generally for the life of the loan |
| VA | 0% | Eligible service members, veterans and some surviving spouses; price must not exceed the appraised value | No monthly insurance; one-time 2.15% funding fee on first use below 5% down (some exempt) |
| USDA guaranteed | 0% | Moderate-income households in an eligible rural area; income at or below 115% of the area median income | No PMI; 1.00% upfront fee plus 0.35% annual fee (fiscal year 2027) |
Two catches. First, the 3% conventional minimum is not open to everyone: the standard 97% loan-to-value option requires at least one first-time buyer, and HomeReady and Home Possible add an income cap — otherwise the standard conventional minimum is 5%. Second, the conforming loan limit matters: for 2026 the Federal Housing Finance Agency set the baseline at $832,750 for a one-unit home in most counties (announced November 25, 2025, up 3.26% from $806,500 in 2025), with a high-cost-area ceiling of $1,249,125. A loan above the limit is a jumbo loan, which usually needs a larger down payment. Note the correction: $806,500 was the 2025 limit, not the 2026 limit.
What Each Down Payment Level Costs on a $400,000 Home
Every level below is priced on the same $400,000 home at 7% over 30 years, principal and interest only — taxes, insurance and homeowners association dues are on top. The PMI figures are illustrative, using annual rates inside the published 2026 range (0.46%–1.50% of the loan amount per year, Enact rates published by the Urban Institute, August 2026), with lower rates for larger down payments. Your actual PMI rate depends on your credit score and loan-to-value ratio, so treat these as planning figures, not quotes.
| Down payment | Cash down | Loan amount | Monthly P&I (7%, 30 years) | Illustrative monthly PMI | Total interest over 30 years |
|---|---|---|---|---|---|
| 0% | $0 | $400,000 | $2,661.21 | — (VA/USDA: no PMI) | $558,035.59 |
| 3% | $12,000 | $388,000 | $2,581.37 | $274.83 (0.85% a year) | $541,294.53 |
| 3.5% | $14,000 | $386,000 | $2,568.07 | $257.33 (0.80% a year) | $538,504.35 |
| 5% | $20,000 | $380,000 | $2,528.15 | $237.50 (0.75% a year) | $530,133.81 |
| 10% | $40,000 | $360,000 | $2,395.09 | $150.00 (0.50% a year) | $502,232.03 |
| 20% | $80,000 | $320,000 | $2,128.97 | $0 | $446,428.47 |
Every extra dollar shrinks the loan, the payment and the total interest — but the biggest jump is at 20%, where PMI disappears. Going from 3% to 10% costs $28,000 more cash and saves $311.11 a month; from 10% to 20% costs $40,000 more and saves $416.12 a month.
Worked Example: 3% vs 10% vs 20% Down on a $400,000 Home
The three down payments buyers most often choose between, on the same home at 7% over 30 years. The PMI totals assume scheduled payments alone — no extra payments, no home-price appreciation — until the balance reaches 80% of the original $400,000 price ($320,000), when PMI can be cancelled. Rising values or extra payments can end PMI sooner.
| 3% down | 10% down | 20% down | |
|---|---|---|---|
| Cash down | $12,000 | $40,000 | $80,000 |
| Loan amount | $388,000 | $360,000 | $320,000 |
| Monthly principal & interest | $2,581.37 | $2,395.09 | $2,128.97 |
| Monthly PMI (illustrative) | $274.83 | $150.00 | $0 |
| Total monthly (principal, interest & PMI) | $2,856.21 | $2,545.09 | $2,128.97 |
| Months until PMI can end (80% loan-to-value) | 140 months (11.7 years) | 101 months (8.4 years) | — |
| Total PMI paid | $38,476.67 | $15,150.00 | $0 |
| Total interest over 30 years | $541,294.53 | $502,232.03 | $446,428.47 |
| Total interest + PMI | $579,771.19 | $517,382.03 | $446,428.47 |
Over the life of the loan, the 3% buyer pays $94,866.05 more interest than the 20% buyer — $133,342.72 more once the $38,476.67 of PMI is added — and $62,389.16 more than the 10% buyer including PMI. Month to month, the gap is $727.24 between 3% and 20% down, and $416.12 between 10% and 20%. That is the real price of buying sooner with less cash — and for many buyers it is worth paying, since waiting years to save 20% while rents and prices rise can cost more than the PMI.
Monthly cost on a $400,000 home at 7% over 30 years — principal and interest plus illustrative PMI, by down payment.
What 20% Down Really Buys You
Twenty percent is not a legal requirement — it is the line where several costs switch off at once. First, no PMI: on a conventional loan PMI is required below 20% down, saving $150–$275 a month on a $400,000 home at the illustrative rates above. Second, a smaller loan and a lower payment: $2,128.97 a month against $2,856.21 with 3% down. Third, instant equity: you own a fifth of the home on day one, so a small price fall cannot leave you owing more than the home is worth. Fourth, a stronger offer: sellers read a 20% down payment as financing that is less likely to fall through. A slightly better rate is possible too, but it varies by lender. And 20% is not always right: if saving it takes five extra years of renting, the rent paid in those years can easily exceed the PMI saved.
The PMI Cost Math, in Detail
Private mortgage insurance protects the lender, not you — but it is what lets you buy with less than 20% down on a conventional loan. In 2026 PMI typically costs 0.46%–1.50% of the loan amount per year, depending on credit score and down payment (Enact rates published by the Urban Institute, August 2026): at 3.5% down, a score of 760 or higher paid about 0.46% a year, while 620–639 meant about 1.50%. On the $388,000 loan above, the illustrative 0.85% rate is $274.83 a month.
PMI does not last forever on a conventional loan. Under the Homeowners Protection Act, you can request cancellation once the balance reaches 80% of the original home value, and the lender must cancel it automatically at 78%. On the $400,000 example that takes 140 months of scheduled payments with 3% down, or 101 months with 10% down — a new appraisal or extra principal payments can bring it forward. FHA insurance is different: a 1.75% upfront premium ($6,755 on a $386,000 loan, usually rolled into the balance, lifting the payment to $2,613.01 a month) plus 0.55% a year ($176.92 a month), and it generally lasts the life of the loan when less than 10% is put down — the usual way out is refinancing into a conventional loan once you have enough equity.
How Much Do Buyers Actually Put Down?
The 20% figure survives because it used to be the norm. According to the National Association of Realtors' 2025 Profile of Home Buyers and Sellers, the median down payment for all buyers was 19% — but first-time buyers put down a median of 10%, the highest level recorded since 1989, while repeat buyers put down a median of 23%, mostly from equity in the home they sold. On the median existing-home price of $417,500 reported by NAR for September 2026, those medians mean $41,750 at 10% (loan $375,750; $2,499.87 a month at 7% over 30 years), $79,325 at 19% and $96,025 at 23%.
Down Payment Assistance Programs
If the minimums are still out of reach, assistance exists in most states — but it is fragmented and changes often, so check your own state rather than a national list. The main sources are state housing finance agencies, which run first-time buyer programs offering grants or low-interest second loans; local city and county programs, often aimed at specific neighbourhoods or income bands; and employer-assisted housing, where some large employers offer forgivable loans or grants to staff buying near work. Some help is a true grant, some is a forgivable loan written off after you live in the home for a set number of years, and some is a deferred second loan that comes due when you sell or refinance — read the repayment terms before accepting any of it. Your lender and state housing finance agency can tell you what you qualify for; some programs require a homebuyer education course first.
Gift Funds: Using Family Money for the Down Payment
Family help is one of the most common ways first-time buyers reach their down payment — NAR found 59% of first-time buyers in its 2025 profile used savings toward it, often built with family gifts. Lenders allow gift funds but document them carefully: expect a gift letter signed by the donor stating the money is a gift, not a loan, plus a paper trail showing it moving from the donor's account into yours. Borrowed money dressed up as a gift will be caught when the lender checks bank statements and can kill the application. Rules differ by loan type — FHA loans generally allow the entire down payment to come from a gift, while conventional loans have minimum borrower-contribution rules that vary with the loan-to-value ratio — so confirm the exact rule with your lender before counting on a gift.
How to Save for a Down Payment
Saving is mostly a question of time and a monthly number. The table below shows how long each level on a $400,000 home takes at a flat monthly saving rate, before any interest earned, which would shorten these times slightly.
| Down payment level | Cash needed | Months at $500 a month | Months at $1,000 a month |
|---|---|---|---|
| 3% | $12,000 | 24 months (2 years) | 12 months (1 year) |
| 5% | $20,000 | 40 months (3.3 years) | 20 months (1.7 years) |
| 10% | $40,000 | 80 months (6.7 years) | 40 months (3.3 years) |
| 20% | $80,000 | 160 months (13.3 years) | 80 months (6.7 years) |
Three habits speed it up: automate the transfer on payday, so saving happens before spending starts; keep it in a separate high-yield savings account, visible and harder to raid; and bank windfalls — tax refunds, bonuses — straight into the fund. Also revisit the home price, not just the saving rate: dropping the target from $400,000 to $350,000 cuts a 10% down payment from $40,000 to $35,000, five months saved at $1,000 a month.
Down Payment vs Emergency Fund: Don't Empty the Tank
The most expensive mistake here is not a small down payment — it is spending every dollar you have on the down payment and moving in with nothing left. Closing costs typically run 2%–5% of the price — $8,000–$20,000 on a $400,000 home — covering lender fees, title insurance, appraisal, prepaid taxes and insurance. On top of that you need an emergency fund kept separate from the purchase: three to six months of expenses is the standard guidance — a broken boiler, a leaking roof, a month between jobs. On a $400,000 home with 3% down and 3% closing costs, the purchase alone needs $24,000 in cash, and the emergency fund sits on top of that. If reaching 10% down would leave you with no emergency fund, the smaller down payment with the fund intact is usually safer — PMI at $150 a month is a known, cancellable cost, while an empty emergency fund turns one bad month into debt.
Five Mistakes That Cost Buyers Thousands
1. Waiting for 20% while prices and rents rise. Saving $80,000 takes 13.3 years at $500 a month — run the worked example for your own timeline before deciding to wait. 2. Forgetting closing costs. The down payment is not the cash to close; add 2%–5% of the price, plus moving costs and the first repairs. 3. Draining the emergency fund. A bigger down payment that leaves no reserves trades a cancellable monthly cost (PMI) for real financial fragility. 4. Choosing FHA without pricing the lifetime insurance. The 1.75% upfront premium and 0.55% annual premium that generally lasts the life of the loan can cost more over time than a conventional loan with PMI that cancels. 5. Treating the down payment as the whole decision. Rate, term, loan type and home price move the payment as much as the down payment — check the whole picture with the Mortgage Calculator.
Frequently Asked Questions
How much down payment do you need on a $400,000 house?
$0 with a VA or USDA loan, $12,000 (3%) conventional, $14,000 (3.5%) FHA, and $80,000 for 20% down. The median first-time buyer puts down 10% — $40,000 on a $400,000 home.
Is 20% down required to buy a house?
No. Conventional loans start at 3%, FHA at 3.5%, and VA and USDA loans require no down payment at all. Twenty percent is the level where PMI stops on a conventional loan — not a legal minimum.
How much is PMI on a $400,000 home?
PMI typically costs 0.46%–1.50% of the loan amount per year. With 3% down, the illustrative rate in this guide is 0.85%, or $274.83 a month on a $388,000 loan; with 10% down it is $150.00 a month at 0.50%.
Can I buy a house with no money down?
Yes, if you qualify for a VA loan (eligible service members, veterans and some surviving spouses) or a USDA loan (moderate-income buyers in eligible rural areas). You will still need cash for closing costs, typically 2%–5% of the price, plus an emergency fund.
What is the average down payment for a first-time buyer?
The median first-time buyer puts down 10%, according to the National Association of Realtors' 2025 Profile of Home Buyers and Sellers — the highest level since 1989. On the median existing-home price of $417,500 (September 2026), that is $41,750. Repeat buyers put down a median of 23%.
Is it better to put 20% down or keep cash in savings?
It depends on your reserves. Twenty percent down saves $727.24 a month against 3% down on a $400,000 home at 7% over 30 years. But if reaching 20% would empty your emergency fund, the smaller down payment with savings intact is usually safer: PMI is cancellable, while an empty emergency fund turns one bad month into debt.
Sources: NAR, 2025 Profile of Home Buyers and Sellers — median down payments 19% all buyers, 10% first-time, 23% repeat; NAR, September 2026 — median existing-home price $417,500; FHFA, November 25, 2025 — 2026 baseline conforming limit $832,750, high-cost ceiling $1,249,125 (2025: $806,500); HUD/FHA — 3.5% minimum at 580+, 1.75% upfront MIP, 0.55% annual MIP; VA — 0% down, 2.15% first-use funding fee; USDA — 0% down, 1.00% upfront and 0.35% annual fee (FY 2027); Enact rates via the Urban Institute, August 2026 — PMI 0.46%–1.50% a year; Freddie Mac — typical PMI about $30–$70 a month per $100,000 borrowed; Homeowners Protection Act — PMI cancellation on request at 80% loan-to-value, automatic at 78%. Loan figures verified by amortisation calculation at 7% over 30 years; PMI figures are illustrative, not quotes. Not financial advice — confirm your rate and program eligibility with a licensed lender.
Related reading: What Is PMI and How to Remove It · What Is a HELOC? · How Much Car Can I Afford? The 20/4/10 Rule, Worked Out
Working out your down payment? If you are weighing a home purchase or want help with the numbers before you apply for a loan, book a free consultation with Asad Webs — we will help you work out the figures before you sign.
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