Minimum down payments by loan type
Example
A 20% down payment on a $400,000 home is $80,000, and closing costs of about 3% add $12,000 — so you need roughly $92,000 in cash. With $20,000 saved and $1,500 a month going into a 4% account, that takes about 3 years 7 months.
Is 20% down worth waiting for?
Putting 20% down avoids private mortgage insurance, lowers your monthly payment and saves interest. But waiting years to save can cost you if home prices and rents keep rising. A smaller down payment with PMI lets you buy sooner; you can ask to cancel PMI once you reach 20% equity.
Ways to reach your down payment faster
- Keep the fund in a high-yield savings account or CDs, not the stock market, if you’ll buy within a few years.
- Look for state and local first-time buyer down payment assistance programs.
- Family gifts are allowed for most loans with a signed gift letter.
Related Real Estate & Home Financing Tools
Structuring an optimal down payment avoids costly mortgage insurance and reduces monthly interest. Compute full principal, interest, taxes, and PMI payments with our Mortgage Calculator, determine your maximum purchase limit using the Home Affordability Calculator, compare homeownership to renting via the Rent vs Buy Calculator, and automate your down payment savings with our Savings Calculator.
Frequently asked questions
What are closing costs?
Fees to finalize the purchase and mortgage — lender fees, appraisal, title insurance, recording fees and prepaid taxes and insurance — typically 2–5% of the price.
How much is PMI?
Usually about 0.3% to 1.5% of the loan amount per year, depending on your credit score and down payment. This calculator uses 0.75% as a typical estimate.
Can I use retirement savings for a down payment?
First-time buyers can withdraw up to $10,000 from an IRA without the early-withdrawal penalty, though income tax may apply. 401(k) loans are another option, with risks if you leave your job.