Twenty percent down isn’t a requirement. Putting down less usually means paying for mortgage insurance, at least for a while.
The idea that you need 20% down is one of the most persistent myths in home buying. What’s true is that less than 20% usually comes with mortgage insurance, which protects the lender, not you.
Typical minimum down payments
- Conventional loans: as little as 3% for some programs, often 5%.
- FHA loans: 3.5% with a credit score of 580 or more.
- VA and USDA loans: usually nothing down for eligible borrowers.
Example: on a $350,000 home, 3% down is $10,500, 5% is $17,500 and 20% is $70,000. Closing costs come on top.
How PMI works
Private mortgage insurance applies to conventional loans with less than 20% down. You pay it monthly, as a single upfront payment or as a mix. The cost depends on your credit score, down payment and loan type.
When PMI goes away
Under the federal Homeowners Protection Act, for most conventional loans on a primary home:
- You can ask to cancel once your balance is scheduled to reach 80% of the home’s original value, if you’re current on payments and meet other requirements.
- It ends automatically when the balance is scheduled to reach 78% of the original value, as long as you’re current.
Extra payments can get you to 80% sooner. Some lenders will also consider a new appraisal if your home’s value has risen.
FHA is different: FHA loans have their own mortgage insurance premiums. If you put down less than 10%, the annual premium usually lasts for the life of the loan, and refinancing into a conventional loan is the common way out.
A tax change for 2026
Mortgage insurance premiums were not deductible from 2022 through 2025. Starting with 2026, they can again be deducted as part of mortgage interest by people who itemize; see our notes on the mortgage interest deduction.
Getting help with the down payment
State housing finance agencies, cities and some employers offer grants or low-cost second loans for down payments, often for first-time buyers. Ask lenders which programs they work with when you get pre-approved.
The short version
- Many buyers put down far less than 20%; programs exist from 0% to 5% down.
- On conventional loans, you can ask to cancel PMI when your balance reaches 80% of the home’s original value, and it ends automatically at 78%.
- From 2026, mortgage insurance premiums are again deductible for people who itemize.
Readers also ask
Is it better to wait until I have 20% down?
Not necessarily. Waiting can mean years of rent and possibly higher prices. Compare the cost of mortgage insurance with the cost of waiting.
Can gifts be used for a down payment?
Often, yes, with a signed gift letter. Rules depend on the loan program.
Where can I find down payment assistance?
Your state housing finance agency is a good place to start. Many cities and counties run programs too.
This guide is general information about U.S. mortgages, not financial, tax or legal advice. Loan terms depend on the lender and on your credit, income and property, so confirm the details with your lender, and see consumerfinance.gov for official guidance.
