Why it matters
The down payment affects your monthly payment, whether you pay mortgage insurance and sometimes your rate. Closing costs are a separate, often surprising, amount.
What to do
- Decide on a down payment target. Many loans allow much less than 20%: some conventional loans allow 3%, FHA 3.5%, and VA and USDA loans can need nothing down.
- Budget for closing costs, typically about 2% to 5% of the loan amount.
- Look for down payment assistance from your state housing finance agency or city.
- If family will help, ask your lender how to document a gift properly.
- Keep an emergency fund separate from your down payment.
Checklist
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Common mistakes
- Emptying every account for the down payment and having nothing left for repairs.
- Moving large amounts between accounts without paper trails right before applying.
General information, not financial or legal advice. Rules vary by state; confirm with your lender, agent or attorney.
Frequently asked questions
Do I need 20% down to buy a house?
No. Many buyers put down much less. With less than 20% on a conventional loan, you will usually pay private mortgage insurance until you reach enough equity.
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Questions from readers
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