How much do you need for a down payment?

How much down payment do I need?

It depends on the loan type. Conventional loans can go as low as 3-5% down, but putting down 20% lets you avoid private mortgage insurance (PMI) entirely. FHA loans allow as little as 3.5% down, but they require mortgage insurance built into the loan regardless of how much you put down.

What is PMI and when does it go away?

Private Mortgage Insurance (PMI) protects the lender if you default on the loan — it does not protect you. It's an added monthly cost that kicks in whenever your down payment is below 20% of the home price. On conventional loans, PMI can typically be removed once you reach roughly 20-22% equity in the home, either automatically under federal law or by requesting cancellation from your servicer once you qualify.

Is a bigger down payment always better?

Not necessarily — it's a trade-off. A bigger down payment lowers your monthly payment and can eliminate PMI, but it also ties up cash that could otherwise be invested, kept as an emergency fund, or used for moving costs, repairs, and furnishing the new home. Whether a larger down payment is worth it depends on what else that money could be doing for you.

How does this relate to how much house I can afford?

This tool answers a narrower question: given a home price and a down payment you choose, what's the resulting loan amount and PMI impact? If you're instead trying to work backward from your income and monthly budget to figure out a realistic home price in the first place, use the House Affordability Calculator.

Worked example: a $400,000 home with 10% down means a $40,000 down payment and a $360,000 loan amount. Since 10% is below the 20% PMI threshold, at an illustrative 0.75% annual PMI rate the estimated monthly PMI is 360,000 × 0.0075 ÷ 12 = $225/month.