Under 20% down the lender adds PMI: $141 a month, ending around Jul, 2034 once the balance reaches 80% of the price — $13,516 in total. Saving another $36,100 to reach 20% removes it from day one.
What each down payment buys you
The same home at $361,000, priced across the down payments lenders actually work with. PMI stops at 20%.
| Down | Cash needed | Loan | PMI/mo | Payment | PMI total |
|---|---|---|---|---|---|
| 3.5% | $12,635 | $348,365 | $151 | $2,371 | $19,926 |
| 5% | $18,050 | $342,950 | $149 | $2,334 | $18,576 |
| 10% yours | $36,100 | $324,900 | $141 | $2,212 | $13,516 |
| 15% | $54,150 | $306,850 | $133 | $2,089 | $7,579 |
| 20% | $72,200 | $288,800 | — | $1,841 | — |
| 25% | $90,250 | $270,750 | — | $1,726 | — |
The last column is what PMI costs you in total before it cancels — the real price of a smaller down payment, on top of the larger loan. Whether that trade is worth it depends on how long saving the difference would take, and what happens to prices meanwhile.
Down payment FAQ
- How much down payment do I need to buy a house?
- There is no single minimum — it depends on the loan. Conventional loans start around 3 percent, FHA loans at 3.5 percent, and VA and USDA loans can require nothing at all. On the national median home of $361,000 that is $18,050 at 5 percent against $72,200 at 20 percent. Below 20 percent the lender adds private mortgage insurance, so the question is rarely "what is allowed" but "what does the smaller down payment cost".
- Why does 20% down matter so much?
- Twenty percent is the point where private mortgage insurance stops. Below it a conventional lender charges PMI every month until the balance falls to 80 percent of the home's value — on a $361,000 home at 5 percent down that is $149 a month, roughly $18,576 before it cancels. It is not a legal requirement and not a threshold for approval; it is where one recurring cost disappears.
- Is it better to put down less and buy sooner?
- Often, yes — but the calculator is the place to see the trade rather than argue it. A smaller down payment means a larger loan, a higher payment and PMI for a while; waiting means more rent paid and a price that may move against you. The honest comparison is the total in the last column against what the extra saving would cost you in time.
- Does the down payment include closing costs?
- No. Closing costs are a separate bill, typically 2 to 5 percent of the purchase price, covering the lender's fees, title work, appraisal, recording and prepaid taxes and insurance. Budget for them alongside the down payment, not inside it.
- Can the money be a gift?
- For most loan programs yes, from a family member, and the lender will want a gift letter confirming it is not a loan. Expect to document where the funds came from — underwriting traces large deposits that appear shortly before closing.
- How do I get rid of PMI once I have it?
- On conventional loans it cancels automatically when the balance reaches 78 percent of the original price, and you can request cancellation at 80 percent. Extra payments or a rise in the home's value can bring that date forward — a new appraisal is usually required for the value route. FHA mortgage insurance works differently and often lasts the life of the loan.
Start from the cash, not the payment
Most mortgage calculators ask what you will pay each month. This one starts a step earlier, with the number that actually decides when you can buy: the cash you have to hand over at closing.
Two things move it. The obvious one is the percentage — 3.5% on a median-priced home is a different life from 20%. The less obvious one is private mortgage insurance, which appears the moment you put down less than 20% on a conventional loan and quietly rides along with every payment until the balance falls to 80% of the price.
What the 20% line really is
It is not a rule about who gets approved, and it is not a legal minimum. Conventional loans go down to about 3%, FHA to 3.5%, and VA and USDA loans can require nothing at all. Twenty percent is simply the point where one recurring cost switches off.
That makes it a trade, not a target. A smaller down payment means buying sooner, with a larger loan, a higher payment, and PMI for a few years. A larger one means waiting, paying rent meanwhile, and hoping prices are patient. The table above prices both sides of that, including what PMI adds up to before it cancels — the number that usually decides it.
Where the money comes from
Down payment funds can be savings, the proceeds of a previous home, a documented gift from family, or assistance from a state or local programme. Lenders care less about the source than about the paper trail: expect to explain any large deposit that lands in the months before closing.
Two things worth checking before you settle on a number: keep enough back for closing costs, which are a separate 2–5% of the price, and do not empty the emergency fund into the down payment. A house that arrives with no cushion behind it is a stressful house.
Read on
Longer answers to the questions this page raises: how much down payment you actually need, what PMI costs and how to cancel it, down payment assistance programmes and using gift funds.
To work the other direction — from your income to a price you can afford — use the affordability calculator. For the whole monthly payment with taxes and insurance, the escrow calculator is set up for that.