How Much Do You Need for a Down Payment? Options and Tips

For many would-be buyers, the down payment feels like the biggest hurdle to owning a home. A lot of people believe they need to save 20% of the purchase price before they can even start looking. The truth is that many loan programs allow much less, and some may not require a down payment at all for eligible borrowers.

Do You Really Need 20%?

Putting 20% down has advantages. On a conventional loan, it means no private mortgage insurance, a smaller loan balance and a lower monthly payment. But it is not a requirement, and waiting years to reach that number can mean paying rent and missing out on building equity in the meantime.

The right amount depends on your savings, your monthly budget and how long you plan to stay in the home.

Down Payment Minimums by Loan Type

• Conventional loans: As little as 3% down for eligible buyers. With less than 20% down, you will typically pay PMI, which can be removed once you reach 80% loan-to-value.
• FHA loans: 3.5% down with a credit score of 580 or higher. FHA loans include a 1.75% upfront mortgage insurance premium plus annual mortgage insurance.
• VA loans: $0 down for eligible veterans and service members with full entitlement, with no monthly mortgage insurance. Most borrowers pay a one-time funding fee.
• USDA loans: Eligible borrowers buying in qualifying areas may not need a down payment, subject to income limits and other program rules.

Remember that the down payment is not the only cash you need. Plan for closing costs, prepaid items like insurance and property taxes, moving expenses and a cushion of savings after closing. Some buyers receive gift funds from family or qualify for down payment assistance programs, which can help cover part of these costs depending on the program.

Practical Ways to Build Your Savings

Set a clear target

Pick a price range and a loan program, then calculate your goal, including closing costs. A specific number is much more motivating than “save as much as possible.” Our mortgage calculator can help you see how different down payments affect your monthly payment.

Automate it

Open a separate high-yield savings account just for your home fund and set up an automatic transfer on payday. Money you never see in checking is much easier not to spend.

Trim and redirect

1. Review subscriptions and memberships and cancel what you do not use.
2. Cook at home more often and plan meals for the week.
3. Shop around for car and renters insurance or phone plans.
4. Send raises, bonuses and tax refunds straight to your home fund.

Boost your income

A side gig, overtime or selling items you no longer need can speed things up. If you plan to use side income to qualify for the loan, keep in mind lenders usually want to see a consistent history, so talk with a loan officer about how it will be counted.

Protect your credit along the way

While you save, keep paying bills on time and avoid taking on new debt. A healthy credit profile may open up more loan options and better pricing when you are ready.

Bigger Down Payment or Buy Sooner?

There is a balance to strike. A larger down payment lowers your loan amount and may reduce mortgage insurance. Buying sooner with less down lets you start building equity earlier. Neither is wrong. It comes down to your goals, your local market and your comfort level with the monthly payment. Explore our low down payment options to see what might fit.

Want to know exactly how much you need to save for your situation? Reach out to FLO Mortgage and a loan officer will help you build a plan.

This article is for general education and is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines and program availability. FLO Mortgage, Company NMLS #1835856. Equal Housing Opportunity.