Down Payment Reality Check: How Much You Actually Need
You don't need 20% down to buy a house. On a $400,000 home, your real down payment options range from $0 to $80,000 depending on the loan program.
0% down: VA and USDA loans
VA loans offer true zero-down financing for eligible veterans, active duty service members, and some surviving spouses. USDA loans offer the same for eligible rural and suburban properties, with income limits around 115% of the area median. On a $400,000 home, that's $0 down with either program, no gimmicks.
3.5% down: FHA loans
FHA requires just 3.5% down with a credit score of 580 or higher. On a $400,000 home, that's $14,000. Scores between 500 and 579 can still qualify with 10% down. The entire down payment can come as a gift from family, an employer program, or down payment assistance.
3% down: Conventional 97
Conventional loans offer a 3% down payment option for first-time buyers through programs like Conventional 97, HomeReady, and Home Possible. On a $400,000 home, that's $12,000. Private mortgage insurance applies until you reach 20% equity, but it cancels automatically at that point, unlike FHA mortgage insurance which often runs for the life of the loan.
20% down: no PMI
Putting 20% down, $80,000 on a $400,000 home, eliminates private mortgage insurance entirely and often gets you the most competitive rate available. It's the traditional benchmark, but it's no longer the requirement most buyers assume it is.
Where the real number lands for most buyers
Most first-time buyers land in the 3% to 3.5% range using conventional or FHA financing, often supplemented with down payment assistance that covers some or all of that amount.
Frequently Asked Questions
Is 20% down actually required to buy a house?
No. Most loan programs allow down payments between 0% and 5%, depending on the program and your eligibility. Twenty percent avoids mortgage insurance but isn't a requirement.
What is PMI and when does it go away?
Private mortgage insurance is required on conventional loans with less than 20% down. It cancels automatically once you reach 22% equity based on the original loan amortization schedule, or you can request cancellation at 20% equity.
Can my down payment be a gift?
Yes, on FHA loans your entire down payment can be gifted. Conventional loans also allow gift funds, typically with some documentation requirements about the source and relationship of the giver.
Emmett Clark
Licensed Mortgage Loan Officer · NMLS #233747 · 20+ Years Experience
This article has been reviewed for accuracy by Emmett Clark, a licensed mortgage professional serving homebuyers across 18 states including California, Texas, Florida, Arizona, and Colorado. Last updated: July 9, 2026.
About Emmett NMLS #233747
Emmett Clark (NMLS #233747) is a licensed mortgage professional with 20+ years of experience helping families achieve their homeownership dreams. Licensed in 18 states nationwide, Emmett specializes in finding the right mortgage solution for each client's unique situation. Powered by Loan Factory, Emmett provides access to competitive rates and a wide variety of loan programs including conventional, FHA, VA, and down payment assistance programs.
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