Quick answer
You don't need 20% down. Conventional loans allow 3–5%, FHA loans 3.5%, and VA and USDA loans 0%. On a $350,000 home that's $10,500–$17,500 for a conventional loan — but under 20% down adds PMI. Also budget 2–5% of the price for closing costs.
The down payment is the single biggest hurdle for most aspiring homeowners. You've probably heard you need 20% — but is that actually true? No. While 20% is ideal, most Americans put down far less. Here's exactly how much you need and how to get there faster.
Down Payment Options: You Have More Than You Think
| Loan Type | Minimum Down Payment | On a $350,000 Home | Who Qualifies |
|---|---|---|---|
| Conventional | 3–5% | $10,500–$17,500 | Good credit (620+), first-time buyers |
| FHA | 3.5% | $12,250 | Credit 580+, more flexible requirements |
| VA | 0% | $0 | Veterans, active military, eligible spouses |
| USDA | 0% | $0 | Rural areas, income limits apply |
| Conventional (standard) | 10% | $35,000 | Good credit, avoids highest PMI rates |
| Conventional (no PMI) | 20% | $70,000 | Best rates, no private mortgage insurance |
The Real Cost of Putting Less Than 20% Down
If you put less than 20% down on a conventional loan, you'll pay Private Mortgage Insurance (PMI). Here's how it impacts your monthly payment on a $350,000 home:
| Down Payment | Loan Amount | Monthly PMI | Monthly Payment (P&I + PMI) |
|---|---|---|---|
| 5% ($17,500) | $332,500 | $220 | $2,322 |
| 10% ($35,000) | $315,000 | $158 | $2,150 |
| 15% ($52,500) | $297,500 | $89 | $1,968 |
| 20% ($70,000) | $280,000 | $0 | $1,770 |
PMI adds $89–$220/month, but it drops off once you reach 20% equity. In many markets, paying PMI and buying sooner beats waiting years to save 20% while home prices rise.
How Long Will It Take to Save?
Here's how long it takes to save different down payment amounts at various monthly savings rates:
| Monthly Savings | $12,250 (3.5% FHA) | $35,000 (10%) | $70,000 (20%) |
|---|---|---|---|
| $500/month | 2 years | 5.8 years | 11.7 years |
| $1,000/month | 1 year | 2.9 years | 5.8 years |
| $1,500/month | 8 months | 1.9 years | 3.9 years |
| $2,000/month | 6 months | 1.5 years | 2.9 years |
Don't Forget Closing Costs
Your down payment isn't the only cash you need at closing. Budget an additional 2–5% of the purchase price for closing costs. On a $350,000 home, that's $7,000–$17,500 extra. Read our complete guide on how much closing costs actually are.
Plus, you should have 3–6 months of mortgage payments in reserve ($5,000–$10,000) for emergencies after buying. Total cash needed to buy a $350,000 home with 10% down: approximately $50,000–$60,000.
9 Strategies to Save for a Down Payment Faster
- Open a high-yield savings account. Don't leave your down payment fund in a checking account earning 0.01%. High-yield savings accounts offer 4–5% APY — on $30,000, that's $1,200–$1,500/year in free interest.
- Automate transfers. Set up automatic weekly or bi-weekly transfers to your house fund. Treat it like a bill you pay yourself.
- Cut one major expense. Downgrade your apartment, sell one car, or cut a subscription bundle. One $300/month savings adds $3,600/year.
- Use windfalls strategically. Tax refunds, bonuses, gifts, and stimulus payments go straight to the house fund.
- Pick up a side hustle. Even $500–$1,000/month from freelancing, tutoring, or gig work adds $6,000–$12,000/year.
- Ask family for a gift. Gift funds are allowed for down payments on most loan types. Parents can gift up to $18,000/year per person tax-free (2026 limit).
- Explore down payment assistance programs. Many states and cities offer grants or forgivable loans for first-time buyers — typically $5,000–$20,000.
- Consider a lower-cost area. A $250,000 home requires only $8,750 down (3.5%) vs. $17,500 on a $500,000 home.
- Use a first-time homebuyer IRA withdrawal. You can withdraw up to $10,000 from a traditional IRA penalty-free for a first home purchase.
Should I Wait for 20% or Buy Now?
The math often favors buying sooner with a smaller down payment if:
- Home prices are rising 3–5%/year in your area (waiting means a more expensive house)
- PMI costs less than the appreciation you'd miss by waiting
- You have stable income and plan to stay 5+ years
Run the specific comparison with our Rent vs Buy Calculator to see whether buying now with less down or waiting for 20% makes more financial sense for your situation.
Frequently Asked Questions
Is it better to put 20% down?
20% down avoids PMI and lowers your monthly payment, but waiting years to save it can cost more if home prices and rents keep rising.
How long does it take to save for a down payment?
Saving $1,000 a month reaches a 3.5% FHA down payment on a $350,000 home in about a year, and 10% ($35,000) in just under 3 years.
Where should I keep my down payment savings?
In a high-yield savings account, money market account or short-term CDs — not the stock market, since you'll need the money soon.
Found this useful? Share it with someone who needs it.
Disclaimer: This article is for educational purposes only and is not financial, tax, or legal advice. Figures are estimates based on publicly available data at the time of writing. Consult a qualified professional about your situation.