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.