How Much Should You Really Put Down on a House?

Buying a home is one of the biggest financial milestones most people will ever reach. Yet, figuring out exactly how much money to put toward a down payment on a house can be confusing. You’ve probably heard “20%” as the gold standard, but there are many paths to homeownership, and some require far less cash upfront. 

The WorkMoney team put together this guide, listing out several options along with the pros and cons of different down payment amounts. So you make the best decision for your financial situation, even if you don’t have a big nest egg.

• How Much Is A Down Payment For A House

  Your down payment is a chunk of the home’s purchase price that you pay upfront. The bigger your down payment, the less money you'll need to borrow for your mortgage loan. That often means a lower monthly payment and paying less interest over time. You'll also build equity (your ownership value) in your home quickly.

  The 20% Myth

  One of the biggest myths in real estate is needed 20% to buy a home. While putting a 20% down payment can help you avoid private mortgage insurance (PMI), it’s not the only option.

  Today, many conventional loans let you start with between 3% to 5% down, and some government-backed programs require even less. The National Association of Realtors says many first-time buyers put down under 10%, and still build equity as their home’s value grows.

  Let’s look at how much you might actually need to put down for the most common loan types.

  

• Common Types of Home Loans

  Conventional loans

  • Typical minimum: 3–5% down.

  • Why 20% still matters: If you put down less, you’ll usually pay PMI until your equity reaches 20%. You can ask your lender to remove PMI once you reach 20% equity—whether that’s from making payments or your home’s value going up.

  FHA loans

  • Minimum: 3.5% down (with a credit score of at least 580).

  • PMI note: FHA loans have mortgage insurance that often lasts the life of the loan unless you refinance into a different loan type.

  VA Loans

  • Minimum: 0% down for eligible veterans, service members, and some surviving spouses.

  • PMI note: No PMI required, which is a big monthly savings.

  
  USDA Loans

  • Minimum: 0% down for eligible rural and suburban buyers who meet income limits.

  • PMI note: They have a small annual fee instead of PMI.
    

• Pros and Cons of Different Down Payment Amounts

  The size of your down payment affects everything from your monthly mortgage to how much cash you have left after closing. Whether you go bigger or smaller depends on your budget, timeline, and money goals. 

  Here’s a quick snapshot to compare:

• Pros of a larger down payment	Pros of a small down payment
  No monthly PMI	Buy a home sooner
  Better interest rates	Conserve cash to save and invest elsewhere
  Lower mortgage payments	Money to pay off other debts
  Build equity faster	Have funds for home upgrades
  Save thousands in interest	Build an emergency fund

• Trade-Offs to Consider

  Larger down payments: Lower monthly costs and big interest savings, but less cash for emergencies, upgrades, or other investments.
  
  Smaller down payments: Higher monthly costs, more interest over time, and PMI (for most loans). The good news—PMI on conventional loans can drop once you build equity, and partner programs or refinancing can help lower costs later.

• Strategies to Save for a Down Payment Faster

  Saving for a down payment doesn’t have to take years. With the right programs, smart tools, and a budget you can stick to, you can grow your savings faster than you think. Below are some WorkMoney partner tools that could help.

  Government Assistance Programs

  These aren’t handouts. They’re benefits you’ve already earned by paying taxes or meeting eligibility requirements. Many people qualify without knowing it.

  • LIHEAP: Cuts your utility bills so you can divert those savings to your down payment fund.

  • DirectFile: Lets you file taxes directly for free and maximize your refund to boost your savings.

  Other Resources That Help You Save

  • Caribou: Helps you refinance or lower your auto loan rate and free up cash each month.

  • Ownwell: Appeals your property tax assessment, potentially lowering your annual bill and freeing up cash.

  • FindHelp: Links veterans to local services and programs—including homebuying help for veterans and surviving spouses.

  Small Wins Add Up

  Here’s how these resources can work for you. Take Maria, a first-time buyer earning $48,000 a year:

  • She applied for LIHEAP and cut her utility bill by $70/month.

  • Used DirectFile to claim every eligible tax credit, netting a $1,200 refund.

  • Refinanced her auto loan through Caribou, saving $85/month.

  In just 18 months, those moves added up to $6,500 in savings—enough for a 5% down payment on a $130,000 home.

  And it’s not just first-time or lower-income buyers who can benefit. A couple earning $95,000 used Ownwell to cut their property taxes by $600 a year. They put that savings, plus extra cash from their budget, toward a larger down payment—enough to skip PMI entirely.

  Estimating Your Target Down Payment Amount

  You don’t have to drain your savings to buy a home. Keeping an emergency fund is key so unexpected repairs or expenses don’t turn into debt. Look at your income, debt, and monthly budget to decide what’s realistic.

  A smaller down payment (3–5%) might get you into a home sooner. Meanwhile, a larger one (10–20%) can lower your monthly costs and interest over time.

  Interactive Savings Timeline

  Once you know your target, map out how to get there. For example, saving $250/month through LIHEAP, auto refinancing, and a few budget tweaks can add up to $3,000 a year.

  Add in a $1,500 tax refund each spring, and you’ve got $7,500 in just two years. That's enough for 5% down on a $150,000 home. Factor in the PMI drop-off after a few years, and your monthly payment can shrink even more without any extra effort.