How Much Down Payment Do You Need to Buy a House in 2026? The 20% Myth, in Dollars

How Much Down Payment Do You Need to Buy a House in 2026? The 20% Myth, in Dollars

Ask a first-time buyer how much they need to buy a house and most will say 20% down. On a $400,000 home that is $80,000 in cash. The 20% figure is real, but it is not a minimum. It is the point where private mortgage insurance drops off a conventional loan. You can buy in 2026 with 3% down conventional, 3.5% down FHA, or 0% down VA or USDA if you qualify. This guide turns each percent into dollars, prices the monthly cost, and adds closing costs. All figures were checked on November 10, 2026.

A close-up of a hand holding a set of house keys, with a blurred home interior in the background.

Photo: The keys are the finish line - the number to save is the down payment plus closing costs. (Photo: Pexels)

What You Will Learn

  • Minimum down payment by loan type, in dollars
  • What 3%, 10% and 20% down cost on a $400,000 home
  • Closing costs, and the real cash-to-close number
  • PMI and FHA insurance costs, and when they end
  • Down payment assistance in your state
  • A savings target you can reach

Step 1: Pick your loan type first

What to do: Find out which loan type fits you before you pick a down payment number.

How: There is no single minimum. The CFPB says most buyers need at least 3% down, and many loans need 5% or more. Fannie Mae HomeReady and Freddie Mac Home Possible allow 3% down with a 620+ score and income at or below 80% of the area median income. A repeat buyer on a standard conventional loan usually starts at 5%. An FHA loan needs 3.5% down with a 580+ score, or 10% with a 500-579 score; HUD states the FHA minimum is 3.5% in most cases. VA loans need 0% down for eligible service members, veterans and some surviving spouses. USDA loans need 0% down for eligible rural or suburban homes, with income limits.

Example: Maya has a 640 score and earns below 80% of her area median income, so HomeReady lets her buy with 3% down.

Common mistake: Assuming every loan needs 20% down.

Flowchart: the six steps to your down payment number - pick your loan type, turn the percent into dollars, add closing costs, price the insurance, check state assistance, and set the target and save.

Illustrative diagram - The six steps to your down payment number. NOT a real CFPB screenshot.

Step 2: Turn the percent into dollars

What to do: Multiply each down payment percent by the home price you are shopping for.

How: On a $400,000 home, 3% down is $12,000, 3.5% is $14,000, 5% is $20,000, 10% is $40,000, and 20% is $80,000. The gap between the lowest conventional down payment and 20% is $68,000 in cash. NAR’s 2025 Profile of Home Buyers and Sellers puts the first-time median at 10% - the highest since 1989 - repeat buyers at 23%, and all buyers at 19%. It covers buyers who purchased between July 2024 and June 2025. The first-time median was 6% in 2020 (reported), so 10% is a 2025 number, not a timeless rule.

Example: At the 2025 first-time median of 10%, a buyer needs $40,000 on a $400,000 home. With a 3% HomeReady loan she needs $12,000.

Common mistake: Comparing percents, not dollars: 3% sounds small until you see $12,000.

Table: minimum down payment by loan type on a $400,000 home - VA loan 0% or $0, USDA loan 0% or $0, HomeReady 3% or $12,000, FHA loan 3.5% or $14,000, repeat buyer 5% or $20,000, no-PMI threshold 20% or $80,000.

Illustrative diagram - Minimum down payment by loan type on a $400,000 home. NOT a real CFPB screenshot.

A two-story suburban house with a garage and a front lawn at sunset, with warm light in the windows.

Photo: On a $400,000 home, the down payment ranges from $12,000 to $80,000 depending on the loan. (Photo: Pexels)

Step 3: Add closing costs

What to do: Add closing costs to your down payment before you set your savings target.

How: Closing costs are lender fees, appraisal, title services and prepaid taxes and insurance. The CFPB says they typically run 2% to 5% of the purchase price, not including the down payment. On a $400,000 home that is $8,000 to $20,000. Cash to close is the down payment plus closing costs: with 3% down, $12,000 plus $8,000 to $20,000 is $20,000 to $32,000 in cash. Cash to close is often 50% to 100% more than the down payment alone. Your Loan Estimate, due within three business days of applying, shows your exact closing costs. To check what your income can support, see our guide to how much house you can afford in the USA in 2026.

Example: Sara saves $12,000 for a 3% down payment. Her Loan Estimate shows $12,000 in closing costs, so she needs $24,000 in cash to close.

Common mistake: Saving only the down payment, then finding the cash needed is nearly double.

Bar chart: down payment in dollars on a $400,000 home - 3% conventional $12,000, 3.5% FHA $14,000, 5% conventional $20,000, 10% typical first-time $40,000, 20% no PMI $80,000.

Illustrative diagram - What the percent means in dollars on a $400,000 home. NOT a real CFPB screenshot.

Diagram: cash to close with 3% down on a $400,000 home - $12,000 down payment plus $8,000 to $20,000 in closing costs equals $20,000 to $32,000 in cash to close.

Illustrative diagram - Cash to close with 3% down on a $400,000 home. NOT a real CFPB screenshot.

Step 4: Price the mortgage insurance

What to do: Work out what mortgage insurance adds to your monthly payment.

How: Below 20% down on a conventional loan, you usually pay private mortgage insurance, or PMI. PMI protects the lender and typically costs 0.5% to 1% of the loan per year (reported). On a $388,000 loan - a $400,000 home with 3% down - that is about $162 to $323 a month. PMI ends: ask for cancellation at 80% of the original value, and it must end automatically at 78% if payments are current. FHA mortgage insurance, or MIP, has an upfront premium of 1.75% - $6,755 on a $386,000 loan - plus 0.55% a year, about $177 a month. With under 10% down, FHA MIP usually lasts the life of the loan (reported); at 10% or more it generally ends after 11 years (reported). Freddie Mac’s survey put the average 30-year fixed rate at 7.18% for the week ending November 5, 2026, down from 7.24%. At 7.18% over 30 years, principal and interest on a $388,000 loan is $2,628 a month, so with PMI the payment is about $2,790 to $2,951 a month. On a $320,000 loan with 20% down it is $2,168 a month with no PMI.

Example: Two buyers buy the same $400,000 home at 7.18%: 3% down pays $2,790 to $2,951 a month, 20% down pays $2,168. The first needs $68,000 less cash but pays $620 to $780 more a month until PMI ends.

Common mistake: Choosing the smallest down payment without pricing PMI.

A family of four hugging in an empty room with cardboard moving boxes on the floor around them.

Photo: Buying sooner with less down means a higher monthly payment - price it before you choose. (Photo: Pexels)

Table: monthly cost at 7.18% on a 30-year fixed loan for a $400,000 home - 3% down, loan $388,000, $2,790 to $2,951 a month; 10% down, loan $360,000, $2,589 to $2,739 a month; 20% down, loan $320,000, $2,168 a month.

Illustrative diagram - Monthly cost at 7.18% on a 30-year fixed loan. NOT a real Freddie Mac screenshot.

Step 5: Check state assistance

What to do: Look up your state housing finance agency before assuming you must save it all yourself.

How: Most states run down payment assistance through their housing finance agency, and amounts and rules differ in every state. New Jersey is one example: its agency offers up to $15,000 toward down payment and closing costs in higher-cost counties, $10,000 elsewhere, as a 0% interest, no-monthly-payment loan, forgivable after five years (reported). A qualifying first-generation buyer can add $7,000, for up to $22,000 in total (reported). Other states offer grants, forgivable loans or low-interest second mortgages. Most require first-time-buyer status, income and price limits, a primary residence, and an approved lender.

Example: A first-generation buyer in Bergen County, New Jersey, gets $15,000 plus $7,000 - $22,000 she does not repay if she stays five years (reported).

Common mistake: Assuming your state matches New Jersey’s $15,000, or that assistance is a grant, not a loan.

Step 6: Set your target and save

What to do: Pick a down payment you can reach, add closing costs, and save that total separately.

How: Work out cash to close from your loan type: down payment plus 2% to 5% for closing costs. Keep the CFPB’s recommended cushion - three to six months of expenses - as a separate emergency fund. If 20% is years away, compare waiting with PMI: two more years of rent may cost more than $162 to $323 a month of PMI. Already own a home? See whether you should refinance your mortgage in 2026. Get preapproved with two or three lenders, compare Loan Estimates, and ask what your payment looks like at 3%, 10% and 20% down.

Example: A buyer with a 3% HomeReady loan saves $32,000 and keeps $15,000 in a separate emergency fund.

Common mistake: Putting every dollar into the down payment, then facing a job loss with no cash left.

Diagram: six mistakes that cost first-time buyers money - waiting to save the full 20%, budgeting the down payment only, emptying the emergency fund, ignoring PMI on a small down payment, assuming FHA insurance ends, and skipping state assistance.

Illustrative diagram - Six mistakes that cost first-time buyers money. NOT a real CFPB screenshot.

Checklist

  • ☐ My loan type and its minimum down payment.
  • ☐ Cash to close, including closing costs.
  • ☐ PMI or MIP priced, and when it ends.
  • ☐ State assistance checked.
  • ☐ Emergency fund of three to six months kept separate.
  • ☐ Loan Estimates compared from two or three lenders.

FAQ

Do I really need 20% down to buy a house in 2026?

No. 20% is where PMI drops off a conventional loan, not the minimum. Conventional loans go as low as 3% down, FHA 3.5%, and VA and USDA 0% for eligible borrowers.

How much is 3% down on a $400,000 house?

$12,000. With closing costs of 2% to 5%, cash to close is $20,000 to $32,000. On the same home, 10% down is $40,000 and 20% down is $80,000.

When does PMI go away?

Ask for cancellation at 80% of the home’s original value; it must end automatically at 78% if payments are current. FHA MIP usually lasts the life of the loan with less than 10% down (reported).

What is the 30-year mortgage rate right now?

Freddie Mac’s survey put the average 30-year fixed rate at 7.18% for the week ending November 5, 2026. It is a national average, not a quote.

Can down payment assistance cover my whole down payment?

Sometimes. New Jersey offers up to $15,000 plus a $7,000 first-generation add-on (reported). Check your own state agency - amounts and rules differ everywhere.

Sources

All figures checked November 10, 2026, against the CFPB, Fannie Mae, Freddie Mac, HUD and NAR.

Disclaimer: For education only, not mortgage, tax or investment advice. Loan programs, rates and assistance rules change and vary by state and lender.