Why 20% is Considered the Benchmark:
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Putting 20% down eliminates private mortgage insurance (PMI) on conventional loans.
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It often results in better loan terms, such as lower interest rates and smaller monthly payments.
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Shows strong financial health, which can make you a more attractive borrower to lenders.
| Loan Type | Minimum Down Payment | PMI Required? |
|---|---|---|
| Conventional | 3%–5% | Yes, if <20% down |
| FHA | 3.5% (580+ credit) | Yes (MIP required) |
| VA | 0% | No |
| USDA | 0% | No PMI, but has fees |
| Jumbo | 10%–20%+ | Sometimes, depends |
What Happens If You Put Less Than 20% Down?
Pros:
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Lower upfront cash requirement
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Ability to buy sooner
Cons:
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You’ll usually pay PMI or MIP (adds ~$30–$70/month per $100k borrowed)
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Higher total loan balance and possibly higher interest rate
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Less immediate home equity
So, Is It a Good Idea?
Putting less than 20% down can still be a smart move—especially for:
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First-time buyers
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Those in high-cost markets
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Buyers using FHA, VA, or USDA programs
You can always refinance later to eliminate PMI once you reach 20% equity.
