How much down payment do you really need?

One of the biggest reasons people delay buying a home is because they believe they need a 20% down payment.

While putting 20% down can have advantages, it’s far from the only option. Depending on the loan program and your financial situation, some buyers may qualify with a much smaller down payment.

Why Do You Need a Down Payment?

A down payment is the portion of the home’s purchase price that you pay upfront. The remaining amount is typically financed through a mortgage.

For example, if you’re buying a $400,000 home and make a 10% down payment, you’d contribute $40,000 and finance the remaining $360,000 (before any closing costs or adjustments).

Is 20% Required?

Not necessarily.

Many mortgage programs allow qualified buyers to purchase a home with less than 20% down. The required amount depends on the loan type, lender guidelines, your credit profile, and other eligibility factors.

A mortgage professional can explain which programs you may qualify for and what down payment they require.

Should You Put More Down?

A larger down payment can offer several potential benefits, including:

• Borrowing less money
• Lower monthly mortgage payments
• Building equity more quickly
• Potentially qualifying for better loan terms, depending on the lender and program

However, using all of your savings for a down payment may not always be the right decision. Many buyers prefer to keep funds available for moving expenses, emergency savings, furniture, or future home maintenance.

Don’t Forget Closing Costs

Your down payment isn’t the only upfront expense.

Most buyers should also budget for closing costs, which can include lender fees, title services, appraisal fees, prepaid taxes, homeowners insurance, and other transaction-related costs.

Understanding both your down payment and closing costs gives you a more complete picture of what you’ll need before purchasing a home.

Find the Right Balance

The “best” down payment isn’t necessarily the largest one—it’s the one that supports both your homeownership goals and your overall financial health.

A qualified mortgage professional can walk you through different loan options, estimate your required upfront costs, and help you understand what may work best for your situation.