Down payment: how much, and where it matters

Program minimums (general)

These are typical minimums. Specific programs and lenders may set higher floors based on credit, occupancy, or property type.

• Conventional: as low as 3% for some first-time-buyer programs; commonly 5%; 20% to avoid mortgage insurance.
• FHA: 3.5% if your credit qualifies for it (and the property meets FHA standards).
• VA: 0% for eligible service members and veterans.
• USDA: 0% for eligible properties in designated rural areas (parts of California qualify).
• Jumbo (above conforming limits): typically 10–20% or more, depending on the lender and the size of the loan.

Why the floor isn't usually the right answer

Putting the minimum down preserves cash but adds three things to the monthly cost: a larger loan balance (more interest), often mortgage insurance until you reach a threshold, and sometimes a higher rate or fee adjustment for the higher loan-to-value ratio.

On the other hand, putting a lot more down ties up cash you could use for reserves, post-closing repairs, or unexpected life events. The “right” number is rarely the extreme on either end.

Mortgage insurance, in plain English

When you put less than 20% down on a conventional loan, the lender charges mortgage insurance to protect itself in case the loan defaults. You pay it monthly until you reach the threshold to drop it (which may be by paying down the balance or by the home appreciating, depending on the program rules).

FHA loans have a similar mechanism with different rules, the insurance can stay for the life of the loan in some structures, which is part of the conversation when comparing programs.

Where the down payment can come from

• Personal savings (most common).
• Gift funds from family, programs vary on what's allowed and what documentation is required.
• Sale of an existing home.
• Down-payment-assistance programs (CalHFA in California, employer programs at some companies).
• Retirement accounts in some cases (with trade-offs, taxes, withdrawal rules, opportunity cost).

What we look at on the call

Less the magic number, more the trade-offs. We sketch out what your monthly payment looks like at different down-payment levels, what reserves you'll have left, what mortgage insurance does to the math, and how the bigger picture (planned moves, career changes, family timing) shapes the answer.