DayCents

Down Payment

A down payment is the share of a home's price you pay upfront in cash, with the mortgage covering the rest. Putting down 20% lets you avoid private mortgage insurance and shrinks the loan, but it isn't required — conventional loans go as low as 3%, FHA 3.5%, and VA or USDA loans can reach 0% for those who qualify.

Twenty percent is a threshold, not a requirement: it removes PMI on a conventional loan and earns the best pricing, but conventional loans start near 3%, FHA at 3.5%, and VA at zero. On a $350,000 home those routes are $70,000 against $12,250 — often several years of saving apart. Set the target as down payment plus closing costs of 2–5%, or you will reach the goal and find yourself several thousand short of closing. Draining every account to hit 20% is usually the wrong trade: lenders like to see reserves after closing, PMI is temporary and ends at 78% of the original value, and an emergency fund matters more than a round number.