The average down payment for first-time buyers is 8% — about $32,000 on a $400,000 home. Add closing costs of 2–5% and you need $40,000–$52,000 in cash before you get the keys. This hub breaks down exactly how much you need, where to save it, and how to reduce it with assistance programs.
Down Payment by Loan Type
| Loan Type | Minimum Down | PMI Required? | Notes |
|---|---|---|---|
| VA Loan | 0% | No | Veterans only |
| USDA Loan | 0% | 0.35%/yr fee | Rural eligible areas |
| FHA Loan | 3.5% | Yes (life of loan) | 580+ credit |
| Conventional 97 | 3% | Yes (removable) | 620+ credit |
| HomeReady/Home Possible | 3% | Yes (reduced) | Income limits |
| Conventional | 5–20% | Until 20% equity | Best rates at 20%+ |
| Jumbo | 10–20% | Sometimes | 700+ credit |
20% Down Payment by Home Price
| Home Price | 20% Down | 10% Down | 5% Down | 3.5% Down |
|---|---|---|---|---|
| $300,000 | $60,000 | $30,000 | $15,000 | $10,500 |
| $350,000 | $70,000 | $35,000 | $17,500 | $12,250 |
| $400,000 | $80,000 | $40,000 | $20,000 | $14,000 |
| $500,000 | $100,000 | $50,000 | $25,000 | $17,500 |
| $600,000 | $120,000 | $60,000 | $30,000 | $21,000 |
| $750,000 | $150,000 | $75,000 | $37,500 | $26,250 |
| $1,000,000 | $200,000 | $100,000 | $50,000 | N/A |
How to Save for a Down Payment (Fast)
On a $400,000 home, 10% down + closing costs = ~$52,000. Here’s how to save it in 2–3 years:
Step 1: Open a dedicated HYSA. Use a high-yield savings account earning 4–5% APY — separate from your regular savings so you’re not tempted to spend it. At current rates, $40,000 earning 4.5% grows by ~$1,800/year just in interest.
Step 2: Automate contributions. Set up an automatic transfer the day after each payday — before you can spend it. Even $1,500/month compounds significantly:
| Monthly Savings | Time to $52,000 (4.5% HYSA) |
|---|---|
| $1,000 | ~50 months (~4.2 years) |
| $1,500 | ~33 months (~2.75 years) |
| $2,000 | ~24 months (2 years) |
| $2,500 | ~19 months (~1.6 years) |
Step 3: Find extra dollars to accelerate. Tax refunds, bonuses, and side income go directly to the down payment fund — don’t let them hit your checking account.
Step 4: Consider down payment assistance programs. Many buyers save for years without realizing they qualify for state grants that can cover $10,000–$25,000 in down payment and closing costs.
Down Payment Assistance Programs
Every state has programs to help buyers with limited down payment funds. Common types:
| Program Type | How It Works | Repayment |
|---|---|---|
| Grant programs | Free money, no repayment required | None |
| Forgivable loans | 0% loan forgiven after 5–10 years of living there | Forgiven if you stay |
| Deferred loans | 0% loan repaid when you sell or refinance | At future sale |
| Matched savings (IDA) | State matches your savings 1:1 to 3:1 | None — it’s a match |
How to find your state’s programs: Go to your state’s Housing Finance Agency (HFA) website, or search “[your state] first time home buyer programs.” Income limits typically range from $80,000–$130,000/year depending on state and county.
The PMI Math: Is Avoiding It Worth Waiting?
PMI costs roughly 0.5%–1% of the loan amount annually. On a $350,000 loan, that’s $1,750–$3,500/year ($146–$292/month).
Scenario A: Wait 18 months to save 20% down ($80,000 on a $400,000 home). Meanwhile, home prices rise 5% — the house now costs $420,000. You need $84,000 down. The waiting cost you the 5% appreciation you paid instead of earned.
Scenario B: Buy now with 10% down, pay PMI. You capture the 5% appreciation, own equity from day one. PMI drops off once you reach 20% equity (often 5–7 years via payments + appreciation).
The takeaway: In appreciating markets, waiting to reach 20% often costs more than PMI. In flat or declining markets, waiting can protect you from buying at the peak. The right answer depends on your local market.
PMI removal triggers:
- You reach 20% equity automatically (Homeowners Protection Act requires lender to cancel at 22%)
- You can request cancellation at 20% equity based on original purchase price
- You refinance once equity exceeds 20%
- You get a new appraisal showing 20%+ equity after appreciation
Pros and Cons of Different Down Payment Sizes
| Down Payment | Pros | Cons |
|---|---|---|
| 3–3.5% | Buy sooner, lower cash required | PMI, higher monthly payment, lower equity buffer |
| 5–10% | Reduced PMI, faster loan paydown | Still have PMI (until 20%) |
| 20% | No PMI, best rates, immediate equity | Large cash requirement, opportunity cost of capital |
| >20% | Lower loan balance | Cash tied up in illiquid asset; consider investing excess |
Most financial planners recommend 5–10% down for buyers with solid incomes and emergency funds, rather than depleting savings to reach 20%.
Cluster Articles — Full List
Down Payment Guides
- How Much Down Payment Do You Need?
- How to Save for a Down Payment (Fast)
- Average Down Payment on a House in 2026
- Median Down Payment by Home Price & Location
- Is $100K Enough for a Down Payment?
20% Down Payment by Home Price
- 20% Down on a $300K House
- 20% Down on a $350K House
- 20% Down on a $400K House
- 20% Down on a $450K House
- 20% Down on a $500K House
- 20% Down on a $550K House
- 20% Down on a $600K House
- 20% Down on a $700K House
- 20% Down on a $750K House
- 20% Down on a $850K House
- 20% Down on a $1M House
- 20% Down on a $1.5M House
Closing Costs
- Average Closing Costs in 2026
- Closing Cost Calculator
- Closing Costs by State
- Closing Costs on a $300K House
- Closing Costs on a $350K House
- Closing Costs on a $400K House
- Closing Costs on a $500K House
- Closing Costs on a $550K House
- Closing Costs on a $600K House
- Closing Costs on a $750K House
- Closing Costs on an $800K House
Related Hubs
- First-Time Home Buyer Hub — programs and process
- Mortgage Affordability Hub — how much house you can afford
- Mortgages Hub — full mortgage guide
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy