Why do people say you need 20% down?

20% down is the line where private mortgage insurance (PMI) is no longer required on most conventional loans. Under 20% down, PMI is typically added to the payment, often 0.5% to 1.5% of the loan per year, until the loan reaches 20% equity.

Is it better to put down more or less on a house?

A larger down payment means a smaller loan, no PMI once past 20%, and less interest paid over time, but it also ties up more cash in the home and can delay buying while saving. A smaller down payment gets you into a home sooner and keeps more cash liquid for an emergency fund or other goals, but usually means PMI and a larger loan. Neither is universally right; it depends on how much cash flexibility matters to you versus the extra monthly cost.

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20% is a benchmark, not a rule

Down payments

How much down payment do you actually need?

Q: How much down payment do I need to buy a house?

It depends on the loan type. Conventional loans can go as low as 3% down for qualified buyers, FHA loans allow 3.5% down, and VA or USDA loans can allow 0% down for eligible buyers. 20% down is a common benchmark because it avoids private mortgage insurance (PMI), not because it's a minimum requirement.

"You need 20% down" is one of the most repeated pieces of homebuying advice — and one of the most misleading. Here's what 20% actually gets you, and what your real options are.

20% is a line, not a minimum

You don't need 20% down to buy a home. Plenty of loans go much lower: conventional loans can go as low as 3% down for qualified buyers, FHA loans allow 3.5% down, and VA or USDA loans can allow 0% down for eligible buyers. 20% matters for a different reason — it's the line where private mortgage insurance (PMI) is no longer required on most conventional loans.

Loan type	Minimum down
Conventional (qualified buyers)	~3%
FHA	3.5%
VA / USDA (eligible buyers)	0%
Conventional, no PMI	20%

What PMI actually costs

Under 20% down, PMI is typically added to your monthly payment — usually 0.5% to 1.5% of the loan per year — until you reach 20% equity, at which point you can ask to have it removed. It's not a penalty, just the lender's protection on a smaller down payment. On a $300,000 loan, that's roughly $125–$375 a month, depending on the rate.

The real tradeoff: more down vs. less down

Putting down more

Smaller loan, no PMI past 20%, less interest paid over time. Cost: more cash tied up in the home, possibly a longer wait to buy.

Putting down less

Buy sooner, keep more cash liquid for an emergency fund or other goals. Cost: usually PMI, and a larger loan balance.

Neither side is universally right. It depends on how much you value having cash on hand — including a real emergency cushion after closing — versus the extra monthly cost of a smaller down payment. A down payment that empties your entire savings isn't the "better" choice just because it avoids PMI.

Track your own down payment savings → See the 20%/PMI rule alongside the others →

Where Zowly stops: this is general education on how down payments work, not a recommendation for your specific loan or lender. Zowly's tools show your own numbers — how close you are to a target down payment, and what's realistic given your timeline — so you can weigh the tradeoff yourself.

General education, not financial or lending advice. Loan minimums, PMI rates, and eligibility vary by lender, loan program, and borrower. Zowly is a financial calculation and education tool, not a licensed advisor or lender.