How Much Money Do You Need For A Down Payment On A House?

Down Payment On A House
Written by Peace

Most people who want to buy a house may consider how much down payment they will need on the house.

You should know different things about down payment to help you know how much you will need for a down payment on a house.

So what is a down payment?

A down payment is simply a part or share of the price of the house that you pay with your money. The house is officially yours when you are done paying your down payments. 

Do You Need A 20% Down Payment On A House

20% Down Payment On A House

Owning a home by putting in just 20% of the house price could sound unrealistic, but it is possible. It is still possible if you still have something more to add up.

It would help if you looked into the merit and demerits of putting in a large down payment.

You must note that it is not about putting in your down payment. Check to see that it works best with your finance and goals.

What Are The Merits And Demerits Of Putting A 20% ​​down Payment

Read Also How Much Will Home Price Continue To Rise


A 20% down payment is generally considered fair on many loans and lenders. If you can put 20% down in your home, you will likely get some essential benefits. Some of these benefits include;

  1. No PMI

You will need to put down 20% to avoid buying private mortgage insurance (PMI). PMI is a kind of insurance that protects the individual or financial institution you borrowed from if you eventually fail to pay back your house mortgage.

  1. Equity

Equity means the amount or value of a house that you own. Here are two ways in which you can achieve equity

  • If your home goes up in price
  • If you pay your mortgage principal with your monthly mortgage payments

In most cases, lenders automatically cancel the PMI once you have created at least 22% equity in your home.

  1. Better Interest Rates

If your paycheck is high, you are at low risk for lenders. If you can save at least 20% on your loan when you close, you may be able to reach lower interest rates. A low-interest rate of one or two points can save you thousands of dollars during your loan period.

  1. Low Monthly Payments

The more you pay, the less money you will borrow on your mortgage loan. If you borrow less, your monthly payments will be smaller. aThis makes it easy to set a budget to adjust any other expenses you receive each month.

  1. Competitive Edge More Than Other Buyers

Real estate agents often work with buyers with at least 20% pay. Low mortgage rates suggest that your finances may be minimal, so you may have fewer problems finding a home lender.

This can give you more control over other buyers, especially if the home you want is hot on the market.


Putting 20% ​​down is not suitable for every buyer. Some buyers cannot afford it. Some would like to keep some money for future repairs and other expenses. Think about these issues if you are trying to decide how much money you need to buy a house.

  1. Additional Financial Risk

Once you pay in money to your mortgage, it becomes hard to get it. If you feel there will be a need for something important later, it may be wise to put down and build your emergency fund.

  1. A Small Amount Of Repairs And Other Items

Homes that need a little renovation can be a source of income for new buyers. However, the more you pay, the less money you will have left over to repair.

  1. Long Save Time

For most people, saving a small payment can take months, years, or even decades. However, waiting until you get a 20% lower pay can lead to more significant cost savings if you consider what you would spend each month renting.

Over time, it may be more expensive to buy a home now than to pay rent while saving a 20% lower down payment.

Can You Purchase A Home Without Any Possible Down Payment?

The answer is yes! It is possible to buy a home without any required down payment. However, you will not be able to get a regular loan except a government-backed loan.

Government-subsidized loans are housing loans that the government guarantees. They pose a small risk to lenders because the government will pay for financial losses if you fail to pay up the loan you collected. 

This means lenders will be more willing to pay lower interest rates and offer lower payment requirements. In the meantime, you can buy a home without a down payment if you qualify for a VA or USDA loan. 

VA loans are loans set aside for current and former members of the Armed Forces and other surviving spouses, while USDA loans are home loans issued to those in rural and urban areas.

Both VA and USDA loans have no down payment guarantee, but you must meet the minimum qualifications set by the USDA and the Department of Human Resources (VA).

What Are The Minimum Down Payment Requirements

The amount you choose as your down payment depends on the type of loan you choose to apply for.

Generally, it depends on the amount you earn monthly and how suitable your income is. Your down payment also depends on factors like if you are buying your house in rural or urban areas.

This is to say that the type of house you purchase will determine how much down payment you will need for a house. 


How much you will be needing a down payment on a house relies solely on you as the individual.

This is because you know your income and how you intend to spend it till the next month. You no longer need a 20% down payment to buy a home.

You may even get a house with a 3% down payment, and you may even be able to buy a house without a down payment if you qualify for a VA or USDA loan.

Hopefully, this article gets you clarified on the amount of down payments you want to start up with. 

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