How much down payment do you need?
Many buyers hear 20 percent as the default answer, but real-world home buying is more flexible than that. The right down payment depends on your budget, your loan options, and how much cash you want to keep after closing.
Smaller down payment tradeoffs
- Higher loan amount
- Higher monthly payment
- Possible PMI
- Less cash needed upfront
Larger down payment tradeoffs
- Lower loan amount
- Lower monthly payment
- Potentially less PMI
- More cash tied up in the home purchase
Why PMI matters when choosing a down payment
For many buyers, PMI becomes part of the affordability decision when the down payment is lower. That means the down payment question is not just about how much cash you bring upfront. It can also affect the monthly payment afterward.
If you want a deeper explanation of how PMI works and why lenders require it, read the full guide here: What Is PMI?.
Read more about PMI
If PMI is part of your down payment decision, read What Is PMI? for a clearer explanation of what it is, why lenders require it, and how it affects the monthly payment.
Practical takeaway
The best down payment is not just the biggest one you can possibly make. It is the one that leaves you with a workable monthly payment and enough financial breathing room after closing.