How much should a first-time buyer put down, and do I really need 20%?

What's the minimum down payment?

Loan	Minimum down
VA (eligible veterans and service members)	0% with full entitlement
Conventional (first-time buyers)	3%
Conventional (everyone else)	5%
FHA	3.5% with a 580+ credit score

Down payment assistance can cover some or all of that in many areas.

What does 20% down actually get me?

On a conventional loan, 20% down means no mortgage insurance and usually a slightly better rate. It also means a smaller loan and a lower payment. But it's not a requirement, and on FHA, putting down more doesn't remove the mortgage insurance unless you put down at least 10% (and even then it lasts 11 years).

Is it smarter to put down less?

Often, yes, if putting 20% down would drain your savings. Things to keep in the bank after closing:

• Closing costs, usually about 2% to 5% of the price. See closing costs and escrow.
• An emergency fund: a few months of expenses, because homes break.
• Moving and move-in costs.

A slightly higher payment with money in the bank is usually safer than a lower payment with none.

How do I decide?

Look at three numbers for each option: the monthly payment, the cash to close, and what's left in savings. Mortgage insurance on a conventional loan can be removed later, so it's often a short-term cost, not a forever one.

Example scenario (illustrative)

A first-time buyer in Denver has $70,000 saved for a $400,000 condo. Putting 20% down ($80,000) isn't possible, and 15% would leave almost nothing for closing costs. They choose 5% down on a conventional loan, pay modest PMI, and keep about $35,000 in the bank for closing costs and emergencies. PMI can come off once they reach 20% equity.

Our take

The 20% rule keeps more people renting than it should. Put down what lets you sleep at night, keep a real cushion, and let me show you side by side what 3%, 5%, 10%, and 20% down look like in payment and cash.