Three percent down, zero down, or twenty — here's the real math on each, including when waiting to save more costs you money.
The 20% rule is a leftover from a different era. Today conventional purchase financing starts at 3% down, FHA at 3.5%, and both VA and USDA can be structured at zero down for eligible borrowers.
What the smaller down payment actually costs
Two things: mortgage insurance and a slightly higher rate tier at high loan-to-value. Both are quantifiable, and conventional mortgage insurance falls off — see the mortgage insurance breakdown for how and when.
- Conventional MI: cancellable, priced off score and LTV
- FHA MIP: usually for the life of the loan at minimum down
- VA: no monthly MI, one-time funding fee (waived for many disabled veterans)
The cost of waiting
Saving another 15% takes most households years. In that window, rent is spent, and both prices and rates may move. Run both scenarios in the calculators: buying now with MI versus buying later with a larger down payment. Sometimes waiting wins. Often it does not.
Keep reserves
Do not drain savings to hit an arbitrary down payment. Three to six months of full housing cost in the bank after closing matters more to your stability than one percent of purchase price. Let's price both versions.
Programs mentioned
- Home Purchase
Buy with a plan, not a guess.
- FHA Loans
Flexible credit, low down payment.
- VA Loans
The strongest benefit in lending.
- USDA Rural Loans
Zero down outside the metro core.
Keep reading
- The First-Time Buyer Roadmap: Nine Steps From Curious to Closed
Every step from your first budget conversation to the day you get keys — including what happens behind the scenes while you wait.
- How Much House Can You Actually Afford?
Pre-approval tells you what a lender will allow. This is how to figure out what you should actually spend.
- Debt-to-Income Explained: The Number That Decides Your Approval
How underwriters calculate DTI, which debts count, and the fastest levers to move it before you apply.
- Financing Your First Rental: DSCR, Reserves, and Real Returns
Investment loans price differently, require more down, and judge the property as much as the borrower. Plan for all three.