The old "you need 20% down" advice costs buyers more than it saves. The right down payment isn't a fixed rule — it's a trade-off between your monthly payment, your mortgage insurance, and keeping cash in your pocket.
What changes as you put more down
- Your loan amount and payment shrink — less borrowed, less interest
- Private mortgage insurance (PMI) — on a conventional loan, PMI typically applies under 20% down and drops off as you build equity
- Your cash reserves — every extra dollar down is a dollar not available for repairs, furniture, or emergencies
When a lower down payment wins
Putting 5% down (or 3% on some conventional programs, 3.5% on FHA) can make sense when keeping cash on hand matters more than shaving the payment — a first home, a fixer that'll need work, or simply not wanting to drain your savings. PMI isn't permanent, and you can often remove it later as your equity grows.
When 20% is worth it
If you have the cash and the rest of your budget is solid, 20% avoids PMI entirely and gives you the lowest payment and instant equity. Just don't do it if it leaves you house-rich and cash-poor.
There's no universal winner. I'll run 5%, 10%, and 20% side by side so you can see the real payment and PMI difference — then you decide what fits your life, not a rule of thumb.
Self-employed? Same flexibility
Down-payment options exist across bank-statement and other creative programs too. Want to see the numbers? Try the payment calculator or reach out and I'll build the comparison for you.
This article is general education, not a commitment to lend or an offer of credit. Program availability, terms, rates, and qualification guidelines vary by lender and are subject to change; all loans are subject to underwriting and final approval. Market figures are approximate and change over time. For guidance specific to your situation, reach out directly. Garrett Potz, NMLS #631592 · Affinity Home Lending, Company NMLS #1181151 · Equal Housing Lender.