Question 1

How much do I need for a down payment on a house?

Accepted Answer

The minimum down payment depends on the loan type. FHA loans require 3.5% with a 580+ credit score. Conventional loans accept as little as 3% for first-time buyers through programs like Fannie Mae's HomeReady. VA and USDA loans require zero down payment for eligible borrowers. However, putting down less than 20% on a conventional loan requires private mortgage insurance (PMI), typically costing 0.5–1.5% of the loan amount annually until you reach 20% equity.

Question 2

Where should I keep my down payment savings?

Accepted Answer

Down payment savings should be in a high-yield savings account (HYSA), money market account, or short-term Treasury bonds — not in stocks or volatile investments. The reason is timing risk: if you plan to buy within 1–3 years and your down payment is in stocks, a market downturn could reduce your savings by 30–40% right when you need them. HYSAs currently yield 4–5%, which is strong for risk-free savings with no lock-up period.

Question 3

Should I put 20% down or buy sooner with less?

Accepted Answer

The right answer depends on your local market and financial situation. In a rising market, waiting 2–3 additional years to save 20% can mean paying $30,000–$60,000 more for the same home. In a stable or declining market, the PMI cost of going in at 10% might be far less than the opportunity cost of waiting. Model both scenarios: calculate what the home might cost when you have 20% saved and compare total costs including PMI to the cost of waiting.

Question 4

Are there down payment assistance programs available?

Accepted Answer

Yes — there are over 2,000 down payment assistance programs in the US, operated by state housing agencies, local governments, and nonprofits. Many offer grants (no repayment required) of $5,000–$25,000 for first-time buyers who meet income limits. Programs like FHA Advantage, Fannie Mae HomeReady, and state-specific programs like CalHFA in California or TSAHC in Texas provide both reduced down payments and assistance grants. Check your state housing finance agency website for current programs.

Down Payment Savings Goal