The right down payment balances monthly payment, PMI cost, cash reserves, and long-term flexibility. There isn't one correct number — a low down payment plus PMI is often reasonable, and so is a larger down payment that avoids PMI.
Who this may fit
Anyone deciding between putting less down and keeping more cash on hand, versus putting more down to lower payment and avoid or shorten PMI.
Key decision factors
- Impact on loan-to-value (LTV)
- Whether PMI applies and how long it may last
- Cash reserves after closing
- Opportunity cost of the cash used for down payment
- Comfort with monthly payment size
Illustrative example
Common mistakes
- Assuming 20% is required for a conventional loan
- Draining reserves to hit a specific LTV
- Ignoring how PMI structure differs between programs
Questions to ask a licensed loan officer
- How does each down-payment tier change my rate and PMI?
- What's the total cost of PMI over the time I plan to keep this loan?
- Are there down-payment assistance or grant programs relevant to my situation?
Sources
We link to primary sources for every substantive claim. Publication dates below are marked as unverified until confirmed under our Source Policy.
- Fannie Mae Single-Family Selling GuideFannie Mae · Published/effective: living document · Last checked: 2026-07-28
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