The 20% myth

"You need 20% down to buy a house" is one of the most repeated pieces of real estate folklore, and it's largely wrong for most buyers. Twenty percent down is the threshold at which you avoid paying private mortgage insurance on a conventional loan — it was never a universal requirement to qualify for a mortgage in the first place. Plenty of buyers in Miami-Dade and Broward close every month with far less down.

That doesn't mean down payment size doesn't matter — it changes your monthly payment, your loan pricing, and in some cases how competitive your offer looks. It just means the number to plan around isn't automatically 20%.

What conventional loans actually require

Many conventional loans allow as little as 3% down for first-time buyers, through programs like Fannie Mae's HomeReady and Freddie Mac's Home Possible, and 5% is a common baseline for other eligible buyers. Below 20% down, lenders require private mortgage insurance (PMI) — an added monthly cost that protects the lender, not you, in case you default. It's not a penalty for a smaller down payment so much as the mechanism that makes a smaller down payment possible at all.

FHA loans: as little as 3.5% down

FHA loans, insured by the federal government, allow down payments as low as 3.5% for borrowers with a credit score of 580 or higher; borrowers with lower scores typically need a larger down payment, and requirements can vary somewhat by lender. Instead of PMI, FHA loans carry their own mortgage insurance premium (MIP): an upfront premium (around 1.75% of the loan amount, often rolled into the loan) plus an ongoing annual premium. The key difference from conventional PMI: if you put down less than 10%, FHA's MIP typically stays for the life of the loan; put down 10% or more, and it can usually be canceled after 11 years.

What PMI actually costs

PMI typically runs somewhere around $30 to $70 per month for every $100,000 borrowed, depending on your credit score and loan-to-value ratio — so on a $400,000 loan, that's roughly $120 to $280 a month. It's not permanent on a conventional loan: federal law requires it to automatically terminate once your loan balance reaches 78% of the home's original value, and you can typically request cancellation yourself once you hit 80% (20% equity), assuming a good payment history and lender sign-off.

What actually changes at each down payment level

  • A smaller down payment means a larger loan, a larger monthly payment, and — below 20% down on a conventional loan — an added PMI cost until you build equity.
  • A larger down payment lowers your monthly payment two ways at once: a smaller loan balance, and no PMI once you're at or above 20% down.
  • Down payment size can also nudge your interest rate slightly through loan-level pricing adjustments, which most conventional lenders tie in part to loan-to-value ratio — generally, more equity at closing means slightly better pricing, all else equal.
  • In a competitive submarket — multiple offers on the same listing, or a building where many buyers pay cash — a larger down payment (or a strong pre-approval with a solid loan-to-value ratio) can make your offer look lower-risk to a seller, even though it isn't a formal requirement to get a loan approved.

Programs that can shrink the number further

A few programs go below even the 3-3.5% range. VA loans, for eligible active-duty service members, veterans, and some surviving spouses, allow 0% down with no PMI (VA loans carry their own funding fee instead). And Florida runs its own down payment assistance program, Florida Hometown Heroes, aimed at teachers, nurses, first responders, and other frontline workers with a Florida-based employer: eligible buyers can receive down payment and closing cost help worth 5% of the loan amount (between roughly $10,000 and $35,000) as a 0%-interest second mortgage, subject to credit score, income limits that vary by county, and a requirement that you haven't owned a home in the past three years. Funding is limited and allocated first-come, first-served each cycle, so eligibility and availability are worth confirming directly with a participating lender before you count on it.

Run your own numbers

Every buyer's math looks different depending on price point, credit, and loan program, so the most useful next step is plugging in your own numbers. Try the mortgage calculator with a few different down payment percentages — 3%, 5%, 10%, 20% — and see exactly how each one moves your monthly payment. Then, before you start touring homes, get pre-approved to find out what you actually qualify for, at what rate, with what down payment — that number is far more useful for house hunting than any rule of thumb.