PocketProofYou need about 3% to 10% of a home's price for a down payment as a first-time buyer, plus another 2% to 5% of the loan for closing costs. On a $300,000 home, that's roughly $18,000 to $38,000 in total cash, not the $60,000-plus that the "you need 20% down" rule implies.
If you're in your 20s and the 20% number has made buying feel permanently out of reach, this is the post for you. Below: what each down payment level actually costs in cash, how long it takes to save at a realistic pace, what you pay in exchange for putting less down, and a calculator that gives you your own timeline.
How much down payment do first-time buyers actually put down?
The median first-time buyer put down 10%, according to the National Association of Realtors' 2025 Profile of Home Buyers and Sellers, the highest since 1989. Repeat buyers, who usually have equity from selling a previous home, put down a median of 23%. So 20% is a repeat-buyer number that got turned into a rule for everyone.
The same report has a number worth sitting with: the median first-time buyer is now 40 years old, a record. Part of what pushes that age up is people waiting years to hit a down payment they were never required to have.
What's the minimum down payment for each loan type?
| Loan type | Minimum down | Who it's for | On a $300,000 home |
|---|---|---|---|
| Conventional (first-time buyer programs) | 3% | First-time buyers with decent credit | $9,000 |
| FHA | 3.5% | Credit scores of 580+ | $10,500 |
| Conventional (standard) | 5% | Most buyers | $15,000 |
| VA | 0% | Eligible veterans and service members | $0 |
| USDA | 0% | Eligible rural and some suburban areas, income limits apply | $0 |
Many states and cities also run down payment assistance programs for first-time buyers, usually through the state's housing finance agency. They can cover part of the down payment or closing costs as a grant or forgivable loan. Search "[your state] housing finance agency down payment assistance" before assuming you have to save the whole amount yourself.
How much cash do you need besides the down payment?
The down payment isn't your whole check at closing. You'll also pay closing costs: lender fees, title insurance, appraisal, recording fees, and prepaid property taxes and homeowners insurance. These usually run 2% to 5% of the loan amount.
Two other cash items to plan for:
- Earnest money, a deposit (often 1% to 3% of the price) you put down when your offer is accepted. It gets credited toward your down payment or closing costs at closing. But you need it in cash weeks earlier.
- A cushion after closing. Your emergency fund should still be intact the day you get the keys. A water heater doesn't care that you just emptied your savings.
The real math: what each down payment costs and how long it takes
Here's a $300,000 home, with closing costs at 3% of the loan, for someone who has $5,000 saved and puts away $600 a month in a high-yield savings account earning 3.5% APY:
| Down payment | Down payment cash | Closing costs | Total cash to close | Time to save it |
|---|---|---|---|---|
| 3% | $9,000 | $8,730 | $17,730 | 21 months |
| 3.5% (FHA) | $10,500 | $8,685 | $19,185 | 23 months |
| 5% | $15,000 | $8,550 | $23,550 | 29 months |
| 10% | $30,000 | $8,100 | $38,100 | 51 months (4.2 years) |
| 20% | $60,000 | $7,200 | $67,200 | 90 months (7.5 years) |
Notice two things. First, closing costs barely change between options. They're roughly $7,000 to $9,000 no matter what, so at 3% down they're about half your total cash. A lot of first-time buyers save exactly the down payment and then get surprised by the second half. Second, the jump from 10% to 20% adds more than three years of saving at this pace.
For a sense of scale at today's prices: the national median existing-home price was $429,100 in August 2026, per NAR's monthly report. 20% of that is $85,820 before closing costs. 3.5% is $15,019. Starter homes in most markets cost less than the median, which is why the example above uses $300,000, but plug in your own local prices below.
Down payment timeline calculator
Enter a realistic home price for where you want to live. The table at the bottom updates to compare every down payment level at once.
How long until you can buy?
Defaults match the worked example above.
| Down | Down payment | Total cash to close | Time to save |
|---|
What do you pay for putting less than 20% down?
Mortgage insurance. It protects the lender, not you, and it's the real price of a smaller down payment:
- Conventional loans (PMI): Freddie Mac estimates roughly $30 to $70 a month per $100,000 borrowed, with your credit score moving the price more than anything else. On the $285,000 loan from 5% down above, that's about $86 to $200 a month. You can ask your lender to remove it once you reach 20% equity, and it ends automatically at 22%.
- FHA loans (MIP): an upfront premium of 1.75% of the loan ($5,066 on the $289,500 loan above, usually rolled into the loan) plus an annual premium of around 0.55% for most borrowers, about $133 a month here. With less than 10% down, FHA mortgage insurance lasts for the life of the loan; the usual way out is refinancing into a conventional loan once you have 20% equity.
A smaller down payment also means a bigger loan, so you pay interest on more money. That's the honest trade: a less-than-20% down payment costs more per month, but it can get you into a home years sooner. Whether that's worth it depends on what renting costs you in the meantime, which our renting vs. buying calculator works out with real numbers.
When waiting for a bigger down payment does make sense
If your credit score is under about 680, PMI can sit at the expensive end of that range, and a few months spent raising your score (see our 12-month credit rebuild plan) can be worth more than a few months of extra saving. Waiting also makes sense if putting down the minimum would leave you with no emergency fund after closing. Buying with 3% down and $0 left over is how a surprise repair turns into credit card debt.
Where should you keep your down payment savings?
In a high-yield savings account, not the stock market. If you're planning to buy within about five years, a market drop the year you're ready to close could take a real chunk out of your down payment with no time to recover. It's short-term money, and our guide to short-term vs. long-term savings covers why the timeline matters more than the return.
Set up an automatic transfer on payday into a separate account named for the goal, the same approach as saving for any big purchase without wrecking your cash flow, just on a longer timeline. A separate account makes it harder to "borrow" from for a weekend trip.
Can you use retirement money or gifts for a down payment?
Yes, and plenty of first-time buyers do. NAR's 2025 data shows 59% used personal savings, 26% used financial assets like 401(k)s, IRAs, or stocks, and 22% used a gift or loan from family or friends (the numbers add to more than 100% because many buyers combine sources).
- IRA: first-time buyers can withdraw up to $10,000 (a lifetime limit) without the 10% early-withdrawal penalty. Traditional IRA money is still taxed as income. With a Roth IRA, your contributions (not the growth) can come out any time, tax- and penalty-free.
- 401(k) loan: many plans let you borrow from your own balance, but if you leave the job, the balance can come due quickly. Treat this as a last resort.
- Gifts: allowed on most loan types, but lenders usually require a signed gift letter saying it doesn't need to be repaid. Get it documented before you apply.
Pulling from retirement trades long-term growth for a house now. Our investing order of operations explains why the employer match should keep running even while you save for a home.
Quick answers
How much do you need for a down payment on a house?
Usually 3% to 10% of the price for first-time buyers: 3% for conventional first-time buyer programs, 3.5% for FHA, and 0% for eligible VA and USDA loans. On a $300,000 home, that's $9,000 to $30,000, plus closing costs.
Do you need 20% down to buy a house?
No. 20% is only the point where conventional loans stop charging PMI. The median first-time buyer put down 10% in NAR's 2025 data.
How much cash do you need to buy a house besides the down payment?
Plan on closing costs of 2% to 5% of the loan. On a $300,000 home with 3.5% down, 3% closing costs are $8,685, for $19,185 total. Keep your emergency fund separate from that.
Where should you keep money you're saving for a down payment?
In a high-yield savings account or similar low-risk account. If you're buying within about five years, the stock market is too risky for money you can't afford to see drop.
Can you use retirement money for a down payment?
Yes. First-time buyers can take up to $10,000 from an IRA without the 10% penalty (Traditional IRA money is still taxed), and Roth IRA contributions can be withdrawn any time. It costs you future growth, so use it carefully.
Still deciding whether buying is even the right move right now? Run your numbers through renting vs. buying a home first. And if you're weighing a house against a car purchase in the same few years, the same affordability logic is in how much car you can actually afford: both loans count against the same income when a lender looks at you.
