20% = $50k difference
What is a down payment?
A down payment is the portion of a home's purchase price you pay upfront from your own funds — the rest is borrowed through a mortgage. On a $300,000 home with 20% down, you pay $60,000 upfront and borrow $240,000. Putting down less than 20% typically triggers private mortgage insurance (PMI), which costs $50–200/month and provides no benefit to you. Conventional loans allow as little as 3% down; FHA loans allow 3.5% with a 580+ credit score.
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Try calculatorKey takeaways
04 · ideas- Down payment = your upfront contribution; the rest comes from the mortgage
- Less than 20% down triggers PMI — an extra $100–200/month
- 20% down on $300k saves $72,000 in interest and PMI vs. 5% down
- FHA loans allow 3.5% down with 580+ credit score
Illustrative chart
$200k · 7.5% · 30yr
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A down payment is the portion of a home's purchase price you pay upfront from your own savings. The mortgage covers the rest.
Example: You buy a $300,000 home.- 20% down payment = $60,000 upfront
- Mortgage = $240,000 (you borrow this)
- It reduces their risk — if you stop paying, they can sell the home
- It shows you have financial discipline
- It gives you immediate equity stake in the property
Below 20% down, most lenders require Private Mortgage Insurance (PMI):
- Costs $50–200/month (typically 0.5–1% of loan annually)
- Protects the lender, not you
- Cancels automatically when you reach 20% equity
- A pure extra cost with no benefit to you
- Conventional loan: 3%
- FHA loan: 3.5% (580+ credit score)
- VA loan: 0% (veterans only)
- USDA loan: 0% (rural areas)