Some conventional mortgage programs allow down payments as low as 3%, subject to borrower and program requirements. FHA loans allow down payments as low as 3.5% for borrowers who meet the applicable credit requirements. Eligible borrowers may qualify for VA loans without a down payment, although lender requirements and the property's appraised value can affect that outcome. USDA loans also offer eligible borrowers a no-down-payment option, with income limits and property-location requirements. These options make 20% a choice for many buyers, rather than a universal entry requirement.

Putting 20% down generally avoids private mortgage insurance, or PMI, on a conventional loan. With a smaller down payment, PMI is typically required and adds to the borrowing cost. It protects the lender, not the homeowner, and eligible borrowers can request cancellation once applicable equity and other requirements are met. FHA mortgage insurance follows different rules and may remain for the full loan term, depending on the original down payment and loan term. Buyers should compare the full monthly payment and upfront charges rather than judging a loan by its down payment alone.

With mortgage rates elevated, a larger down payment can help reduce the loan balance and monthly principal-and-interest payment. Still, draining savings to reach 20% can leave a homeowner poorly prepared for repairs or an income interruption. Closing costs and prepaid expenses are separate from the down payment, so the cash needed to close deserves its own review. Down payment assistance may help eligible buyers, but some programs involve repayment obligations or restrictions. A useful comparison puts several down payment options side by side and shows both the monthly housing cost and the savings left after closing.