The down payment range for a $400,000 house

The down payment you need depends on the type of loan and the lender's rules, not on a fixed percentage. Conventional loans typically require 3 to 20 percent down. FHA loans allow as little as 3.5 percent down. VA loans and USDA loans may require zero down if you meet their criteria. On a $400,000 purchase price, that means anywhere from $0 to $80,000, depending on which loan type you use and what the lender will accept.

The lower your down payment, the higher your monthly payment and the more interest you pay over the life of the loan. A smaller down payment also triggers private mortgage insurance (PMI) on conventional loans, which adds to your monthly cost until you reach 20 percent equity. Understanding this trade-off helps you decide what down payment makes sense for your situation.

Key Takeaways

  • Conventional loans require 3 to 20 percent down; FHA loans allow 3.5 percent; VA and USDA loans may allow zero down if you meet program requirements.
  • On a $400,000 house, 3 percent down is $12,000; 10 percent is $40,000; 20 percent is $80,000.
  • Down payments below 20 percent trigger PMI on conventional loans, which increases your monthly payment by roughly $200 to $400 depending on the loan size and your credit score.
  • Your down payment affects not only the monthly payment but also the interest rate the lender offers you.
  • Saving for a larger down payment takes time, but it lowers your total cost of borrowing and reduces the risk the lender takes on.

Conventional loans: 3 to 20 percent down

Most home buyers use conventional loans backed by Fannie Mae or Freddie Mac. These loans allow down payments as low as 3 percent, which on a $400,000 house is $12,000. However, lenders often prefer 5 to 10 percent, and some require a higher score or larger down payment if your income is variable or your credit is below 740.

If you put down less than 20 percent, you pay PMI. On a $400,000 loan with 10 percent down ($40,000), PMI typically runs $200 to $350 per month, depending on your credit score and the exact loan terms. This cost stays on your bill until you reach 20 percent equity in the home — which takes years if you are making only the minimum payment.

At 20 percent down ($80,000), you avoid PMI entirely. Your monthly payment is lower, and you build equity faster. The trade-off is that you need to save more upfront, which delays your purchase.

FHA loans: 3.5 percent down

FHA loans are backed by the Federal Housing Administration and allow down payments as low as 3.5 percent. On a $400,000 house, that is $14,000. FHA loans are popular with first-time buyers and people with lower credit scores (some lenders accept scores as low as 580).

FHA loans require mortgage insurance premiums (MIP) instead of PMI. You pay an upfront MIP of 1.75 percent of the loan amount at closing, and then an annual MIP that appears on your monthly bill. The annual MIP stays for the life of the loan if you put down less than 10 percent, or for at least 11 years if you put down 10 percent or more. This makes FHA loans more expensive over time than conventional loans, even though the upfront down payment is lower.

VA and USDA loans: zero down payment

If you are a military member, veteran, or surviving spouse, you may be able to use a VA loan, which requires zero down payment. USDA loans, available to rural homebuyers who meet income limits, also allow zero down. Both programs have their own insurance costs and may be able to access rules, but they eliminate the need to save a down payment.

VA loans charge a funding fee (typically 2.3 percent of the loan amount for first-time users) that can be rolled into the loan. USDA loans charge a may provide fee and an annual fee. These costs are built into your monthly payment, so you do not pay them upfront, but they do increase the total amount you borrow and the interest you pay.

How down payment size affects your monthly payment

The larger your down payment, the smaller the loan amount and the lower your monthly principal and interest payment. On a $400,000 house at current interest rates, the difference between 3 percent and 20 percent down can be $300 to $500 per month before adding insurance, taxes, and fees.

However, the monthly payment is only part of the cost. A smaller down payment means you borrow more, pay more interest over 30 years, and carry PMI or MIP for years. A larger down payment means higher upfront savings but lower total interest paid. Use a mortgage calculator to compare scenarios based on your interest rate and loan term.

Down payment and interest rates

Lenders often offer lower interest rates to borrowers who put down 20 percent or more. The difference is usually 0.25 to 0.5 percent, which adds up significantly over 30 years. A buyer with a 10 percent down payment might be offered 6.5 percent, while a buyer with 20 percent down gets 6.0 percent on the same day. Over the life of the loan, that 0.5 percent difference costs tens of thousands of dollars in extra interest.

Your credit score, income, and debt-to-income ratio also affect the rate you are offered. A larger down payment signals lower risk to the lender, so they reward it with a better rate.

Saving for a down payment on a $400,000 house

Saving $12,000 to $80,000 takes time for most households. A common approach is to set a target (such as 10 percent, or $40,000) and work backward to find a monthly savings amount. If you have three years to save, you need to set aside roughly $1,100 per month for a 10 percent down payment.

Some people use down payment assistance programs offered by state housing agencies, nonprofits, or employers. These programs may provide grants or low-interest loans that count toward your down payment. Check with your state housing finance agency or a HUD-approved housing counselor to learn what is available in your area. You can also ask your employer whether they offer down payment help as an employee benefit.

Another option is to buy with a smaller down payment now and refinance later once you have built equity and improved your credit. This lets you enter the market sooner, but refinancing costs money and takes time, so it is not always the best choice.

Frequently Asked Questions

Can I use a gift for my down payment?

Yes. Most lenders allow down payment gifts from family members, and some allow gifts from employers or nonprofits. You will need a signed gift letter stating the money is a gift, not a loan, and the lender may ask for bank statements showing the gift was deposited. The gift does not have to be repaid.

What happens if I put down less than 3 percent?

Conventional loans do not go below 3 percent down. If you cannot save 3 percent, your options are FHA (3.5 percent), VA (zero), USDA (zero), or waiting to save more. Some lenders offer 1 to 2 percent down programs, but they are rare and come with higher rates and stricter credit requirements.

Is it better to put down 10 percent or 20 percent?

Twenty percent avoids PMI and usually gets you a lower interest rate, saving money over time. Ten percent gets you into the home sooner with less upfront savings. The right choice depends on whether you can afford to wait and save, and whether the interest rate difference justifies the delay.

Can I borrow money for my down payment?

Most lenders do not allow you to borrow the down payment from another lender. However, some allow you to borrow from a 401(k) or take a personal loan from a family member if you document it as a loan with a repayment plan. Ask your lender what they will accept before you commit to borrowing.

Does a larger down payment hurt my credit score?

No. Saving money and making a larger down payment does not hurt your credit. Your credit score is based on payment history, credit utilization, and age of accounts. The down payment itself does not appear on your credit report.