The down payment on a $500,000 house is typically between $50,000 and $250,000, depending on the loan type and your lender's requirements

The amount you put down is a percentage of the purchase price. Most conventional loans require between 10% and 20% down. On a $500,000 house, that means $50,000 to $100,000. Federal Housing Administration (FHA) loans allow as little as 3.5% down, which would be $17,500. VA loans and USDA loans, if you meet their requirements, may require no down payment at all.

The exact amount depends on three things: the loan program you use, the lender's specific rules, and your credit score. A stronger credit score sometimes lets you put down less. A weaker one might require you to put down more, even within the same loan program. Your lender will tell you the minimum they will accept before you move forward.

Key Takeaways

  • Conventional loans typically require 10% to 20% down on a $500,000 house, meaning $50,000 to $100,000.
  • FHA loans allow down payments as low as 3.5%, or about $17,500, but charge mortgage insurance for the life of the loan.
  • VA and USDA loans may require zero down payment if you meet military service or rural property requirements.
  • Your credit score, debt-to-income ratio, and savings reserves all affect what down payment amount a lender will accept.

How down payment percentage works

The down payment is simply a percentage of the home's price that you pay upfront. The lender finances the rest through the mortgage. On a $500,000 house, a 10% down payment is $50,000. A 20% down payment is $100,000. A 5% down payment is $25,000.

The percentage matters because it affects your monthly payment, the interest rate you receive, and whether you pay mortgage insurance. The larger your down payment, the smaller the loan amount, and the lower your monthly payment. A larger down payment also usually qualifies you for a better interest rate.

Conventional loans and the 20% benchmark

Conventional loans are mortgages not backed by a federal agency. Most conventional lenders want to see 20% down, which on a $500,000 house is $100,000. This is the amount that avoids private mortgage insurance (PMI), an extra monthly fee that protects the lender if you stop paying.

Many lenders will accept 10% to 15% down on a conventional loan, but you will then pay PMI each month until you have paid down the loan enough or your home value rises. PMI typically costs between 0.5% and 1% of your loan amount per year, split into monthly payments. On a $450,000 loan (after a $50,000 down payment), PMI might add $200 to $400 per month to your payment.

Some lenders accept as little as 5% down on a conventional loan, but this is less common and usually requires a higher credit score and lower debt-to-income ratio.

FHA loans and lower down payments

FHA loans are mortgages insured by the Federal Housing Administration. They allow down payments as low as 3.5%, which on a $500,000 house is $17,500. This makes FHA loans attractive if you do not have a large amount saved.

The trade-off is that FHA loans require mortgage insurance premiums (MIP) that you pay for the entire life of the loan, not just until you reach 20% equity. You pay an upfront MIP when you close, usually rolled into your loan amount, and then a monthly MIP added to your payment. On a $482,500 loan (after a $17,500 down payment), monthly MIP might add $200 to $300 to your payment.

FHA loans also have limits on the loan amount in your area. In high-cost regions, the limit may be $766,550 or higher, so a $500,000 house would fall within the limit. Check with your lender or the HUD website for your county's limit.

VA and USDA loans with no down payment

If you are a veteran or active-duty service member, a VA loan may let you buy with zero down payment. The Department of Veterans Affairs guarantees part of the loan, so lenders accept the risk. You will pay a one-time VA funding fee, usually 2% to 3.3% of the loan amount, which can be rolled into the mortgage.

USDA loans, backed by the U.S. Department of Agriculture, also allow zero down payment if the property is in a rural area and your income is below the area limit. Like VA loans, USDA loans charge an upfront may provide fee and an annual fee, both usually rolled into the loan.

Both programs have strict rules about property location, income, and military service or farm background. If you think you might may have access to, ask a lender who works with these programs.

What lenders look at beyond the down payment percentage

Your lender will not approve a mortgage based on down payment alone. They also look at your debt-to-income ratio, which is your total monthly debt payments divided by your gross monthly income. Most lenders want this ratio to be 43% or lower. If you earn $5,000 per month, your total debt payments (including the new mortgage) should not exceed $2,150.

Your credit score matters too. A score of 740 or higher usually qualifies you for the best interest rates and the lowest down payment requirements. A score below 620 may disqualify you from conventional loans entirely and limit your options to FHA or other government-backed programs.

Lenders also check your savings and reserves. Some want to see that you have cash left over after the down payment and closing costs, to show you can handle the mortgage if income drops. Others require proof that you have held your job for at least two years.

Closing costs are separate from the down payment

The down payment is not the only money you need at closing. Closing costs are fees for the loan itself, the title search, the appraisal, inspections, and other services. On a $500,000 house, closing costs typically run between $10,000 and $20,000, or 2% to 4% of the purchase price.

Some of these costs can be rolled into the loan, but your lender may require you to pay certain fees upfront. Ask your lender for a Closing Disclosure at least three days before closing so you know exactly what you owe.

Frequently Asked Questions

Can I put down less than 3.5% on an FHA loan?

No. FHA loans have a minimum down payment of 3.5%. Some state and local programs may offer lower down payments, but they are not FHA loans and have different rules and costs. Ask your lender what programs are available in your state.

Does a larger down payment always mean a better interest rate?

Usually, yes. A larger down payment means less risk for the lender, so they often offer a lower rate. The difference is typically 0.25% to 0.5%, which adds up over 30 years. But rates also depend on market conditions, your credit score, and the loan type, so ask your lender for a rate quote at different down payment levels.

What happens if I put down 15% instead of 20% on a conventional loan?

You will pay PMI each month until you reach 20% equity in the home or your home value rises enough. PMI typically costs $200 to $400 per month on a $500,000 purchase. You can ask your lender to remove PMI once you have paid the loan down to 80% of the original home value.

Can I borrow the down payment from family?

Most lenders allow a gift from family, but they require a signed letter stating it is a gift, not a loan. If it is a loan, you must count the monthly payment as debt when calculating your debt-to-income ratio, which may disqualify you. Ask your lender for their gift letter requirements.

Is the down payment the same as earnest money?

No. Earnest money is a deposit you make when you make an offer on the house, usually 1% to 3% of the purchase price. It shows the seller you are serious. At closing, the earnest money is credited toward your down payment. So if you put down $50,000 and already paid $5,000 in earnest money, you owe $45,000 at closing.