Down Payment in 2026: 3% vs 20% — Which Is Right for You?
Calculate your target with our [Down Payment Calculator](/calculators/finance/down-payment-calculator).
2026 Minimum Down Payments by Loan Type
| Loan Type | Minimum Down | PMI Required |
|---|---|---|
| FHA Loan | 3.5% (580+ credit score) | Yes (MIP for life with under 10% down) |
| Conventional | 3% (620+ credit score) | Yes (until 20% equity) |
| VA Loan | 0% | No |
| USDA Loan | 0% | No (guarantee fee instead) |
| Conventional | 20% | No |
True Monthly Cost Comparison ($350,000 Home, 7% Rate)
| Down % | Down Amount | Monthly P&I | PMI | Total Monthly |
|---|---|---|---|---|
| 3% | $10,500 | $2,260 | $283 | $2,543 |
| 5% | $17,500 | $2,213 | $221 | $2,434 |
| 10% | $35,000 | $2,097 | $157 | $2,254 |
| 20% | $70,000 | $1,864 | $0 | $1,864 |
20% down saves $679/month vs 3% down — but requires $59,500 more upfront.
The Break-Even Question: Wait for 20% or Buy Now?
In rising markets (3-5%/year price appreciation):
A $350,000 home rises to ~$380,000 in 2 years while you save. The extra $30,000 in price roughly offsets the PMI costs you would have paid. Buying sooner often wins.
In flat or falling markets:
Waiting to save 20% avoids PMI and gets you better loan terms. The math clearly favors waiting.
First-Time Buyer Programs in 2026
- Fannie Mae HomeReady: 3% down, reduced PMI, income limits apply
- Freddie Mac Home Possible: 3% down, reduced PMI
- State HFA programs: Many offer 0% interest down payment assistance loans
- Check your state's Housing Finance Agency for local programs
How Long to Save Each Down Payment Amount
| Target | Monthly Savings | Time to Save |
|---|---|---|
| 3% ($10,500) | $875 | 12 months |
| 5% ($17,500) | $729 | 24 months |
| 10% ($35,000) | $729 | 48 months |
| 20% ($70,000) | $875 | 80 months (6.7 years) |
Related Tools
- [Mortgage Calculator](/calculators/finance/mortgage-calculator) — Payment at any down payment
- [PMI Removal Calculator](/calculators/finance/pmi-removal-calculator) — When PMI goes away at 3-10% down