Should I Put 5%, 10%, or 20% Down?
More down isn't automatically better — it's a tradeoff between cash today and payment tomorrow.
By Jerry Hayes, NMLS# 2305577 · Reviewed 2026-09-01
What changes as your down payment grows
A larger down payment reduces how much you borrow, which lowers your monthly principal and interest payment. Depending on the loan program, it can also reduce or eliminate mortgage insurance once you cross certain thresholds. But every dollar you put toward a down payment is a dollar that's no longer in your savings or investments.
The case for putting down less
Keeping more cash in reserve gives you flexibility for moving costs, repairs, or simply peace of mind. For buyers early in their homeownership journey, preserving liquidity can matter more than shaving a modest amount off a monthly payment.
The case for putting down more
If you have more cash than you need for reserves and other goals, a larger down payment can meaningfully lower your monthly payment and reduce or remove mortgage insurance, which may be worth the tradeoff if you plan to stay in the home for a long time.
The tradeoffs
- A 5% down payment preserves cash but usually means paying mortgage insurance and a higher monthly payment.
- A 20% down payment can eliminate conventional mortgage insurance but ties up cash that could otherwise be reserves or investments.
This may not be the right fit when:
- Draining your reserves to reach 20% down is generally not advisable if it leaves you without an emergency fund after closing.
Frequently asked
Does 20% down guarantee no mortgage insurance?
On many conventional loans, reaching 20% equity avoids private mortgage insurance, but exact thresholds and rules vary by loan program and lender. Confirm the specifics for your loan before assuming.
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