How Much Down Payment You Need for a $400,000 House
What You Actually Need to Put Down
For a $400,000 house, your down payment will be somewhere between $12,000 and $200,000, depending on the loan type you choose and what you can afford. The most common range is 3% to 20% of the purchase price — that's $12,000 to $80,000. The lower your down payment, the higher your monthly payment and the more interest you'll pay over the life of the loan, because the lender is taking on more risk.
The down payment is separate from closing costs, which typically run 2% to 5% of the purchase price ($8,000 to $20,000 for a $400,000 house). You need to have both amounts ready before you close. Many buyers don't realize this and run short of cash at the final walkthrough.
Key Takeaways
- A 3% down payment on a $400,000 house is $12,000; a 20% down payment is $80,000, and anything in between is possible depending on your loan type.
- Loans with down payments below 20% require mortgage insurance (PMI), which adds $200 to $400 per month to your payment and stays until you reach 20% equity.
- FHA loans allow down payments as low as 3.5% ($14,000), but charge an upfront insurance fee and ongoing mortgage insurance that never goes away.
- VA and USDA loans may allow 0% down if you meet military service or rural property requirements, but have their own fees and restrictions.
- Down payment assistance programs exist through nonprofits, state housing agencies, and some employers, but they vary widely by location and income.
Conventional Loans: 3% to 20% Down
A conventional loan is a mortgage from a bank or lender that is not backed by the federal government. With a conventional loan, you can put down as little as 3% ($12,000) or as much as you want. Most lenders will approve you for 3% to 5% down if your credit score is 620 or higher and your debt-to-income ratio is under 50%.
The catch: if you put down less than 20%, you pay private mortgage insurance (PMI). This is an extra monthly charge that protects the lender if you stop paying. On a $400,000 house with 5% down ($20,000), PMI typically runs $200 to $400 per month depending on your credit score and the exact loan terms. PMI stays on your loan until you have paid down the balance to 80% of the original purchase price — which takes years.
At 20% down ($80,000), you avoid PMI entirely. Your monthly payment is lower, and you build equity faster. But you need that cash upfront, and many buyers don't have it.
FHA Loans: 3.5% Down with Mortgage Insurance That Stays
An FHA loan is backed by the Federal Housing Administration and allows down payments as low as 3.5% ($14,000 on a $400,000 house). FHA loans are easier to get than conventional loans — you can have a credit score as low as 580 and still be approved, and your debt-to-income ratio can go up to 50%.
However, FHA loans come with two insurance charges. First, an upfront mortgage insurance premium (UFMIP) of 1.75% of the loan amount, which is rolled into your loan balance. On a $386,000 loan (after your $14,000 down payment), that's about $6,755 added to what you owe. Second, you pay annual mortgage insurance that never goes away — even after you reach 20% equity. This runs roughly $150 to $300 per month for the life of the loan.
FHA loans make sense if your credit is lower or you don't have much cash saved, but the insurance costs are real and permanent. Calculate the total cost before you commit.
VA and USDA Loans: 0% Down (If You may have access to)
If you are a military veteran or active-duty service member, a VA loan allows you to buy with 0% down. You pay a one-time funding fee (typically 2.3% of the loan amount, or about $8,900 on a $386,000 loan) that can be rolled into the loan. There is no monthly mortgage insurance. VA loans have lower interest rates than conventional loans and are easier to get approved for.
If you are buying in a rural area and meet income limits, a USDA loan also allows 0% down. USDA loans have a may provide fee (about 2% upfront) and an annual fee, but no monthly mortgage insurance. Both programs have strict rules about the property and your income, so check with a lender first.
Down Payment Assistance Programs
Many states, cities, and nonprofits offer down payment help. These come in three forms: grants (money you don't repay), forgivable loans (loans that disappear if you stay in the house for a set time), and low-interest loans. The amount varies from $2,000 to $50,000 depending on where you live and your income.
To find programs in your area, start with your state housing finance agency (search "[your state] housing finance agency" online) or call 211 and ask for down payment assistance. Some employers and credit unions also offer down payment help to members. Many programs require you to take a homebuyer education course first, which usually costs $50 to $200 and takes 4 to 8 hours.
Programs often have income caps — you may not earn more than 80% or 120% of your area's median income to may have access to. For a $400,000 house, this typically means a household income under $80,000 to $120,000, depending on your county. Check the rules before you spend time applying.
How Down Payment Size Affects Your Monthly Payment
The size of your down payment directly changes what you pay each month. Here's how it works on a $400,000 house with a 30-year loan at 7% interest (rates change, so use this as an example only):
| Down Payment | Loan Amount | Base Payment | PMI/Insurance | Total Monthly |
|---|---|---|---|---|
| 3% ($12,000) | $388,000 | $2,583 | $350 | $2,933 |
| 5% ($20,000) | $380,000 | $2,532 | $275 | $2,807 |
| 10% ($40,000) | $360,000 | $2,398 | $150 | $2,548 |
| 20% ($80,000) | $320,000 | $2,131 | $0 | $2,131 |
The difference between 3% and 20% down is about $800 per month. Over 30 years, that's nearly $290,000 more in total payments. But if you don't have $80,000 saved, a lower down payment gets you into a house now rather than waiting years to save.
What to Do If You Don't Have Enough Saved
If you're short on down payment money, you have several real options. First, ask family members if they can gift you money toward the down payment — most lenders allow this as long as the gift is documented and the giver signs a letter saying it's a gift, not a loan. Second, look for down payment assistance in your area through your state housing agency or 211. Third, consider an FHA or USDA loan if you may have access to — they let you put down less cash upfront.
You can also delay closing and save more, or negotiate with the seller to cover some of your closing costs, which frees up your cash for the down payment. Some buyers use a personal loan or credit card to cover part of the down payment, though this increases your debt and may hurt your approval odds.
The worst option is to borrow the down payment from a retirement account or take out a second mortgage before closing — both create tax problems and make lenders nervous. Talk to a mortgage lender about what's possible in your situation before you decide.
Frequently Asked Questions
Can I put down less than 3%?
Conventional loans typically require at least 3% down. FHA loans allow 3.5%. VA and USDA loans allow 0% if you may have access to. Some lenders offer 1% or 2% down programs, but they're rare and come with higher interest rates and larger insurance fees. Ask your lender what's available.
Does a larger down payment mean a lower interest rate?
Usually yes, but not always by much. A larger down payment shows the lender you're less risky, so they may offer a rate 0.25% to 0.5% lower. The bigger benefit is avoiding or reducing mortgage insurance. Run the numbers with your lender to see the actual difference.
What if I put down 15% — do I still pay PMI?
Yes. PMI stays on your loan until you reach 20% equity (80% loan-to-value). At 15% down, you're paying PMI until you've paid the loan down to $320,000. Depending on your payment schedule, that could take 5 to 10 years.
Can I remove PMI once I've paid enough principal?
Yes, but you have to request it. Once your loan balance reaches 80% of the original purchase price, you can ask your lender to remove PMI. Some lenders do this automatically; others require you to ask in writing and may require a new appraisal. Check your loan documents for the exact process.
Is it better to put down 20% or use the money for something else?
That depends on your situation. If you have high-interest debt (credit cards, personal loans), paying that off first usually saves you more money than avoiding PMI. If you have an emergency fund and low-interest debt, putting 20% down and avoiding PMI for 30 years is usually the better move. Talk to a financial advisor about your specific numbers.