Down Payment Options for a $500,000 Home Purchase
What you actually need to put down on a $500,000 house
The down payment on a $500,000 house ranges from $0 to $150,000 or more, depending on the loan type you choose. A conventional loan typically requires 3% to 20% down—that's $15,000 to $100,000. An FHA loan requires 3.5% down ($17,500). A VA loan (if you may have access to) requires 0% down. A USDA loan (for rural properties) also requires 0% down. The amount you put down directly affects your monthly payment, how much interest you pay over the life of the loan, and whether you'll owe mortgage insurance on top of your regular payment.
The lower your down payment, the higher your monthly mortgage payment and the more you pay in total interest. But a lower down payment also means you don't have to save as much before you buy. The trade-off is real, and which path makes sense depends on your savings, your income, and how long you plan to stay in the house.
Key Takeaways
- Conventional loans on a $500,000 house require between $15,000 (3% down) and $100,000 (20% down), with monthly payments ranging based on your down payment size and interest rate.
- FHA loans require only $17,500 down (3.5%) but add mortgage insurance to your monthly payment for the life of the loan if you put down less than 10%.
- VA and USDA loans allow 0% down if you meet military service or rural property requirements, but come with their own fees and restrictions.
- Putting down less than 20% on a conventional loan triggers private mortgage insurance (PMI), which costs between 0.5% and 1.5% of your loan amount annually.
- Your actual monthly payment depends on your down payment, interest rate, loan term, property taxes, homeowners insurance, and any mortgage insurance—not just the down payment alone.
Conventional loans: 3% to 20% down
A conventional loan is a mortgage backed by a private lender, not the government. On a $500,000 house, a conventional loan requires a minimum down payment of 3%, which is $15,000. Most lenders will approve you with 5% down ($25,000) or 10% down ($50,000). The standard benchmark is 20% down ($100,000), which eliminates mortgage insurance but is not required.
If you put down less than 20%, you'll pay private mortgage insurance (PMI). PMI protects the lender if you stop paying, and it costs between 0.5% and 1.5% of your total loan amount per year. On a $500,000 house with 5% down, your loan is $475,000, and PMI might add $2,375 to $7,125 per year to your payment—roughly $200 to $600 per month. You can remove PMI once you've paid down the loan to 80% of the home's original value, which typically takes 5 to 10 years depending on your payment schedule and whether home values rise.
Your credit score, debt-to-income ratio, and employment history all affect whether a lender will approve you and what interest rate they offer. A higher down payment can improve your approval odds and lower your interest rate, but it's not the only factor.
FHA loans: 3.5% down with mortgage insurance
An FHA loan is backed by the Federal Housing Administration and is designed for buyers who can't save a large down payment. On a $500,000 house, an FHA loan requires 3.5% down, which is $17,500—only $2,500 more than a conventional 3% down loan. However, FHA loans come with mortgage insurance that works differently than PMI.
FHA loans charge two mortgage insurance premiums: an upfront premium (1.75% of the loan amount, paid at closing or rolled into your loan) and an annual premium (0.55% to 0.80% of the loan amount per year, added to your monthly payment). On a $500,000 house with 3.5% down, your loan is $482,500. The upfront insurance is about $8,444, and the annual insurance adds roughly $265 to $386 per month. Unlike PMI, FHA mortgage insurance stays on your loan for the full 30 years if you put down less than 10%.
FHA loans have lower credit score requirements than conventional loans—some lenders approve borrowers with scores as low as 580—but the total cost over time is usually higher because of the permanent mortgage insurance. FHA loans also have limits on how much you can borrow in your area; check your local FHA loan limit before assuming a $500,000 house qualifies.
VA loans: 0% down if you served
If you're a veteran, active-duty service member, or surviving spouse of someone who died in service, you may be able to get a VA loan with 0% down. On a $500,000 house, that means no down payment at all. VA loans are backed by the Department of Veterans Affairs and are available through private lenders.
VA loans don't require mortgage insurance, but they do charge a funding fee (1.25% to 3.6% of the loan amount, depending on your down payment and military branch). On a $500,000 house with 0% down, the funding fee is roughly $6,250 to $18,000, usually rolled into your loan. You'll also pay property taxes, homeowners insurance, and possibly HOA fees, just like any other buyer.
VA loans have no credit score minimum, though most lenders require a score of at least 620. You'll need a Certificate of may be able to access from the VA to prove your service. If you haven't received one, you can request it online through VA.gov or through your lender.
USDA loans: 0% down for rural properties
USDA loans are backed by the U.S. Department of Agriculture and are designed for rural homebuyers. They require 0% down and no mortgage insurance. However, they come with a may provide fee (1% to 3.6% of the loan amount, depending on the down payment) and an annual fee (0.35% of the loan amount per year). On a $500,000 house, the may provide fee might be $5,000 to $18,000, and the annual fee adds roughly $145 per month.
USDA loans have strict geographic limits—the property must be in a designated rural area. Most suburban and urban areas don't may have access to. You can check whether a specific address qualifies on the USDA Rural Development website. USDA loans also have income limits that vary by county; your household income must fall below a certain threshold to be may be able to access.
Like VA loans, USDA loans don't require a down payment, making them valuable for buyers who haven't saved much. But the property location restriction eliminates them as an option for most $500,000 homes in or near cities.
How down payment size changes your monthly payment
The size of your down payment directly changes how much you owe each month. Here's how it works on a $500,000 house at a 7% interest rate over 30 years (these are example numbers; your actual rate will vary):
| Down Payment | Loan Amount | Principal + Interest | Mortgage Insurance | Total Monthly Payment* |
|---|---|---|---|---|
| 3% ($15,000) | $485,000 | $3,227 | $363 | $3,590 |
| 5% ($25,000) | $475,000 | $3,162 | $237 | $3,399 |
| 10% ($50,000) | $450,000 | $2,997 | $0 | $2,997 |
| 20% ($100,000) | $400,000 | $2,665 | $0 | $2,665 |
*This table shows principal and interest only. Your actual monthly payment also includes property taxes, homeowners insurance, and possibly HOA fees, which vary by location and property. The numbers above assume a conventional loan at 7% interest over 30 years.
A 3% down payment costs you about $925 more per month than a 20% down payment, but it requires $85,000 less upfront. Over 30 years, that extra $925 per month adds up to $333,000 in additional payments. However, if you don't have $100,000 saved, the choice isn't between 3% and 20%—it's between 3% and not buying at all.
Down payment assistance programs and grants
Many states, counties, and nonprofits offer down payment assistance to first-time homebuyers or buyers with lower incomes. These programs may cover part or all of your down payment and closing costs. Some are grants (you don't repay them), and some are forgivable loans (you repay them only if you sell the house within a certain time frame).
Down payment assistance varies widely by location. Your state housing finance agency, local housing authority, or a nonprofit like NeighborWorks can tell you what's available in your area. Some programs have income limits, some require you to take a homebuyer education course, and some are only for first-time buyers. A few programs work with any down payment amount; others require you to put down at least 3% yourself.
If you're a veteran, the VA also offers a VA grant program in some states that can help with down payments. Check with your state's VA office or your lender to see whether you may have access to.
Frequently Asked Questions
Can I buy a $500,000 house with no money down?
Yes, if you may have access to for a VA loan (military service) or a USDA loan (rural property). Both allow 0% down. Conventional and FHA loans require at least 3% to 3.5% down. Some down payment assistance programs may cover your down payment, but you'll still need to cover closing costs (typically 2% to 5% of the purchase price).
What's the difference between PMI and FHA mortgage insurance?
PMI is private mortgage insurance on conventional loans and can be removed once you've paid down the loan to 80% of the home's value. FHA mortgage insurance is permanent if you put down less than 10% and stays on the loan for the full 30 years. FHA insurance is usually more expensive upfront but may be cheaper monthly on very low down payments.
Should I put down 3% or save for 20%?
That depends on your timeline and how long you plan to stay. If you'll own the house for 10+ years, saving for 10% or 20% down usually saves money over time because you avoid or reduce mortgage insurance. If you need to buy sooner or rates are rising, a 3% or 5% down payment lets you buy now and build equity while you continue saving. Run the numbers for your specific situation.
Do I have to pay closing costs on top of my down payment?
Yes. Closing costs typically run 2% to 5% of the purchase price—on a $500,000 house, that's $10,000 to $25,000. These cover the appraisal, title search, lender fees, and other services. Some lenders allow you to roll closing costs into your loan, but that increases your monthly payment and total interest paid.
What if my interest rate is higher than the example in the table?
Your monthly payment will be higher. Interest rates change daily and depend on your credit score, down payment, loan type, and market conditions. A 1% difference in interest rate changes your monthly payment by roughly $350 to $400 on a $500,000 loan. Get quotes from multiple lenders to compare both rates and down payment requirements.