Buying a house is a significant life milestone that requires careful planning and thought. One of the most important considerations when purchasing a home is understanding the size of the down payment that is necessary.

For some, saving a large sum of money can be intimidating. However, saving for your down payment can be more straightforward with helpful advice and knowledge.

Being financially prepared is one of the key considerations when purchasing a home. It is also essential for getting the best loan terms and conditions. Building equity faster is an excellent advantage of a larger down payment, giving homeowners a more significant financial stake in their property.

Minimum Requirements for a Down Payment

The amount of down payment you’ll need to provide when purchasing a home depends on many factors. Typically, lenders require a minimum down payment of 5% of the purchase price, with higher costs for more expensive properties.

The amount you’ll need to put down will also depend on your credit score; generally speaking, those with higher scores can get away with smaller payments.

The amount required upfront may also vary depending on the type of loan product being used. Conventional mortgages require as low as 5%, while government-backed loans like FHA or VA loans require much less—as low as 0%.

Not surprisingly, Millennials buying homes often opt for one of these popular programs.

Down Payment Size Needed to Buy a House

Minimum You Have to Save for a Down Payment

Most borrowers will not qualify for USDA or VA loans, so you’ll look at more than 0%. Your credit score and finances will play a part, but the most important is what type of loan you can access.

Conventional Loan

Potential homeowners must consider the minimum down payment requirements when taking out a conventional loan for a home.

Conventional loans require borrowers to put a certain amount of money upfront, typically between 5 and 20 percent of the purchase price. This initial investment acts as insurance for the lender in case of default.

The minimum down payment depends on several factors, such as mortgage insurance requirements and current interest rates.

Generally, borrowers must put at least 5 percent down when taking a conventional loan for a single-family primary residence. However, this can increase if you buy an investment property or vacation home.


USDA loans are an excellent option for purchasing a home with no down payment required. However, borrowers still need to ensure they have sufficient funds to cover closing costs and other associated fees.

The USDA recommends saving at least 2.75% of the home’s purchase price for closing costs and money to cover additional costs like pest control or repairs that may arise after the loan has been approved.

Potential borrowers need to remember that if their credit score is below 640, they will need to contribute an additional 1% of the loan amount due at closing as part of their down payment requirement.

VA Loan

The U.S. Department of Veterans Affairs offers VA loans with more favorable terms than conventional mortgages. While traditional loans typically require a 5% down payment (or more), VA loans sometimes allow you to purchase a home with no money down.

Potential qualified homeowners may not worry about saving thousands of dollars for their down payment.

FHA Loan

An FHA loan is a mortgage insured by the Federal Housing Administration. It requires a minimal down payment of 3.5% of the purchase price of your new home and has more flexible eligibility criteria than traditional mortgages.

What Benefits Does a Larger Down Payment Have?

One of the buyers’ most critical decisions when purchasing a home is how much money they plan to put down as a down payment.

The down payment size has many advantages buyers should consider before signing on the dotted line.

Avoiding Private Mortgage Insurance (PMI)

Avoiding mortgage insurance is a significant benefit of making a larger down payment, as it can add to the monthly cost of your mortgage.

Private mortgage insurance (PMI) adds to the cost of a home loan, but it can be avoided. PMI is an insurance policy that protects lenders against borrower default, and it is required when borrowers make a down payment that is less than 20 percent of the purchase price of their home.

PMI premiums are added to monthly mortgage payments, so any steps to avoid this additional expense can help homeowners save money in the long run.

Better Interest Rates

One significant benefit of making a larger down payment is that it will usually result in lower interest rates for the loan. Generally speaking, lenders prefer to see larger initial payments, which indicates a more committed borrower is likely to repay their loan faster.

Borrowers who can put down 20% or more may qualify for better interest rates than those with smaller initial payments.

Aside from allowing buyers to secure better interest rates on their mortgage loans, making a larger down payment can also reduce overall costs by eliminating some closing costs and fees associated with certain mortgages.

Faster Underwriting

A larger down payment can lead to several benefits, including faster underwriting. For many borrowers, promptly closing their loan is essential, and making a more significant upfront investment can provide an advantage.

Making a larger down payment reduces the risk for lenders since there is more equity in the home from the start.

This means they are often willing to commit resources to review and approve these loans quicker than those with smaller down payments.

With this process expedited, borrowers may be able to close their loans faster than expected. They can begin taking advantage of lower interest rates sooner rather than later.

In addition to speeding up underwriting, larger down payments offer other advantages, such as reduced mortgage insurance premiums and more accessible qualification standards.

Borrowers should consider all of these potential benefits when deciding how much they wish to put towards their purchase up front.

You Can Avoid Jumbo Loans

Making a larger down payment can provide many benefits when buying a home. One of the most notable advantages is avoiding taking out a jumbo loan.

A jumbo loan is needed when the cost of the home exceeds conventional loan limits and requires additional funds from other sources. You can avoid this financing altogether by spending more money at the outset.

Understanding loan limits is crucial, especially for those considering jumbo loans with different down payment requirements.

Understanding Closing Costs and Additional Expenses

When planning your Massachusetts home purchase, it’s essential to account for closing costs and additional expenses beyond the down payment. Closing costs, ranging from 2% to 6% of the home’s purchase price, include fees such as loan origination, home inspection, appraisal, and title insurance.

These costs can significantly impact your overall budget and should be factored into your savings plan.

Additionally, consider the ongoing costs of homeownership. This includes property taxes, homeowners insurance, and maintenance, which can add to your monthly expenses. By understanding these costs upfront, you can better prepare for the financial responsibilities of owning a home in Massachusetts.

Exploring Down Payment Assistance Programs For Massachusetts Borrowers

For many prospective Massachusetts homeowners, down payment assistance programs offer a lifeline. It makes the dream of homeownership attainable.

These programs, available through state and local governments and some private organizations, can provide grants, low-interest loans, or forgivable loans to help cover down payment and closing costs.

Criteria can vary based on income, location, and whether you’re a first-time homebuyer. Check with your state’s housing finance agency or a mortgage lender to find programs you might qualify for. Taking advantage of these programs can significantly reduce your upfront costs and make homeownership more accessible.

How Much Should You Put Down on a House in Massachusetts?

If you can swing it, 20% is usually very advantageous. You can avoid the dreaded PMI, which typically has lower fees and interest rates, and underwriting is frequently more straightforward.

If you can’t swing 20%, that doesn’t mean you shouldn’t buy a home now. It just adds more variables to the equation. If you can save money by buying over renting monthly, that is a different story. Demonstrating financial stability through a substantial down payment can make the mortgage process smoother and offer more favorable loan terms.

Zack Larsen About the author: The above article on what size down payment you need to buy a house was written by Zach Larsen. Zach is a small business owner, finance and investment expert, and co-founder of He has been featured in publications including MSN, GOBankingRates, Yahoo Finance, and Credit Sesame. He enjoys teaching others about personal finance and spending time with his family.