What is the minimum down payment in the US?

The minimum varies by loan type. Conventional loans backed by Fannie Mae or Freddie Mac require as little as 3% down for first-time buyers. FHA loans require 3.5% with a credit score of 580+. VA loans (veterans) and USDA loans (rural) have no minimum down payment. Below 20% on a conventional loan, you pay PMI. Below 20% on an FHA loan, you pay a mortgage insurance premium for the life of the loan in most cases.

What is the minimum down payment in Canada?

Canada uses a tiered minimum: 5% on the first $500,000 of the purchase price, and 10% on the portion between $500,000 and $1,500,000. Homes priced at $1,500,000 or more require 20% down — insured mortgages are not available at that price point. On a $750,000 home, the minimum is $50,000 (5% × $500,000 = $25,000 + 10% × $250,000 = $25,000).

How does down payment affect my monthly payment?

A larger down payment reduces the loan principal, which lowers P&I. It also eliminates or reduces mortgage insurance once you reach 20%. On a $500,000 home at 6.5% for 30 years: 5% down means a $475,000 loan with PMI (~$180/month) for a total around $2,840/month; 20% down means a $400,000 loan with no PMI for about $2,528/month — saving $312/month.

What happens if I put less than 20% down?

In the US, you pay PMI (private mortgage insurance) monthly until your equity reaches 20%. On a conventional loan at 6.5% LTV, PMI typically adds 0.3–1.5% of the loan annually. In Canada, less than 20% means mandatory CMHC/Sagen/Canada Guaranty default insurance — a one-time premium of 2.8%–4.0% added to your mortgage principal, plus possible PST at closing.

Can I use gifted funds for a down payment?

Yes, in both the US and Canada, but with documentation requirements. Lenders need a signed gift letter stating the funds are a true gift (not a loan), the relationship between donor and recipient, and often bank statements showing the transfer. In Canada, gifts from immediate family are fully acceptable for the down payment. In the US, conventional loan rules allow gifts from family members; FHA loans also allow gifts from employers and charitable organizations.

Down payment

Your down payment is the upfront cash you put toward a home purchase. It sets your loan-to-value ratio. At 20% or more, you avoid mortgage insurance in both the US (PMI) and Canada (CMHC). Learn minimum requirements, how it affects your payment, and strategies to reach 20%.

Updated August 2026

Definition

The down payment is the cash you pay upfront when purchasing a home. It is expressed as a percentage of the purchase price and directly sets your loan-to-value (LTV) ratio. A 20% down payment means an 80% LTV — the threshold that eliminates mortgage insurance in both the US and Canada. Every extra percent down reduces your loan, your monthly payment, and your total interest paid.

How down payment splits a home's price

The bar below shows a $500,000 home. Watch the down payment (accent) grow toward 20% while the loan portion shrinks. The "No PMI" badge appears once the 20% threshold is crossed.

Real numbers: $500,000 home at 6.5% — 30-year US mortgage

Down payment	Loan amount	Monthly P&I	Est. PMI/mo	Total monthly	Total interest (30 yr)
5% — $25,000	$475,000	$3,003	~$200	~$3,203	$606,000+
10% — $50,000	$450,000	$2,844	~$140	~$2,984	$573,000+
15% — $75,000	$425,000	$2,686	~$80	~$2,766	$542,000+
20% — $100,000	$400,000	$2,528	$0	$2,528	$510,177

20% vs 5%: An extra $75,000 upfront eliminates ~$200/month PMI and saves $96,000 in total interest over 30 years. Break-even on the additional down payment is around 6 years — after that, you're pure savings.

How down payment affects your mortgage

Lower LTV = better rate (sometimes)

Many lenders price their rates by LTV bucket. Dropping from 95% LTV to 80% LTV can shave 0.125–0.25% off your rate, which on a $400,000 loan saves another $25–$50/month on top of the PMI savings.

Canadian tiered minimum

Canada's minimum is not flat. On an $800,000 purchase the minimum is $55,000 (5% of first $500K = $25,000 + 10% of next $300K = $30,000) plus CMHC insurance on the resulting $745,000 loan. Homes above $1.5M require 20% regardless.

Gift funds, HBP, and FHSAs

Canadians can withdraw up to $35,000 from an RRSP under the Home Buyers' Plan or save up to $8,000/year in a First Home Savings Account (FHSA, up to $40,000 lifetime) — both tax-sheltered paths to a bigger down payment. US first-time buyers can withdraw IRA funds penalty-free (up to $10,000 lifetime).

Frequently asked questions

What is the minimum down payment in the US?: The minimum varies by loan type. Conventional loans backed by Fannie Mae or Freddie Mac require as little as 3% down for first-time buyers. FHA loans require 3.5% with a credit score of 580+. VA loans (veterans) and USDA loans (rural) have no minimum down payment. Below 20% on a conventional loan, you pay PMI. Below 20% on an FHA loan, you pay a mortgage insurance premium for the life of the loan in most cases.
What is the minimum down payment in Canada?: Canada uses a tiered minimum: 5% on the first $500,000 of the purchase price, and 10% on the portion between $500,000 and $1,500,000. Homes priced at $1,500,000 or more require 20% down — insured mortgages are not available at that price point. On a $750,000 home, the minimum is $50,000 (5% × $500,000 = $25,000 + 10% × $250,000 = $25,000).
How does down payment affect my monthly payment?: A larger down payment reduces the loan principal, which lowers P&I. It also eliminates or reduces mortgage insurance once you reach 20%. On a $500,000 home at 6.5% for 30 years: 5% down means a $475,000 loan with PMI (~$180/month) for a total around $2,840/month; 20% down means a $400,000 loan with no PMI for about $2,528/month — saving $312/month.
What happens if I put less than 20% down?: In the US, you pay PMI (private mortgage insurance) monthly until your equity reaches 20%. On a conventional loan at 6.5% LTV, PMI typically adds 0.3–1.5% of the loan annually. In Canada, less than 20% means mandatory CMHC/Sagen/Canada Guaranty default insurance — a one-time premium of 2.8%–4.0% added to your mortgage principal, plus possible PST at closing.
Can I use gifted funds for a down payment?: Yes, in both the US and Canada, but with documentation requirements. Lenders need a signed gift letter stating the funds are a true gift (not a loan), the relationship between donor and recipient, and often bank statements showing the transfer. In Canada, gifts from immediate family are fully acceptable for the down payment. In the US, conventional loan rules allow gifts from family members; FHA loans also allow gifts from employers and charitable organizations.

Try the calculator & explore related terms

Calculators

US mortgage calculator — see how down payment changes your payment and PMI
Canadian mortgage calculator — tiered minimum, CMHC auto-calculated

Related glossary terms

Loan-to-value (LTV) — the ratio your down payment sets
PMI — US insurance triggered below 20% down
CMHC insurance — Canadian equivalent
Closing costs — additional cash needed at purchase
Amortization — how the remaining loan pays down