The down payment range for a $500,000 house
A down payment on a $500,000 house typically ranges from $25,000 to $150,000, depending on the loan type you choose. The most common scenario is 20 percent down, which equals $100,000. But you can put down less—as little as 3 to 5 percent with certain loan programs—or more if you want to reduce your monthly payment and avoid mortgage insurance.
The amount you put down affects three things: your monthly mortgage payment, whether you pay private mortgage insurance (PMI), and how much you need to borrow. A larger down payment means a smaller loan, lower monthly payments, and no PMI. A smaller down payment means you borrow more, pay more each month, and add PMI to your bill until you reach 20 percent equity in the home.
Key Takeaways
- A 20 percent down payment on a $500,000 house is $100,000, and this amount avoids private mortgage insurance.
- You can put down as little as 3 to 5 percent ($15,000 to $25,000) with FHA, VA, or conventional loans, but you will pay PMI until you reach 20 percent equity.
- Your down payment does not include closing costs, which typically run 2 to 5 percent of the purchase price ($10,000 to $25,000 on a $500,000 home).
- The loan type you choose—conventional, FHA, VA, or USDA—determines your minimum down payment and whether PMI is required.
Down payment amounts by loan type
Different loan programs have different minimum down payments. A conventional loan (the most common type) typically requires 3 to 20 percent down. At 3 percent, you would put down $15,000 on a $500,000 house. At 5 percent, you would put down $25,000. At 20 percent, you would put down $100,000. With conventional loans below 20 percent down, you pay PMI.
An FHA loan requires a minimum of 3.5 percent down, which is $17,500 on a $500,000 house. FHA loans are backed by the Federal Housing Administration and are designed for borrowers with lower credit scores or less savings. You will pay mortgage insurance with an FHA loan regardless of your down payment size—it does not go away at 20 percent equity the way PMI does on conventional loans.
A VA loan (for military members, veterans, and surviving spouses) often requires zero down payment. You pay a funding fee instead of a down payment, which is typically 1.4 to 3.6 percent of the loan amount depending on your military status and whether you have used your VA benefit before. A USDA loan (for rural properties) also requires zero down payment but is limited to properties in designated rural areas and has income limits.
What private mortgage insurance costs and when it ends
If you put down less than 20 percent on a conventional loan, your lender will require PMI. On a $500,000 house with 5 percent down ($25,000), you would borrow $475,000. PMI typically costs 0.5 to 1.5 percent of the loan amount per year, paid monthly. On a $475,000 loan, that could be $200 to $600 per month added to your mortgage payment.
PMI stays on your loan until you reach 20 percent equity in the home. If you put down 5 percent, you need to build up another 15 percent equity through payments and home appreciation before PMI drops off. This can take 5 to 10 years depending on your payment schedule and local market conditions. You can also request PMI removal once you reach 20 percent equity, but your lender is not required to remove it until you hit that threshold.
FHA loans work differently. The mortgage insurance premium (MIP) on an FHA loan does not go away based on equity. You pay an upfront MIP (1.75 percent of the loan amount) at closing, and you pay an annual MIP (0.55 to 0.8 percent depending on loan term and down payment) for the life of the loan if you put down less than 10 percent. If you put down 10 percent or more on an FHA loan, the annual MIP drops off after 11 years.
Closing costs are separate from your down payment
Your down payment is only part of the money you need at closing. Closing costs are fees paid to the lender, title company, appraiser, and other parties involved in the transaction. On a $500,000 house, closing costs typically run 2 to 5 percent of the purchase price, which is $10,000 to $25,000.
Closing costs include the loan origination fee (usually 0.5 to 1 percent of the loan amount), appraisal fee ($400 to $600), title search and insurance ($800 to $1,200), property survey (if required), homeowners insurance premium (first year), property taxes (prorated), and attorney fees (if applicable). Some of these costs vary by state and lender. You can ask your lender for a Loan Estimate within three business days of applying; this document shows all estimated closing costs.
In some cases, you can negotiate with the seller to cover part of your closing costs. This is called a seller concession. The amount the seller can contribute varies by loan type—conventional loans typically allow up to 3 percent of the purchase price, while FHA loans allow up to 6 percent. If the seller covers $15,000 of your closing costs, you would need to bring $10,000 to $25,000 less to closing.
How to calculate your total cash needed at closing
To know exactly how much cash you need, add your down payment and closing costs together. Here are three scenarios on a $500,000 house:
| Scenario | Down Payment | Closing Costs | Total Cash Needed |
|---|---|---|---|
| 3% down, conventional | $15,000 | $10,000–$25,000 | $25,000–$40,000 |
| 5% down, conventional | $25,000 | $10,000–$25,000 | $35,000–$50,000 |
| 20% down, conventional | $100,000 | $10,000–$25,000 | $110,000–$125,000 |
| 3.5% down, FHA | $17,500 | $10,000–$25,000 | $27,500–$42,500 |
| 0% down, VA | $0 | $10,000–$25,000 | $10,000–$25,000 |
These numbers assume no seller concessions. If the seller covers closing costs, subtract that amount from your total. Your lender will provide a final Closing Disclosure three business days before closing that shows the exact amount you owe.
Down payment sources and what lenders accept
Lenders want to know where your down payment money comes from. Most lenders accept savings accounts, checking accounts, money market accounts, and certificates of deposit. They typically require bank statements from the past 60 days to verify the funds are yours and have been there long enough (usually at least two months) to show they are not borrowed.
Some lenders allow down payment gifts from family members. If a relative gives you money for your down payment, the lender will require a gift letter stating the money is a gift, not a loan you have to repay. The gift letter must be signed by both you and the person giving the money. The funds still need to show up in your bank account and be documented with bank statements.
Retirement account withdrawals (401k, IRA) are sometimes allowed but come with tax consequences and penalties. If you withdraw from a traditional IRA before age 59½, you typically pay a 10 percent early withdrawal penalty plus income tax on the amount withdrawn. First-time homebuyers can withdraw up to $10,000 from a traditional IRA without the 10 percent penalty, but you still owe income tax. Roth IRA contributions (not earnings) can be withdrawn penalty-free at any time. Talk to a tax professional before withdrawing from retirement accounts.
Putting down more than 20 percent
Some buyers put down more than 20 percent to reduce their monthly payment, build equity faster, or avoid PMI entirely. On a $500,000 house, putting down 25 percent means $125,000 down and a loan of $375,000. Putting down 30 percent means $150,000 down and a loan of $350,000.
A larger down payment lowers your monthly mortgage payment because you are borrowing less. It also means you build equity faster and have less interest to pay over the life of the loan. However, a larger down payment also means less cash in your pocket for emergencies, home repairs, or other expenses. Many financial advisors suggest keeping 3 to 6 months of living expenses in savings even after buying a home, so putting every dollar into a down payment can leave you vulnerable if something breaks or you lose income.
Frequently Asked Questions
Can I get a mortgage with less than 3 percent down?
Yes, with a VA loan (zero down) or USDA loan (zero down in may be able to access rural areas). Conventional and FHA loans have minimums of 3 to 3.5 percent. Some lenders offer 2 percent conventional loans, but they are rare and require strong credit and income. Ask your lender what programs they offer.
What happens if I don't have enough for a 20 percent down payment?
You can still buy with 3 to 5 percent down on a conventional loan or 3.5 percent on an FHA loan. You will pay PMI or mortgage insurance, which increases your monthly payment. As you pay down the loan and build equity, you can request PMI removal once you reach 20 percent equity.
Can the seller pay my down payment?
No, the seller cannot pay your down payment directly. However, the seller can contribute toward your closing costs through a seller concession. The amount allowed varies by loan type—typically 3 percent for conventional loans and up to 6 percent for FHA loans. This reduces the cash you need to bring to closing.
Do I need to show proof of funds before making an offer?
Most sellers will ask for proof of funds or a preapproval letter before accepting your offer. A preapproval letter from your lender shows you have been vetted and can borrow the amount needed. Proof of funds shows your bank statements confirming you have the down payment and closing costs available.
What if my down payment is in a different country or currency?
You will need to transfer the funds to a U.S. bank account before closing. International wire transfers can take 3 to 7 business days and may include fees. Start the transfer early and confirm with your lender that the funds have arrived and are documented in your bank statements before your closing date.