A down payment is the initial amount you pay towards buying a home. Your mortgage covers the rest.
The minimum down payment depends on the home's price:
- $500,000 or less: 5% of the purchase price
- $500,000 to $999,999: 5% of the first $500,000, plus 10% of the amount above $500,000
- $1 million or more: 20% of the purchase price
If your down payment is under 20%, you'll need mortgage loan insurance. This protects the lender if you can't make payments.
Mortgage loan insurance premiums range from 0.6% to 4.5% of your mortgage amount.
- For a $400,000 home, the minimum down payment is 5%, or $20,000.
- For a $600,000 home, it's $25,000 (5% of $500,000) plus $10,000 (10% of the remaining $100,000), totalling $35,000.
A bigger down payment means a smaller mortgage, which could save you thousands in interest. For example, on a $400,000 home with a 4% interest rate over 25 years, a 20% down payment can reduce your total cost significantly compared to a 5% down payment.
Use our mortgage calculator to determine your monthly payments and see how different down payments affect your costs.
