Standard Down Payment Amounts
Conventional wisdom suggests 20% down to avoid PMI. However, FHA loans allow 3.5% down, VA loans require no down payment, and many conventional programs accept 5-10% down with appropriate credit scores.
PMI and Its Costs
PMI protects lenders if you default. It typically costs 0.5-1% of your loan amount annually. On a $400,000 loan, this equals $2,000-4,000 yearly in additional costs.
Strategic Considerations
Lower down payments preserve cash for emergency reserves and investing. Higher down payments reduce monthly payments and eliminate PMI. The optimal amount depends on your financial situation.