Minimum Down Payments in the US
In the United States, the minimum down payment depends on your loan type. There is no single universal rule:
| Loan Type | Min. Down Payment | Credit Score Required | Notes |
|---|---|---|---|
| Conventional | 3% | 620+ | PMI required under 20% |
| FHA Loan | 3.5% | 580+ | MIP required for life of loan (if <10% down) |
| VA Loan | 0% | No minimum (lender varies) | Military/veterans only. No PMI. |
| USDA Loan | 0% | 640+ | Rural areas only. Income limits apply. |
| Jumbo Loan | 10–20% | 700+ | Loans above conforming limits (~$766,550 in 2026) |
Minimum Down Payments in Canada
Canada's rules are based on the purchase price of the home and are set by the federal government:
| Home Purchase Price | Minimum Down Payment |
|---|---|
| Under $500,000 | 5% |
| $500,000 – $999,999 | 5% on first $500K + 10% on the remainder |
| $1,000,000 and above | 20% minimum (no CMHC available) |
For example, on a $700,000 home in Canada: the minimum down payment is $25,000 (5% of $500K) + $20,000 (10% of $200K) = $45,000 total.
Any down payment under 20% requires CMHC mortgage insurance (also called mortgage default insurance), which protects the lender — not you — if you default.
The Real Numbers: How Much Does a Bigger Down Payment Save?
Let's use a $500,000 home with a 6.5% interest rate and 25-year amortization (Canadian standard) and compare three down payment scenarios:
| Down Payment | Amount | Loan Amount | Monthly P&I | Total Interest |
|---|---|---|---|---|
| 5% | $25,000 | $475,000 | $3,210 | $488,000 |
| 10% | $50,000 | $450,000 | $3,041 | $462,300 |
| 20% | $100,000 | $400,000 | $2,703 | $410,900 |
Going from 5% to 20% down saves you approximately $77,000 in total interest and reduces your monthly payment by about $507/month. That's significant — but it also requires an extra $75,000 upfront, which takes years to save.
PMI vs CMHC: The Hidden Cost of a Small Down Payment
When your down payment is under 20%, you're required to pay mortgage insurance — this is where the "20% rule" comes from. But it's not a hard requirement to buy; it's a cost you need to factor in.
In the US (PMI): Private Mortgage Insurance typically costs 0.5%–1.5% of the loan amount per year, added to your monthly payment. On a $400,000 loan, that's roughly $167–$500/month. The good news: PMI automatically cancels once your equity reaches 20% of the original home value.
In Canada (CMHC): The premium is a one-time percentage of your mortgage amount, added to your loan balance:
| Down Payment | CMHC Premium Rate | On a $475,000 loan |
|---|---|---|
| 5% – 9.99% | 4.00% | $19,000 added to mortgage |
| 10% – 14.99% | 3.10% | $14,725 added to mortgage |
| 15% – 19.99% | 2.80% | $13,300 added to mortgage |
| 20%+ | 0% | No insurance required |
The Sweet Spot: Is 20% Always Worth It?
Not necessarily. Here's how to think about it:
20% down makes strong sense when:
- You have the savings and it won't drain your emergency fund
- You're buying in Canada (avoids CMHC insurance permanently)
- You want the lowest possible monthly payment and total cost
- The housing market is stable and you plan to stay long-term
A smaller down payment may make sense when:
- Home prices in your market are rising fast — waiting to save 20% means paying more for the home
- You have high-interest debt (credit cards, personal loans) — paying that off first may save more money than a bigger down payment
- Your emergency fund would be wiped out — having 3–6 months of expenses in savings is critical after buying a home
- You qualify for 0% down (VA loan) — no PMI, so there's little penalty for putting nothing down
How to Decide What's Right for You
Here's a simple decision framework:
- Step 1: Calculate the minimum you can put down and still qualify for the loan you need
- Step 2: Use our mortgage calculator to compare total interest at different down payment amounts
- Step 3: Calculate the PMI or CMHC cost you'd pay with a smaller down payment
- Step 4: Check whether you have at least 3–6 months of expenses left after the down payment
- Step 5: Consider opportunity cost — could that extra savings earn more invested elsewhere?
There's no single right answer that works for everyone. The best down payment is the one that gets you into your home comfortably, protects your financial cushion, and minimizes unnecessary insurance costs over time.