5% vs 10% vs 20% Down Payment: How Much Should You Put Down?
Compare 5%, 10%, and 20% down payments on a $400,000 home. See monthly mortgage payments, total interest, PMI considerations, cash reserves, and how to choose a down payment.
Short answer: 20% down usually minimizes mortgage borrowing costs, 10% is often a practical middle ground, and 5% can make sense when preserving cash is more important than minimizing interest. On a $400,000 home, the down payments are $20,000, $40,000, and $80,000. A larger down payment lowers the loan balance and principal-and-interest payment, while 20% down may also avoid PMI on many conventional mortgages. The right choice depends on your cash reserves, closing costs, income stability, other debt, and how you would use the cash you keep instead of putting it into the home. For most homebuyers, 20% down is the lowest-cost option, but it is not always the best financial decision. Our recommendation: choose 20% down if you can still keep a 3–6 month emergency fund and cover closing and moving costs; otherwise, 10% is often a strong middle ground, while 5% makes sense when preserving cash or buying sooner is more important.
5% vs 10% vs 20% Down Payment: Key Takeaways
For a $400,000 home, 5% down means $20,000 upfront and a $380,000 mortgage; 10% down means $40,000 upfront and a $360,000 mortgage; 20% down means $80,000 upfront and a $320,000 mortgage. At a 6.5% interest rate on a 30-year fixed mortgage, the estimated principal-and-interest payments are about $2,402, $2,276, and $2,023 per month. In general, choose 20% when you can still keep adequate cash reserves after closing, 10% when you want a balance between liquidity and borrowing cost, and 5% when preserving cash or buying sooner is the priority. These figures exclude property taxes, homeowners insurance, HOA fees, closing costs, and PMI.
5% vs 10% vs 20% Down Payment: The Quick Answer
If your priority is minimizing the total cost of your mortgage, 20% down is usually the best choice. If your priority is balancing lower monthly payments with enough cash reserves, 10% is often the better compromise. If you need to preserve cash or qualify for a home sooner, 5% can be reasonable, but you will generally borrow more and may have to pay PMI. For a $400,000 home, the three options require $20,000, $40,000, and $80,000 in down payment respectively. Our recommendation is simple: do not put 20% down if doing so would leave you without enough emergency savings after closing.
5% vs 10% vs 20% Down Payment: Side-by-Side Comparison
Using a $400,000 home price and a 30-year fixed mortgage at 6.5% APR, the difference between down payments is substantial. With 5% down, you borrow $380,000 and the estimated principal-and-interest payment is about $2,402 per month. With 10% down, you borrow $360,000 and pay about $2,276 per month. With 20% down, you borrow $320,000 and pay about $2,023 per month. The 20% option reduces the monthly principal-and-interest payment by about $379 compared with 5% down and by about $253 compared with 10% down.
How Much Does Each Down Payment Cost Over 30 Years?
Ignoring taxes, insurance, HOA fees, PMI, and future refinancing, the 20% down option has the lowest lifetime mortgage interest because you borrow the least. At 6.5% APR over 30 years, the estimated total principal-and-interest payments are approximately $864,600 on a $380,000 loan, $819,400 on a $360,000 loan, and $728,300 on a $320,000 loan. That means the 20% option can save roughly $136,000 in interest compared with borrowing $380,000 at the same rate. However, this comparison assumes you keep the mortgage for the full 30 years and does not account for PMI or investment returns on the cash you keep instead of putting into the home.
When Is 20% Down Better Than 10% or 5%?
20% down is generally better when you have stable income, sufficient savings, and no high-interest debt. The key benefit is not just the lower monthly payment: you also start with more home equity and may avoid PMI on a conventional mortgage. For the $400,000 example, moving from 10% to 20% down requires an additional $40,000 but reduces the estimated principal-and-interest payment by about $253 per month. That is roughly $3,036 in annual payment savings before considering PMI. Our recommendation: if you can put 20% down and still maintain a strong emergency fund, it is usually the lowest-cost option.
When Is 10% Down the Better Choice?
10% down is often the best compromise for buyers who can afford more than 5% but do not want to tie up $80,000 in a $400,000 home. Compared with 5% down, you borrow $20,000 less and reduce the estimated principal-and-interest payment by about $126 per month. Compared with 20% down, you keep an additional $40,000 in cash. The main drawback is that PMI may still apply, so you should compare the actual PMI cost with the benefit of keeping the extra cash.
When Does 5% Down Make Sense?
5% down makes sense when preserving cash or buying sooner is more valuable to you than minimizing mortgage costs. It can be a reasonable choice for buyers with stable income, strong credit, and a clear plan to build equity over time. However, a 5% down payment should not be used simply to buy a more expensive house than you can comfortably afford. Our recommendation: use 5% down only when the resulting monthly payment, PMI, taxes, insurance, and other housing costs still fit comfortably within your budget and you maintain adequate emergency savings.
Should You Put 20% Down or Keep the Extra Cash?
The answer depends on what the extra cash will do. If the alternative is leaving $40,000 in a low-yield savings account while carrying a 6.5% mortgage, increasing your down payment can be attractive because it reduces borrowing costs. If the alternative is paying off 20% APR credit card debt, paying the credit card first is usually the stronger financial decision. If the money is needed for an emergency fund, keeping the cash is more important than reaching 20% down. Our recommendation: prioritize emergency savings and high-interest debt before maximizing your down payment.
5% vs 10% vs 20% Down Payment: Which Should You Choose?
For most buyers, 20% down is the best option for minimizing mortgage costs, but 10% is often the better overall choice when liquidity matters. 5% down is best reserved for buyers who need to preserve cash or who would otherwise delay buying for several years. On a $400,000 home at 6.5% APR, moving from 5% to 20% down reduces the loan balance by $60,000 and the estimated monthly principal-and-interest payment by about $379. However, the decision should not be based on monthly payment alone. Compare the down payment, PMI, closing costs, emergency reserves, and alternative uses for your cash before deciding.
5% vs 10% vs 20% Down Payment: Common Questions
The right down payment depends on your financial position rather than a single universal rule.
Related Mortgage Guides and Calculators
Use these related resources to continue comparing your home-buying decision. Start with the Mortgage Calculator to compare payment and interest scenarios, then use the Home Affordability Calculator to estimate a comfortable purchase price. For deeper planning, compare paying extra toward your mortgage with investing and review how much additional monthly payment could shorten the loan term.
Use a Mortgage Calculator Before Choosing Your Down Payment
The right down payment depends on more than the purchase price. Compare each scenario using the same home price, APR, loan term, property taxes, insurance, and estimated PMI. Then compare the monthly payment, total interest, cash required upfront, and remaining emergency savings. A mortgage calculator can help you see the direct cost difference between 5%, 10%, and 20% down before you commit to a home purchase.
Related Calculators
Compare Your Mortgage Down Payment Options
Compare mortgage scenarios by entering your home price, down payment, interest rate, and loan term. See estimated monthly payment and total principal-and-interest cost before choosing how much to put down.
Use the Mortgage CalculatorRelated Guides
How Much House Can I Afford? Income, DTI, Down Payment & Monthly Costs
Find out how much house you can afford based on income, debt, DTI, down payment, mortgage rates, taxes, insurance, and monthly housing costs.
15-Year vs 30-Year Mortgage: Which Is Better for You?
Compare a 15-year vs 30-year mortgage based on monthly payments, total interest, equity growth, flexibility, and opportunity cost. See which mortgage term may fit your financial goals.
Should You Refinance Your Mortgage in 2026? Refinance Calculator & Break-Even Guide
Should you refinance your mortgage? Compare refinance rates, closing costs, monthly savings, total interest, and break-even point with a mortgage refinance calculator.
Extra Mortgage Payments vs Investing: Which Is Better?
Should you pay extra toward your mortgage or invest the money instead? Compare mortgage payoff strategies, investment returns, risk, and financial flexibility.
How Much Extra Should I Pay on My Mortgage Each Month?
How much extra should you pay on your mortgage each month? Compare $50, $100, $500, and other extra payments to see how they can reduce mortgage interest and shorten your payoff timeline.
Financial Disclaimer
The information provided by Calclend is for educational purposes only and should not be considered financial advice.
Financial decisions involving loans, mortgages, investments, or debt management should be based on your individual circumstances and professional guidance.
Calclend does not guarantee specific financial outcomes or results.
Explore More Loan Topics
Loan
Use loan calculators to estimate monthly payments, interest costs, and repayment timelines. Learn how loan terms, rates, and payment strategies affect borrowing costs.
Home Affordability
Estimate how much home you can afford based on income, debt, down payment, and mortgage costs.
Home Purchase
Estimate the total cost of buying a home including down payment, closing costs, taxes, and mortgage expenses.
Loan Amortization
Generate an amortization schedule to understand monthly payments, principal reduction, and total interest costs.
Loan Interest
Calculate loan interest costs based on amount, rate, and repayment term.
Refinance
Compare refinancing options, estimate payment changes, savings, costs, and break-even periods.
Debt Payoff
Estimate debt payoff timelines and compare repayment strategies.
Personal Loan
Estimate personal loan payments and understand borrowing costs.
Auto Loan
Calculate auto loan payments and understand vehicle financing costs.