Down Payment on a House: How Much Do You Really Need?
The belief that you need twenty percent down is the single most expensive myth in home buying, because it keeps people renting for years while they save toward a number no loan program requires.
Here is what a down payment on a house actually needs to be, and when a larger one is worth it.
What Each Loan Type Looks For
- Conventional financing commonly starts around three percent down for qualifying buyers, and five percent is very ordinary.
- FHA loans have a low minimum down payment and more flexible credit requirements, in exchange for mortgage insurance that in most cases stays for the life of the loan.
- VA loans offer no-down-payment financing to eligible service members and veterans, with a funding fee instead of monthly mortgage insurance.
- USDA loans also allow no down payment in eligible rural areas — which covers a fair amount of Waller County and the western edge of Fort Bend County — subject to income limits and property eligibility.
Twenty percent is not a requirement. It is the threshold at which conventional loans stop charging private mortgage insurance.
What PMI Actually Costs, and When It Goes Away
Private mortgage insurance protects the lender, not you, and it is added to your monthly payment when you put less than twenty percent down on a conventional loan. The premium varies with your down payment size and credit score.
The part that gets left out of the argument: on a conventional loan, PMI is not permanent. It can generally be cancelled once you have built sufficient equity, and it terminates automatically at a set threshold. So the real question is not “PMI or no PMI” — it is whether the years of waiting and saving to avoid a few years of PMI is a good trade.
FHA is different. In most cases its mortgage insurance lasts the life of the loan, and the usual escape is refinancing into a conventional loan once you have the equity and credit for it. That is worth factoring in at the outset rather than discovering later.
When a Bigger Down Payment Is Worth It
It genuinely helps when:
- You are close enough to twenty percent that a modest stretch gets you there and eliminates PMI outright.
- You are in a competitive situation and a stronger down payment makes your offer more credible to a seller.
- The lower monthly payment is what makes the house comfortable rather than merely possible.
When It Is Not
Be honest about the other side:
- If it drains your reserves. Arriving at closing with nothing behind you is a genuinely risky position. A water heater, an HVAC failure or a job disruption in year one is common, not exotic, and lenders look at reserves too.
- If it means waiting years while prices and rates move. The saving may not outrun the market.
- If it leaves nothing for closing costs. These are a separate pile of money due at the table, and they surprise people. We break them down in closing costs in Texas: what buyers actually pay.
The Money You Need That Is Not the Down Payment
Budget for these separately:
- Option fee and earnest money, both due within three days of an executed contract. Earnest money is credited back at closing; the option fee generally is not.
- Closing costs, including several months of property taxes and a full year of insurance funded into escrow — a larger line in Fort Bend County than in most of the country.
- The inspection, paid during the option period.
- Reserves for what the inspection finds and what the first year brings.
Assistance Is Worth Checking
Texas has several down payment assistance programs with income and location eligibility rules, and buyers frequently assume they will not qualify without ever asking. It costs nothing to have a lender check, and the answer is sometimes surprising.
Where This Sits
Gathering a down payment is step six of twenty-five, and it works best alongside the credit work that comes just before it — a stronger score and a modest down payment often beat a weaker score and a large one. The full order is in our home buying checklist for Texas buyers, and what credit score for a mortgage you need covers the other half.
If you want help working out what you would actually need for a specific price range here, call Terra Point Realty at (713) 766-1697.
About the author — Stacy Burgin is a Texas real estate agent with Terra Point Realty serving Katy, Fulshear, Richmond and the wider Fort Bend County area. She has closed more than 300 transactions, including over 130 home sales representing roughly $30 million in volume, and holds HAR Platinum recognition with a 4.89 client satisfaction rating across 124+ surveys.