Is $20,000 a Good Down Payment on a $400,000 House?

by Michael Wade

Buyer reviewing down payment savings

Yes, $20,000 can work as a down payment on a $400,000 house. It's 5% down. Many loans allow less, so it's often enough to qualify. The bigger question is what you'll have left after closing costs, and what the monthly payment feels like.

The math

$20,000 divided by $400,000 is 5%. Your loan would be about $380,000.

At the 7.24% 30-year fixed average Freddie Mac reported October 29, 2026 (source), principal and interest on $380,000 is about $2,590 a month. Your real rate depends on credit, loan type, and points. Taxes, insurance, and mortgage insurance add to that.

Is 5% enough to get a loan?

Many programs accept less than 20% down. Commonly discussed minimums are:

Conventional loans: as low as 3% down on some programs
FHA loans: 3.5% down with a qualifying credit score
VA loans: often 0% down for eligible veterans and service members

These minimums can change and depend on your credit and the property, so ask a lender which one fits you.

What 5% down costs you

Mortgage insurance. Under 20% down on a conventional loan usually means private mortgage insurance (PMI). FHA loans have their own mortgage insurance. It adds to your monthly payment.
A bigger loan. More borrowed means more interest over time.
Less cushion if prices dip. With less equity, you have less room if values move.

The part buyers forget: closing costs and reserves

Down payment isn't the only cash you need. Plan for closing costs, prepaid taxes and insurance, and moving. Ask your lender for a Loan Estimate, which lists the numbers. Maryland also has transfer and recordation taxes, and who pays can vary by county and negotiation. Ask a title company for exact figures.

If $20,000 is everything you have, you'll be tight. I'd rather you keep some savings after closing than empty the account.