Down Payment Strategies
How much you really need, where it can come from, and the trade-offs between putting more down vs keeping cash for everything else.
The down payment is usually the single biggest barrier between renters and homeownership. The good news is that the 'standard 20%' figure is more flexible than people think.
How much do you actually need?
- United States: as low as 3–3.5% with FHA-style loans, but you'll pay mortgage insurance until you reach 20% equity.
- Canada: minimum 5% on homes up to a certain price, more above; insurance required below 20%.
- United Kingdom: 5–10% common for first-time buyers, with better rates above 20%.
- Australia: 5–20% common; lenders' mortgage insurance applies under 20%.
- Eurozone: requirements vary widely; many lenders want 20% plus all transaction costs in cash.
More down isn't always better
A larger down payment lowers your monthly payment and total interest. But it also drains your savings — and a house-poor buyer with no emergency fund is vulnerable to a single repair bill or job loss.
Where down payments come from
- Long-term savings in a high-interest account or short-term bonds.
- Government-backed first-time-buyer schemes (Help to Buy, FHSA, FHSS, etc.).
- Gifts from family — usually allowed but require a 'gift letter' for the lender.
- Sale proceeds from another property.
Don't forget closing costs
Your down payment is not your only upfront cost. Plan for closing costs, moving, and an emergency fund on top.
Tip
A useful rule of thumb: keep 3–6 months of total housing costs in cash after closing.
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All the smaller fees that turn a quoted price into a much bigger cheque on closing day — and how to predict them in advance.
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