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The 5% buyer on a $400k home needs $32,000, not $20,000. Here is the full check.
On a $400,000 home, 5% down is $20,000 — plus about $12,000 in closing costs and $158 a month of PMI until you reach 20% equity. This calculator prices every level from 3% to 20% side by side so you can pick the down payment that fits the savings you actually have.
First-time buyers use it to size the real check: 5% on $400k is $20,000 plus $12,000 closing plus $158/mo PMI — $32,000 cash to close, not $20,000.
The minimums by loan type: conventional loans start at 3% (first-time buyers) or 5%, FHA at 3.5% with 580+ credit, VA and USDA at 0% for eligible buyers. But the down payment is not the check — closing costs add 2–5% of the price (lender fees, title, appraisal, prepaid taxes and insurance), and smart buyers hold 2–3 months of payments in reserve afterward because some loan programs require it and life does anyway. On a $400,000 home: 3% down = $12,000, plus ~$12,000 closing, plus reserves — call it $30,000 of real savings for the minimum path. The 20% number ($80,000) exists because it kills PMI, not because it is required.
Run the PMI math: on $400,000, the gap from 10% to 20% down is $40,000 of cash to save about $150/month of PMI and roughly $260/month of payment — that is a 5.3% annual "return" on the $40,000, guaranteed and tax-free-ish. But the counterargument is liquidity: money in home equity requires a refinance or sale to access, and buyers who empty savings for 20% down are one furnace from credit-card debt. The honest framework: if 20% down leaves 3+ months of reserves, take the PMI savings; if it leaves you empty, put 10% down, keep the cushion, and request PMI removal at 78–80% LTV — appreciation and payments often get there in 4–6 years. FHA buyers should note MIP is for the life of the loan under 10% down — refinance is the only exit.
Lenders care about sourcing because undisclosed loans inflate your real DTI. Clean sources: savings and checking with 60 days of statements, gift funds from family with a signed gift letter (allowed on nearly all programs — the donor's paper trail gets checked too), down-payment assistance programs (most states run DPA grants or forgivable second loans worth 3–5% of price for moderate-income buyers), 401(k) loans (allowed, but the repayment counts in DTI), and IRA withdrawals up to $10,000 penalty-free for first-time buyers (taxes still due). What kills applications: undocumented cash deposits ("mattress money"), loans from friends disguised as gifts, and crypto sold without a paper trail. Deposit anything unusual 3+ months before applying — seasoned money asks no questions.