How Much Is the Down Payment for a $500,000 House?

What’s the minimum down payment needed for a $500K house? It could be anything between $0 and $100,000. Don’t worry about the vagueness. By the time you’ve read this article, you’ll have a good idea of how much you will need.

In this article (skip to...)

• Intro to down payments
• Minimum down payment amounts
• Down payment assistance programs
• Monthly payment for a $500K house
• Home affordability FAQ

Introduction to down payments  

A down payment is the sum of money you contribute from your savings or other sources to the purchase price of a home you’re buying.

It’s usually expressed as a percentage of the purchase price. So, if your mortgage requires that you put down, say, 3%, the down payment needed for a $500K house would be $500,000 x 3% = $15,000. And a 20% down payment would require $100,000 ($500,000 x 20% = $100,000).

You may be able to do those calculations in your head or using a calculator. But, if you ever encounter difficulty with math, you always can ask Alexa, Siri, or a similar cloud-based voice service to assist you.

“Other sources”

We mentioned that a down payment is “money you contribute from your savings or other sources.” So, what might those others be?

Well, one could be a gift from a family member, friend or partner. Just be aware that any such gift must be properly documented so the lender knows where the money came from and is sure that it truly is a gift, not a loan in disguise. If you’re eligible for one of Freddie Mac’s mortgage loans, you may also be able to use funds given as wedding gifts, but again, you’ll have to document the sources and your marriage.

An even bigger source of down payment funds can be down payment assistance (DPA) programs. And there’s a whole section of these coming up later in this article.

Why most people need to make a down payment

Only two types of mortgages allow you to get a home loan without a down payment requirement. Again, we’ll be covering those in a minute.

Unless you’re eligible for one of those, your mortgage lender will insist on a down payment. Why?

Well, years of experience in the mortgage industry have shown that those with skin in the game are more likely to pay down their mortgages than those with no financial interest in the home. And the bigger that financial interest, the less likely a mortgage borrower is to walk away from his or her loan.

Similarly, the lender can avoid a loss if the loan turns bad and needs to be foreclosed. Your large down payment is a financial cushion for your mortgage lender.

So, lenders tend to reward those with down payments that are higher than the minimum. And you may well get a lower mortgage rate the more you put down.

That may be why the National Association of Realtors® reports that the typical down payment for first-time home buyers in 2022 was 6%. Yet it’s easy to find mortgages with minimum down payments of half that.

Down payment needed for a $500K house 

The size of the down payment you need will depend on the type of mortgage you choose and your financial situation. Unfortunately, it’s a bit more complicated than that.

That’s because you can choose only mortgages for which you’re eligible. And eligibility hurdles are why everyone doesn’t opt for a mortgage with a 0% down payment.

So, let’s next dig into those homeownership eligibility hurdles and the minimum down payment for different types of mortgages.

What's the minimum amount you can put down?   

Below are the different types of mortgages so you can see which you should pick and the down payment you might have to find for it:

VA loans

VA loans are available only to veterans, service members and those in related (and closely defined) groups. But, if you can get one, you’ll have a very competitive mortgage with these benefits:

• Zero minimum down payment
• Typically, very competitive mortgage rates compared to other 30-year home loans
• No mortgage insurance. Just a single funding fee on closing
• Include your closing costs in the home loan (VA refinance only)
• Expect most mortgage lenders to want minimum credit scores of 620 or even 640

Your down payment for a $500K house with a VA loan can be $0.

USDA loan

USDA loans come via the U.S. Department of Agriculture (USDA), which partly guarantees them. They’re available only to people on moderate and low incomes who are buying in an area that the USDA counts as rural.

However, the USDA counts 97% of America’s landmass as rural, including some suburbs. So, look up the address of the home you want to buy on the USDA’s website to see if your next home might be eligible. Just don’t forget those income limits.

Here are the benefits of a USDA loan:

• Zero down payment
• Below-market mortgage rates
• Reduced-rate mortgage insurance premiums
• No pre-set credit score but expect lenders to require 620 or higher

Your down payment for a $500K house with a USDA loan can be $0.

Conforming loans

Conforming loans count as types of conventional loans. But we have to treat them separately here because they have very different down payment (and other) requirements.

Why are they called conforming loans? Because they conform to rules and regulations laid down by Fannie Mae and Freddie Mac. Expect:

• A minimum down payment of 3%
• Competitive interest rates rather than very low ones
• A mortgage insurance requirement. However, you can request PMI removal when you have 20% equity.
• A minimum credit score of 620

Your minimum down payment needed for a $500K house with a conforming loan can be $15,000.

FHA loans

FHA loans are partly guaranteed by the Federal Housing Administration (FHA). Expect:

• A minimum down payment of 3.5%
• Lower mortgage rates than some other loans
• However, high mortgage insurance premiums can make them more costly overall.
• Worse, you’ll have to pay private mortgage insurance for the lifetime of your home loan. You must finish paying down your mortgage, sell the home, or refinance the loan to escape it. However, there’s one caveat to this. If you put 10% down on an FHA loan, it’s possible for your mortgage insurance to drop after 11 years of on-time payments
• A minimum credit score of 580. But that can be as low as 500 if you have a 10% down payment

Your minimum down payment needed for a $500K house with an FHA loan can be $17,500.

Conventional mortgages

A conventional loan is one that isn’t backed by the federal government. Conforming loans are considered conventional loans but have different requirements for borrowers. They’re a subset. So, we covered those separately earlier in this list.

A true conventional mortgage has the following characteristics:

• 20% minimum down payment
• Lower mortgage rates than many mortgages
• No mortgage insurance
• Expect to need a minimum credit score of 620+

Your minimum down payment for a $500K house should be $100,000. But check out piggyback loans, which can sometimes get you a conventional loan for half that.

Should I put 20% down on a $500,000 house?

Putting down 20% on a house brings many benefits. Indeed, putting down the biggest down payment you can manage is usually a good idea.

Just don’t overstretch yourself financially. Most borrowers want to live comfortably as homeowners. But, of course, it’s up to you if you’re happy to live on a PBJ diet for a few years to reap the benefits of a high down payment.

So, what are the advantages of high down payments? Well, we already mentioned that you’ll often be in line for a lower mortgage rate.

But you’ll also get a lower monthly payment. And your total cost of borrowing to buy your new home will be considerably a smaller amount of money.

This isn’t magic. It’s because you’re borrowing (and paying interest on) less. Suppose you put down a significant chunk (20%) of the down payment needed for a $500K house. You’ll be borrowing $400,000. But if you make a 3% down payment, you’ll be borrowing $485,000.

That $85,000 difference will make your mortgage much more expensive if you’re paying 7% or 8% (or whatever the mortgage rate you can get when you buy) for 30 years.

Down payment assistance programs  

We mentioned down payment assistance earlier and promised to explore it further. And here we are.

Some 2,000 DPA programs operate in the United States, mostly covering local areas. Many are operated by state, county, or city governments.

Each gets to set its own eligibility criteria and decide what benefits to offer. So we can’t tell you what you might get. But programs commonly offer home buyers one or more of the following:

1. Outright grants — These never have to be repaid
2. Low-interest loans — Repay these in parallel with your primary mortgage
3. Forgivable silent loans — You make no monthly payments and pay no interest. And, after a certain number of years, your mortgage lender forgives your loan, providing you’re still in residence

It’s well worth checking out whether you’re eligible for help where you plan to buy and establishing what assistance you might receive. To make a start, read Down Payment Assistance Programs & Grants by State 2023.

And don’t forget other help you might be in line for. Seller concessions mean you might be able to get your seller to cover some or all of your closing costs. And some sellers are even willing to pay to buy down your mortgage rate for one or more years.

Will yours? It depends on how badly your seller needs your purchase to proceed.

What’s the monthly payment for a $500K house?

There’s no single answer to what the monthly payment on a $500,000 home will be. There are too many variables, including type of mortgage, size of down payment, mortgage rate when you apply, and how attractive a borrower you are to mortgage lenders.

But luckily, there’s an easy way to find out. And that’s by using our free mortgage calculators. Click Tools at the top of our home page to find an array, including a general one and others for FHA, VA, and USDA loans.

Pick the calculator you want and then fill in the different fields: home price, down payment, the ruling mortgage rate, mortgage term (usually 30 years), and the state in which you’re buying. So, you can model different scenarios.

We did that for a $500,000 Floridian home with a 30-year fixed-rate mortgage with a 20% down payment. On the day we were checking, the average rate for one of these loans was 6.75% but check to see what it is when you read this. That returned a monthly mortgage payment of $2,594, plus property taxes and homeowners insurance.

The comparable figure for an FHA loan with a 3.5% down payment and a then-current mortgage rate of 6.616% was $3,087 plus $229 mortgage insurance each month, making $3,316.

You can see how much difference the smaller down payment and the mortgage insurance can make.

Home affordability FAQ