How Much Should I Save for a House Deposit?
The size of your house deposit affects three things: how much home you can afford, how much you pay each month, and whether you'll need to pay extra for mortgage insurance. This guide compares the three most common deposit sizes — 5%, 10%, and 20% — so you can pick the target that fits your timeline.
The three common deposit sizes
- 5% down (or less) — fastest path to ownership, but you'll pay PMI and a higher rate.
- 10% down — middle ground; smaller PMI, modestly better rates.
- 20% down — no PMI, best rates, lowest monthly payment, but takes longer to save.
None of these is "the right answer" — the best deposit depends on your income, the housing market, and how long you can wait.
Worked example: $300,000 home
Let's use a realistic 2026 scenario: a $300,000 home, a 30-year mortgage at 6.5%, property tax of 1.1%, and insurance of $1,500/year.
| Deposit | Cash needed | Loan amount | Monthly payment* | PMI? |
|---|---|---|---|---|
| 5% | $15,000 | $285,000 | ~$2,210 | Yes (~$120/mo) |
| 10% | $30,000 | $270,000 | ~$2,090 | Yes (~$90/mo) |
| 20% | $60,000 | $240,000 | ~$1,830 | No |
* Includes principal, interest, taxes, and insurance. PMI shown separately.
The difference between 5% down and 20% down is about $380/month — over $4,500/year, every year, until you reach 20% equity.
When each deposit makes sense
5% down works when:
- Rents are rising fast in your area.
- Your income is stable and growing.
- You'll stay in the home 5+ years to absorb closing costs.
10% down works when:
- You want a balance between speed and cost.
- You can comfortably afford a slightly higher monthly payment plus modest PMI.
20% down works when:
- You're not in a rush.
- You want the lowest possible monthly payment and no PMI.
- You qualify for the lender's best interest rate tier.
How long it takes to save each amount
Saving $1,000/month into a 5% APY high-yield savings account:
- $15,000 (5% on $300K) → about 15 months
- $30,000 (10% on $300K) → about 28 months
- $60,000 (20% on $300K) → about 52 months
Want to plan your exact deposit timeline? Use our savings goal calculator or our full best way to save for a house guide.
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Open Savings Goal CalculatorFrequently Asked Questions
What is the minimum house deposit?
In the US, FHA loans allow as little as 3.5% down, and conventional loans go as low as 3% for first-time buyers. The trade-off: you'll pay private mortgage insurance (PMI) until you reach 20% equity.
Why is a 20% deposit considered the standard?
A 20% deposit removes PMI, typically unlocks the best interest rates, and reduces the loan amount — meaning a smaller monthly payment and far less interest over the life of the loan.
Is it better to wait and save 20% or buy now with less?
Depends on rent costs, market conditions, and your timeline. If rents are climbing and you'll stay in the home 5+ years, buying with 5–10% down often beats waiting. If rates are high or you're not settled, saving more is usually safer.
How long does it take to save a 20% deposit?
On a $300,000 home, 20% is $60,000. At $1,000/month in a 5% high-yield savings account, that takes about 4.3 years. At $500/month, about 7.7 years.
Does my deposit affect my interest rate?
Yes. Lenders typically offer the best rates at 20%+ down, decent rates at 10–20%, and slightly higher rates below 10%. The rate difference can be 0.25–0.5%, which adds up to thousands over a 30-year loan.
What is PMI and how do I avoid it?
Private Mortgage Insurance protects the lender if you default. It typically costs 0.5–1.5% of the loan amount per year and is required when you put down less than 20%. Avoid it by saving 20%, or remove it once your equity reaches 20% through payments and home appreciation.
Can I use gifts or grants for my deposit?
Yes. Gifted funds from family are allowed for most loan types (you'll need a gift letter). First-time buyer grants and down payment assistance programs are available in many states.