Down Payment Options for a $400K Home
The size of your down payment dramatically affects your monthly payment, whether you pay PMI, and how much cash you need on day one. Here's the full comparison:
| Down Payment | Amount | Monthly Payment | PMI | Total Cash Needed |
|---|---|---|---|---|
| 3% (FHA) | $10,500 | $2,405 | Yes (~$146/mo) | $26,000 |
| 5% Conventional | $17,500 | $2,358 | Yes (~$146/mo) | $33,000 |
| 10% Conventional | $35,000 | $2,169 | Reduced | $50,500 |
| 20% Conventional | $70,000 | $1,863 | None | $85,500 |
What Is PMI and How Do You Avoid It?
Private Mortgage Insurance (PMI) protects the lender — not you — if you default. It typically costs 0.5-1% of the loan amount annually. On a $400K home with 3% down, that's approximately $1,750/year in PMI alone.
You can request PMI removal once you reach 20% equity in the home (through payments + appreciation). But the fastest way to avoid it is to put 20% down from the start.
FHA vs Conventional: Which Is Better?
- FHA (3.5% down): Best for credit scores 580-679. Lower down payment but higher long-term cost due to MIP (mortgage insurance premium that lasts the life of the loan)
- Conventional (5-20% down): Best for credit scores 680+. PMI can be removed; MIP cannot on FHA
- Verdict: If your credit score is 680+, conventional almost always wins long-term
Use our mortgage calculator to compare exact monthly payments at different down payment amounts for your specific situation.
🔍 Also explore: All FRC Research Tools · Zai — File Analysis · FHA State Map · Lender Stress Index