Here's the catch: there's no single right answer. Depending on your loan type, credit score, and buyer status, a down payment on a $400K house could run anywhere from $0 to $80,000+.
This guide breaks down the real ranges, which loan programs fit which buyers, how much income you'll need, and how to land on the number that actually works for your situation.
Key Takeaways
- Down payments on a $400K home typically range from 3% ($12,000) to 20% ($80,000)
- VA and USDA loans offer 0% down for eligible borrowers
- Smaller down payments mean PMI or MIP, raising your monthly cost
- Qualifying income ranges $85,000–$125,000/year, depending on down payment and debt
- Pick the down payment that protects cash reserves without locking in higher monthly costs long term
How Much Is a Down Payment for a $400K House?
There's no single "correct" down payment on a $400K house—it depends on your loan program, credit, and cash reserves. On this price point, most buyers land between $0 and $80,000 down. Common missteps still trip people up:
- Underestimating total cash needed at closing
- Ignoring what PMI adds to the monthly payment
- Leaving closing costs out of the budget
Down payments on a $400K home generally fall into three tiers.
Minimum Down Payment Tier: 0%–3.5% ($0–$14,000)
VA, USDA, and FHA (or some conventional first-time programs) can get you in with little or no money down.
- Lower upfront cash—often $0 to $14,000—with PMI or MIP and a higher monthly payment
- Fits first-time buyers, veterans, and anyone with limited savings
Moderate Down Payment Tier: 5%–10% ($20,000–$40,000)
- Reduced mortgage insurance versus the minimum tier and a more moderate monthly payment
- Fits buyers with solid savings who want lower monthly costs without stretching to 20%
Standard Down Payment Tier: 20% ($80,000)
- No PMI, stronger loan terms, and the lowest monthly payment of the three tiers
- Fits buyers who can prioritize long-term savings over keeping cash liquid
Also budget for closing costs. They typically run 2%–5% of the purchase price—$8,000 to $20,000 on a $400K home—and they're separate from your down payment.
Down Payment Options by Loan Type
Your loan program sets the minimum down payment on a $400K home. Here's how the major options compare:
| Loan Type | Minimum Down | Key Requirement |
|---|---|---|
| Conventional | 3%–5% | 620+ credit typically; 20% avoids PMI |
| FHA | 3.5% (or 10%) | 580+ score for 3.5% down; 500–579 requires 10% |
| VA | 0% | Eligible veterans/service members; funding fee applies |
| USDA | 0% | Eligible rural/suburban areas; income limits apply |
Conventional Loans
Conventional loans allow as little as 3% down ($12,000 on a $400K home) for qualified first-time buyers through programs like Fannie Mae's 97% LTV option or Freddie Mac Home Possible. At 5% down, you're looking at $20,000 upfront.
Put down 20% ($80,000) and you skip PMI entirely. Credit score thresholds generally start around 620, though requirements vary by lender.
FHA Loans
FHA loans require 3.5% down ($14,000 on $400K) with a 580+ credit score. Borrowers scoring 500–579 can still qualify, but need 10% down ($40,000) instead.
FHA carries mortgage insurance premiums (MIP) regardless of down payment size — the trade-off for flexible credit standards.
VA and USDA Loans
Eligible buyers may qualify for 0% down ($0 upfront on a $400K price) through VA or USDA programs:
- VA: Veterans and active-duty service members; no monthly mortgage insurance, but a funding fee of roughly 1.25%–3.3% applies based on use history and any down payment
- USDA: Income-eligible buyers in qualifying rural or suburban areas; a guarantee fee applies instead of traditional PMI
Both can eliminate the cash-down hurdle, though closing costs and fees still apply.
Down Payment Assistance Programs
Many first-time buyers don't cover the down payment alone. Per NAR's 2025 buyer profile, funding sources break down like this:
- Personal savings: 59% of first-time buyers
- Gifts or loans from relatives or friends: 22%
- Down payment assistance programs and grants: a common supplement when cash is short
State, local, and lender assistance programs can cover part—or occasionally all—of the down payment if you meet income and first-time-buyer rules. Gift funds are widely accepted on conventional, FHA, VA, and USDA loans when documented correctly.
How Much Income Do You Need to Afford a $400K House?
Lenders often use the 28%/30% rule: your housing payment shouldn't exceed roughly 28%–30% of your gross monthly income. That range is only a benchmark, but it is a useful starting point for sizing what you can afford.
Here's how that plays out with a 30-year loan at a 6.66% rate:
| Down Payment | Loan Amount | Monthly P&I | Approx. Income Needed (28%) |
|---|---|---|---|
| 3% ($12,000) | $388,000 | ~$2,489 | ~$106,700 |
| 20% ($80,000) | $320,000 | ~$2,053 | ~$88,000 |
So how much income do you need to afford a $400K house? Based on principal and interest alone, plan on about $88,000 to $107,000 a year, before taxes, insurance, or PMI.
A few things push that number higher:
- DTI ratio — lenders want your total debt (including car loans, student loans, and the new mortgage) under roughly 43% of gross income, not just the housing payment
- Property taxes and insurance add hundreds to your monthly obligation
- PMI or MIP on low-down-payment loans adds further monthly cost
A lower down payment therefore does more than increase the loan balance. It often raises the income you need to qualify at all.
Down Payment Amount vs. Monthly Mortgage Payment: What's the Trade-Off?
Putting less down frees up cash today but costs more over time. Here's the trade-off on the same $400K purchase.
| Factor | Lower Down Payment | Higher Down Payment |
|---|---|---|
| Monthly payment | Higher principal and interest, plus PMI | Lower payment, no PMI |
| Total interest (30 years) | More interest on a larger loan balance | Lower total interest over the full term |
| Cash after closing | More left for emergencies, repairs, or moving | Less liquidity, stronger equity from day one |
Moving from 3% to 20% down cuts the loan balance by $68,000 and drops the monthly P&I payment by roughly $436, before the PMI you'd eliminate. That's real money, but it also means tying up $68,000 more in equity instead of your bank account.
How to Decide the Right Down Payment for Your Situation
The right down payment is the one that fits your finances, not whatever percentage is typical. Consider:
- Savings and emergency fund: Don't drain your cushion just to hit 20%
- Credit score: A stronger score can lower your rate and PMI cost
- How long you'll stay: Longer stays make paying down PMI faster worthwhile
- Comfort level: Weigh a bigger monthly payment against a bigger upfront cash outlay
Numbers on a spreadsheet only tell part of the story. Getting pre-approved lets you see real figures (actual rate, PMI cost, and monthly payment) across different down payment scenarios before you commit.
Working with an advisory service like ClearPoint Mortgage Advisors can help you compare loan programs side by side, based on your actual income and goals, rather than guessing which tier fits best.
What People Often Get Wrong About Down Payments
When budgeting for a $400K home, these down payment myths trip up buyers most often:
- Assuming 20% is required. It's not. Conventional loans allow 3%, FHA allows 3.5%, and VA/USDA can mean 0% down for eligible buyers.
- Forgetting closing costs and moving expenses. These sit on top of your down payment, not inside it—often several thousand dollars more due at closing.
- Focusing only on the upfront number. Private mortgage insurance (PMI) and loan type affect your total cost far beyond day one.
- Ignoring existing debt. Car payments and student loans raise your debt-to-income (DTI) ratio, which lenders use to decide how much you can borrow.
Frequently Asked Questions
How much income do you need to borrow $400,000?
Roughly $85,000 to $125,000 a year, depending on your down payment and existing debt. This follows the 28%–30% housing cost guideline lenders commonly use as a benchmark.
Can a 70-year-old get a 20-year mortgage?
Yes. Fair lending laws prohibit age discrimination in mortgage approval. Qualification still depends on income, assets, and debt-to-income ratio, just as it does for any other borrower.
What credit score is needed to buy a $400,000 house?
FHA loans allow scores as low as 500–580 depending on your down payment tier. Conventional loans typically look for 620 or higher, though exact requirements vary by lender.
How much is a $400K mortgage per month?
At a 6.66% rate on a 30-year term, expect roughly $2,050 to $2,500 in principal and interest, depending on your down payment. Add taxes, insurance, and PMI for your full payment.
Is it better to put more money down on a $400K house?
A larger down payment means no PMI and a lower monthly payment, but it also ties up more cash. It's better if you have strong reserves; smaller down payments make sense if liquidity matters more to you.
What are the closing costs on a $400,000 house?
Typically 2%–5% of the purchase price, or about $8,000–$20,000. This covers lender fees, title insurance, appraisals, and other transaction costs, separate from your down payment.
