Texas Home Loans

How Much Should You Put Down on a House in Texas? (2026)

The "best" down payment is not always the biggest one. Putting less down and keeping cash in the bank is often the smarter move, and many Texas buyers need far less than they think.

Tyler Allen Reviewed by

Byron Davis, NMLS #621780 823 words · ~4 min read

3%Minimum down, conventional (many qualified buyers)

3.5%Minimum down, FHA

0%Down payment for eligible VA and USDA buyers

20%Where conventional PMI is no longer required

“How much should I put down?” sounds like a money question, but for most Texas buyers it is really a strategy question. The old rule says 20%, and that number scares a lot of people out of even starting. On a $400,000 home, 20% is $80,000 in cash, and when buyers see that figure they often stop researching altogether.

Here is what the rule misses: 20% is optional, not required. Qualified buyers purchase every day with 3%, 3.5%, or even nothing down. The more useful question is not how little you can put down, but how much you should, given your savings, your monthly comfort level, and what you want your cash to do after closing. Putting more down is not automatically the smarter move.

Clearing up the 20% myth first

Three assumptions trip buyers up before they run a single number:

“I need 20% down to buy.” No. That only avoids PMI on a conventional loan. Many buyers go in with 3% to 5%.
“Bigger down payment is always better.” Not necessarily. Every dollar in your down payment is a dollar not in your emergency fund.
“I make too little to save enough.” Often the gap is smaller than you think, especially once down payment assistance enters the picture.

What each down payment tier actually buys you

Think of it as a sliding tradeoff between cash kept and payment lowered, not a single right answer.

Down payment	What it gets you	The tradeoff
3% (conventional)	Buy sooner, keep the most cash, lowest upfront barrier	PMI required, higher loan balance and payment
3.5% (FHA)	Flexible credit qualifying, low upfront cash	Upfront + annual MIP that often stays for the life of the loan
5% (conventional)	Lower payment and PMI than 3%, still preserves reserves	More cash needed at closing
10% (conventional)	Noticeably lower payment and PMI, more equity day one	Larger upfront investment, less liquidity
15% (conventional)	Lower payment and PMI, stronger equity position	Significant cash out of pocket
20% (conventional)	No PMI, lowest payment, most immediate equity	Large cash outlay, least liquidity for emergencies

Put more down, or keep money in the bank?

This is the real decision, and it is where a lot of buyers over-index on PMI. Yes, 20% down removes private mortgage insurance, which the CFPB explains here, and on a conventional loan you can request removal at 80% and it cancels automatically at 78% anyway, per the CFPB’s PMI removal rules. But homeownership has a way of producing surprise expenses:

HVAC and roof repairs
Appliance replacement
Medical bills and job changes
Moving and furnishing costs

For many buyers, keeping $10,000 to $20,000 in reserves is worth more than the monthly savings from a bigger down payment. We dig into the insurance side in our guide to PMI and when it goes away.

What about 0% down with VA and USDA?

Two programs let eligible buyers skip the down payment entirely. VA loans, for eligible veterans and active-duty service members, allow 100% financing with no monthly mortgage insurance. USDA loans allow 100% financing in eligible rural and suburban areas, and more of Texas qualifies than most people expect. FHA loans, insured through HUD, sit in the middle at 3.5% down. Even with zero-down financing, down payment assistance can still help cover closing costs and preserve your reserves.

How down payment assistance changes the math

This is the part many Texas buyers never hear. Programs through TSAHC and TDHCA may provide up to 5% of the loan amount toward your down payment and closing costs, delivered as a grant, a forgivable second lien, or a deferred 0% second lien depending on the program. On a roughly $388,000 conventional loan, 5% is about $19,400, which in some cases can cover the entire minimum down payment and still help with closing costs. See our overview of Texas down payment assistance and the breakdown of how much money you actually need to buy in Texas.

So how much should you put down?

The best down payment is not the largest one. It is the one that gets you into the home while keeping your finances steady and your goals on track. For one buyer that means 3% and a full emergency fund; for another it means 20% and no PMI. ShopDPA is The Texas Down Payment Assistance Marketplace, and the licensed mortgage professionals in our network will model these scenarios side by side, including assistance, so you decide based on your real numbers instead of a rule of thumb.

Frequently Asked Questions

Do I really need 20% down to buy a house in Texas?

No. Twenty percent down only removes PMI on a conventional loan. Many qualified Texas buyers purchase with 3% to 5% down on conventional, 3.5% on FHA, or 0% with VA and USDA financing. Down payment assistance can reduce the cash you need even further.

Is it better to put more down or keep cash in the bank?

It depends on your situation. A larger down payment lowers your payment and can remove PMI, but draining your savings can leave you exposed to repairs, job changes, and emergencies. Many buyers are better served putting 5% to 10% down and keeping a healthy reserve.

What is the lowest down payment available in Texas?

Eligible VA and USDA buyers may purchase with 0% down. Conventional loans go as low as 3% for many qualified buyers, and FHA as low as 3.5%. Down payment assistance through TSAHC and TDHCA can help cover those amounts plus closing costs.

Does a bigger down payment get me a lower interest rate?

It can influence pricing and PMI, but rate depends on many factors including credit score, loan type, and the loan-to-value. A larger down payment usually lowers PMI and the loan balance, which lowers the payment, but it is not the only lever.

Can I use down payment assistance instead of my own savings?

Often, in part. Texas programs through TSAHC and TDHCA may provide up to 5% of the loan amount toward down payment and closing costs. Whether it covers your full down payment depends on the loan, the price, and the program, which a participating lender can confirm.

How much down payment do I need on a $400,000 home in Texas?

Roughly $12,000 at 3% conventional, about $14,000 at 3.5% FHA, or $0 with eligible VA or USDA financing. Twenty percent would be $80,000, but that is optional. Down payment assistance may reduce the out-of-pocket amount further.

† ShopDPA is a home loan and down payment assistance referral service. We are not a mortgage lender, mortgage broker, or loan officer, and we do not originate, fund, or service loans. We connect Texas homebuyers with licensed mortgage professionals and with down payment assistance programs. We are not affiliated with TSAHC, TDHCA, HUD, the VA, USDA, the CFPB, or any government agency. Loan terms, down payment requirements, and program rules are set by the applicable lender or agency and may change; confirm current details with a participating licensed lender. Equal Housing Opportunity.