<prompt> Human: So you want to buy a house, eh? Heres some information that can help with that pesky down payment how much do you need, and where should you get it? This is for US audiences. and assumes you are buying a personal residence. Note that this is intended as an overview, and doesnt cover every possible option or alternative available, especially locally to you or specific to your situation. This writeup assumes you are qualified for a loan in other ways, such as credit history.The basics. Lenders want you to have your own money at risk in a house purchase, thus the down payment, which forms your initial equity. 20 of the price is a popular target; this gives the lender a cushion in the event they need to foreclose, since you will take the first 20 of the loss in foreclosure. Most conventional i.e. non-government-backed mortgages will require Private Mortgage Insurance PMI if you dont put 20 down; usually you need at least 5, though. Thats not the end of the world, but its an added cost to you, so well look at that shortly. Note that there are some conventional mortgages with reduced eliminated PMI, but they are limited to certain lenders or situations. Most people wont have those options. Since 23 of mortgages are conventional, well spend more time discussing how down payments and PMI work for these type of loans. Alternatively, the government guarantees other mortgage products, including FHA, VA and USDA loans, that have reduced down payment requirements the government assumes some of the risk, allowing a reduced down payment, and gets you to pay the rest of it in various ways. You have to be a veteran for a VA loan, and only certain ruralish locations are eligible for USDA loans and the best deals are for people with low income, but if those work for you, those are good options with 0 ! down payment. FHA loans are more of a mixed blessing because you end up paying their version of PMI, called MIP down payments on FHA mortgages start at 3.5. How much should you put down? Thats easy, right? 20? Well, maybe not. The average down payment in 2016 was 11 across all types of mortgages, so plenty of conventional mortgages are written with less than 20 down. You just pay extra through PMI for the privilege of the bank taking on more risk. You have three main ways of paying PMI - As an added fee to your monthly payment, usually about .5 to 1 of the house price year, paid monthly, but it varies based on down payment and credit score;- As a higher interest rate perhaps .25 more for the life of your loan, so-called lender-paid PMI but you really pay it anyway;- As a one-time lump sum You pay something like 3 of the house price up front in lieu of monthly surcharges. Unlike a down payment, this doesnt go towards your equity.So, you have options. The monthly surcharge PMI can be eliminated once you pay down the principal of your loan to below 80 of your original purchase price. That could take a while if you make minimum payments with a small down payment, but if your income grows, you could be in a position to eliminate PMI within a few years. While paying down a mortgage isnt always the best use of money, paying enough to eliminate PMI is typically more rewarding and worth the effort. Some mortgages also allow you to eliminate PMI if your house appreciates enough to make your equity 20, but thats not universal and will require you to do some work and pay some fees.The exact amount you put down depends on your specific situation; try for 20 if you can do it, since it will give you better financing options. You will also pay less monthly with a larger down payment. You probably wont get a better interest rate with a bigger down payment 20, so thats not something to plan for. Where should you get the money? The down payment should be your money, so, ideally, you want to save up for this over time. A typical nationwide house price might be 250,000, so 20 down would be 50,000; if you saved 1000month, you could do that in about four years. And, yes, in many places houses cost much, much more. Adjust accordingly. But, thats a lot of savings, and thats a long time. So, what else can you do?Gifts from relatives are a very popular option, actually. Lenders are used to these and like them. There is typically no gift tax if your parents give you 20,000 or even 50,000 as a down payment. Problem solved, for those lucky enough to have this as an option. Note that loans from relatives are not the same and not nearly as cool. You will usually need to document that money from relatives is a gift and not a stealth loan. If your relatives sell you their house for less than market value, this is also treated a down payment gift, a so-called gift of equitySpecial programs exist in certain places to give homebuyers, especially first-time buyers for some definition of first-time, some assistance with their down payment. Sometimes first-time just means didnt own a house recently. You might not know about the Good Neighbor Next Door program that helps municipal employees in certain cities get a big discount on their homes. Thats an example of program you probably dont qualify for, but there could be something local to you that you do qualify for, e.g. in Ohio or Austin, TX or various other places. Look around at whats available in your state, and in cities near you. Sometimes these are low-cost loans; other times they are grants, especially for low-income households. Not everybody has these, though. Many people dont have any good options here. Retirement accounts This is an option, but not an ideal one. Most people retire one day, so thats a higher priority than buying a house. If you are convinced you want to do this, your best options are either a 401k loan or a distribution from an IRA. Roth contributions are the best way to do this not-so-good idea. You can also tap IRA gains up to 10,000 without penalty once in a lifetime, but you may owe taxes on the money.Another loan You can borrow part of your downpayment with a so-called piggyback loan You still come up with part of the money yourself, but then borrow enough additional in a second mortgage to eliminate PMI. You then have two loans to pay back. Its an option, but not usually your best option.Where to save for your down payment? Many people coming to this forum want to put their money to work, and especially for a house down payment. But, sadly, your money is not very ambitious, and wont work very hard for you in typical down-payment-size amounts and timetables. If you are saving for a house purchase within five years, you dont want to put your money at risk of a 20 stock market correction that will inevitably occur just before you need the money. Your contributions will dominate any interest or earnings over a short timetable, so just use something that pays interest without principal risk. Unless you really do want to risk your down payment. Most people dont.So there is some basic information about down payments. If you have specific questions, let me know and I will try to answer them and update this. See also closing costs here: Assistant: No mention of closing costs? That can be a pretty significant amount of cash in addition to the down payment.Human: Maybe we need a Closing Costs 101?  <response>: Please do one! 