How Much Should You Put Down on a Home in Washington State?

One of the most common questions I get from home buyers in Washington State is: how much should I put down? The short answer is: it depends. But the longer answer is actually pretty interesting — and knowing the tradeoffs can save you real money.

Let’s walk through how your down payment affects your loan, your rate, and your monthly payment.

You Don’t Have to Put 20% Down

This is the first myth worth busting. The idea that you need 20% to buy a home is outdated. Most buyers in Washington State put down significantly less — and they have good reasons to.

Here are the most common minimum down payments by loan type:

• Conventional (Fannie Mae / Freddie Mac): 3% for qualifying first-time buyers (HomeReady, Home Possible, HomeOne); 5% for most other buyers
• FHA: 3.5% with a credit score of 580 or higher
• VA: 0% for eligible veterans and active-duty service members with full entitlement
• USDA: 0% for qualifying rural areas of Washington State
• Jumbo: Typically 10%–20%, depending on the lender and loan amount
• Doctors Loans: 0% down for eligible medical professionals.

If you’re a veteran, a VA loan with zero down is almost always worth pricing out. And for buyers who are short on cash, down payment assistance programs may be able to cover some or all of what’s required.

How Your Down Payment Affects Your Rate (LLPAs)

Here’s something many buyers don’t know: on conventional loans, your down payment directly affects your mortgage rate. Fannie Mae and Freddie Mac use what are called Loan-Level Price Adjustments (LLPAs) — pricing grids that vary by credit score and loan-to-value ratio (LTV).

In plain terms: the more you put down, the lower your LTV, and generally the better your pricing. The most meaningful pricing improvements tend to happen at these LTV thresholds:

• 95% LTV (5% down)
• 90% LTV (10% down)
• 80% LTV (20% down) — this is also where PMI goes away
• 75% LTV (25% down) — often the sweet spot for the best conventional pricing

The difference between 5% and 10% down can sometimes be meaningful enough to change whether a slightly higher down payment makes sense — not because of PMI, but because of the rate itself.

This is one of the reasons I price out multiple scenarios for my clients. The math isn’t always what you’d expect.

What Is PMI and When Does It Go Away?

Private mortgage insurance (PMI) is required on conventional loans when your down payment is less than 20%. It protects the lender — not you — if you default. But it’s not permanent.

PMI is typically removed when your loan balance reaches 80% of the home’s original purchase price. Under the Homeowners Protection Act, lenders are required to cancel it automatically when you reach 78% LTV based on the original amortization schedule. You can also request cancellation at 80% LTV if you have a good payment history.

So if you’re putting down 10% or 15%, you’re not paying PMI forever — you’re paying it for a defined period until you’ve built enough equity.

Is it worth putting down 20% just to avoid PMI? Maybe — but not always. The breakeven calculation matters. If it takes you several more years to save up to 20%, you might have been better off buying earlier at 10% down, letting the home appreciate, and then requesting PMI removal once you hit 80% LTV.

Washington State Home Prices and Loan Limits

Washington State — and the Seattle metro in particular — has some of the highest home prices in the country. That changes the down payment conversation in a few important ways.

For 2026, the conforming loan limits in Washington State are:

• Most counties: $832,750 for a single-family home
• King, Pierce, and Snohomish counties: $1,063,750 for a single-family home

If your loan amount exceeds the conforming limit for your county, you’re in jumbo territory — which typically means a larger required down payment (often 10%–20%) and slightly stricter qualifying guidelines.

For buyers in the Seattle metro purchasing homes priced above the high-balance limit, a larger down payment may be required simply to stay within jumbo lender guidelines — not necessarily because it’s the financially optimal choice.

The Liquidity Tradeoff: Don’t Drain Your Reserves

One of the most important conversations I have with buyers is about what you’re giving up when you put more down.

A larger down payment means:

• Lower monthly payment
• Less interest paid over time
• Better loan pricing in some cases
• No PMI if you hit 20%

But it also means:

• Less cash on hand after closing
• Fewer reserves for repairs, emergencies, or life changes
• Equity that’s tied up and illiquid (you can’t spend it without selling or refinancing)

Lenders often require reserves after closing — typically two to six months of your housing payment, depending on the loan type and scenario. If making a larger down payment wipes out your reserves, that’s a problem both for qualifying and for your financial stability after closing.

My general guidance: don’t put so much down that you’re house-rich and cash-poor. Homes require maintenance. Life happens. Liquidity matters.

What About Using That Money to Pay Off Debt?

Sometimes buyers have a choice between putting more down on the home or paying off existing debt first. There’s no universal right answer, but here’s how I think through it:

If paying off a debt would significantly lower your debt-to-income ratio (DTI) and help you qualify for a better loan — or qualify at all — that may be the better move. On the other hand, if the debt is low-interest and your DTI is already in good shape, putting those funds toward the down payment (or keeping them as reserves) may make more sense.

This is exactly the kind of scenario-based conversation I have with clients before they decide how to structure their purchase. The numbers tell the story.

The Opportunity Cost of Equity

Here’s a question worth asking: if you put an extra $50,000 into your down payment, what are you giving up?

That $50,000 sitting in home equity earns a return equal to your home’s appreciation rate — which you’d get regardless of how much you put down. Your home doesn’t appreciate faster because you put more down. But that same $50,000 invested elsewhere might earn a different return, especially over a long-time horizon.

This is a personal finance calculation, not a mortgage calculation. It depends on your other investment options, your risk tolerance, your tax situation, and how long you plan to stay in the home. I’m not a financial advisor, but I can help you understand the mortgage side of the equation clearly — so you can make a fully informed decision with your financial planner or on your own.

So How Much Should You Put Down?

Here’s my practical take after working with Washington State home buyers for over two decades:

• Put down the minimum if you need to preserve cash and your monthly payment still works. Getting into a home earlier has its own financial benefits, especially in an appreciating market.
• Don’t feel obligated to reach 20% if it means waiting years or draining every dollar of savings. PMI is a cost — but so is renting while you wait.
• If you’re a veteran, price out the VA loan first. Zero down with no PMI is a remarkable benefit that often wins even against conventional options with significant down payments.
• If you’re short on funds, ask about down payment assistance. Washington State has solid programs that can help cover your down payment and sometimes closing costs too.
• Gift funds from family members may be an option to go towards your down payment if properly documented with the mortgage program you’re using.

The right answer depends on your specific scenario — your income, credit, savings, the home price, and what you plan to do with the property long-term. That’s not a dodge; that’s just the honest reality of how mortgages work.

Let’s Run the Numbers for Your Situation

If you’re buying a home in Washington State and trying to figure out the right down payment strategy, I’m happy to walk through the scenarios with you. I’ll price out your options at different down payment levels so you can see exactly what changes — and what doesn’t.

Let’s talk — no pressure, just numbers.

Rhonda Porter is a licensed Washington State Mortgage Advisor (NMLS #121324) with New American Funding (NMLS #6606). This post is for informational purposes only and does not constitute financial advice.