How much should you put down?
Investment properties typically require 20% to 25% down. Conventional single-family minimums start near 15% (with PMI), 2 to 4 units usually need 25%, and an owner-occupied FHA house-hack can go as low as 3.5%. More down means safer cash flow but a lower return on your cash.
"How much should I put down?" sounds like a budgeting question, but it is really a strategy question. The amount you put down quietly decides your monthly cash flow, your return on capital, and how many deals you can do.
Down payment by loan type
| Loan / property | Typical down |
|---|---|
| Conventional, single-family | 15% minimum, 20% to 25% typical |
| Conventional, 2 to 4 units | 25% |
| DSCR loan | 20% to 25% |
| FHA house-hack (owner-occupied) | 3.5% |
Putting less than 20% down on a conventional loan usually triggers PMI, and 15% down generally needs a 700+ credit score.
The trade-off
More down means a smaller loan, a lower payment and safer monthly cash flow, but a lower return on the cash you committed. Less down boosts your cash-on-cash percentage and frees money for the next deal, but thins the buffer and raises risk. Match it to your goal:
- Optimizing cash flow? Lean toward more down for a thicker cushion.
- Optimizing growth? Put the minimum down that still cash-flows, and reuse the rest.
Do not forget closing costs and reserves
The cash you need up front is more than the down payment. Closing costs typically add 2% to 5% of the price, and lenders often want about 6 months of payments in reserves. On a $350,000 purchase with 25% down, that is $87,500 down plus roughly $10,500 closing, about $98,000 to close, before reserves.
Frequently asked questions
Can I put less than 20% down on a rental?
On a conventional single-family investment loan, 15% is often the floor, but under 20% usually means paying PMI and needing stronger credit. An owner-occupied FHA house-hack on a 2 to 4 unit can go as low as 3.5%.
How much down do I need for a 2 to 4 unit?
Conventional financing on a 2 to 4 unit investment property generally requires 25% down. If you live in one unit, owner-occupied programs can be far lower.
Does a larger down payment improve my return?
It improves monthly cash flow and lowers risk, but it usually lowers your cash-on-cash return because more of your own cash is tied up. It is a trade-off, not a free win.
How much total cash do I need beyond the down payment?
Budget another 2% to 5% of the price for closing costs and roughly 6 months of payments in reserves. The down payment alone understates the real cash required to close.