FHA mortgages require a minimum down payment of 3.5 percent of the home's purchase price
The Federal Housing Administration (FHA) sets the down payment floor at 3.5 percent. That means on a $200,000 home, you would put down $7,000. On a $300,000 home, $10,500. The FHA does not require you to put down more than 3.5 percent, though you can choose to if you have the cash available.
This 3.5 percent rule applies to most borrowers. The exception is if you have a credit score below 580—in that case, FHA requires 10 percent down instead. A score of 580 or higher unlocks the 3.5 percent option.
The down payment amount does not include closing costs, which are separate expenses you will owe at signing. Closing costs typically run 2 to 5 percent of the loan amount and cover appraisal fees, title insurance, and lender fees. You can sometimes negotiate with the seller to cover part of your closing costs, but the down payment itself comes from your own funds or a gift.
Key Takeaways
- FHA loans let you put down as little as 3.5 percent if your credit score is 580 or higher; borrowers with scores below 580 must put down 10 percent.
- The down payment is calculated on the home's purchase price, not the loan amount, so a lower purchase price means a smaller dollar amount due upfront.
- You will also owe closing costs of 2 to 5 percent of the loan amount at signing, which is separate from your down payment.
- FHA loans require mortgage insurance premiums (an upfront payment plus monthly fees) that protect the lender if you default, adding to your total borrowing cost.
What counts toward your 3.5 percent down payment
Your own savings count. A gift from a family member also counts, as long as you document it with a letter from the gift-giver stating the money is a gift and does not need to be repaid. The lender will ask for proof that the gift arrived in your account—usually a bank statement showing the deposit.
Sweat equity (the value of work you do on the property yourself) does not count toward FHA down payment requirements. Neither do grants from nonprofit organizations or government programs, though some state and local programs do exist that can help you cover the down payment separately. Your lender can tell you whether any programs in your area apply to your situation.
If you are buying a home that needs repairs, some FHA programs allow you to roll repair costs into the loan itself, which can reduce the cash you need upfront. This is called an FHA 203(k) loan. The lender will order an inspection, and approved repair costs get added to your mortgage balance rather than paid out of pocket before closing.
How mortgage insurance changes your total cost
FHA loans require two mortgage insurance payments: an upfront premium and a monthly fee. The upfront premium is typically 1.75 percent of the loan amount and is usually rolled into your mortgage balance (meaning you finance it rather than pay it in cash at closing). On a $200,000 loan, that is $3,500 added to what you owe.
The monthly mortgage insurance premium (MIP) varies based on your loan amount, the length of your loan, and how much you put down. If you put down 3.5 percent, your monthly MIP stays for the life of the loan. If you put down 10 percent or more, the MIP drops off after 11 years. This is one reason some borrowers choose to put down more than the minimum—the monthly savings can add up over time.
Your lender will show you the exact monthly MIP amount before you sign, so you can see the full cost of borrowing. This fee is separate from your principal and interest payment, property taxes, homeowners insurance, and HOA fees (if any).
Down payment assistance programs and where to find them
Some states, counties, and cities offer down payment help for first-time homebuyers or borrowers below certain income thresholds. These programs vary widely—some are forgivable loans (you do not repay them if you stay in the home for a set period), others are grants, and some are low-interest loans you repay over time.
Your mortgage lender or a local housing counselor can point you toward programs in your area. HUD-approved housing counselors offer free guidance and know which local programs are currently open. You can find a counselor through HUD's website or by calling 1-800-569-4287.
Nonprofit organizations in your community may also offer down payment help. Search your city or county name plus "down payment assistance" to see what exists near you. Be cautious of any program that charges an upfront fee—legitimate assistance programs do not charge you to learn about or receive help.
Comparing 3.5 percent down to putting down more
Putting down 3.5 percent means you keep more cash in your pocket today and can buy sooner. The tradeoff is that you pay mortgage insurance for the life of the loan (if you put down less than 10 percent), which increases your monthly payment and total interest paid over 30 years.
Putting down 10 percent or more means a higher upfront cost but lower monthly payments and no mortgage insurance after 11 years. Over a 30-year loan, the monthly savings from dropping MIP can be substantial. A mortgage calculator can show you the difference for your specific numbers.
There is no single right answer—it depends on whether you have the cash available, what interest rates are doing, and whether you plan to stay in the home long enough to benefit from the MIP drop-off. If you are unsure, a mortgage lender can walk you through both scenarios.
Credit score and down payment requirements
Your credit score determines whether you can use the 3.5 percent minimum or must put down 10 percent. FHA does not publish a hard cutoff, but most lenders treat 580 as the threshold. Scores of 580 and above unlock 3.5 percent; scores below 580 require 10 percent.
Some lenders have their own minimums above 580, so it is worth shopping around. A lender that requires a 620 score will turn you down, but another lender with a 580 minimum might approve you. Getting quotes from multiple lenders takes time but can save you thousands in down payment costs.
If your score is below 580, you have options: wait and build your score before applying, look for a co-borrower with a higher score, or put down the 10 percent. Building credit takes months, but even a 20 or 30-point increase can move you into range at some lenders.
What happens if you do not have the full down payment yet
If you are short on cash, a family gift is the fastest route. The lender will require a gift letter and proof the money arrived in your account, but the process is straightforward and takes a few days.
Delaying your purchase to save more is also an option. Every month you save brings you closer to a larger down payment, which lowers your monthly payment and total interest cost. The tradeoff is that home prices and interest rates may change, and you stay in your current housing situation longer.
Some employers offer down payment assistance as an employee benefit, particularly in high-cost areas. Check with your HR department to see whether your company has a program. If you are a teacher, healthcare worker, or work in certain other fields, you may also have access to profession-specific down payment help.
Frequently Asked Questions
Can I use a gift card or credit card to cover my down payment?
No. The lender needs to see that the down payment money came from your own savings or a documented gift from a family member. Borrowed money (including credit card advances) does not count. The lender will ask for bank statements showing where the funds came from.
What if I put down 3.5 percent but later want to remove the mortgage insurance?
You cannot remove FHA mortgage insurance if you put down less than 10 percent—it stays for the life of the loan. Your only option is to refinance into a conventional loan once you have built enough equity, which typically takes several years. A mortgage lender can tell you when refinancing might make sense.
Do I have to put down exactly 3.5 percent or can I put down more?
You can put down more than 3.5 percent. Putting down 5, 7, or 10 percent is allowed. The higher your down payment, the lower your monthly mortgage insurance premium and the sooner (or if) it drops off. Some borrowers put down 10 percent specifically to avoid lifetime mortgage insurance.
If my credit score is 579, can I still get an FHA loan?
Yes, but you will need to put down 10 percent instead of 3.5 percent. Some lenders may also require additional documentation or charge a higher interest rate. It is worth getting quotes from multiple lenders, as some have more flexible policies than others.
Can my employer or a nonprofit cover my down payment for me?
Some employers and nonprofits do offer down payment help, but the money must be documented as a gift or grant. If it is a loan you have to repay, the lender counts it as debt and it affects how much you can borrow. Ask the organization whether the assistance is a gift or a loan before accepting it.