Down payment minimums range from 0% to 20%, depending on the loan type and lender
The smallest down payment you can make is 0% on a VA loan (for military members and veterans) or a USDA loan (for rural properties). FHA loans require a minimum of 3.5% down. Conventional loans typically start at 3% down, though some lenders require 5% or more. The amount you put down affects your monthly payment, how much you borrow, and whether you pay mortgage insurance.
A lower down payment means you borrow more money and pay interest on a larger loan. It also usually triggers private mortgage insurance (PMI) on conventional loans, which adds to your monthly cost until you reach 20% equity in the home. On FHA loans, mortgage insurance is built into the loan itself and may never go away, depending on your down payment size.
The down payment you can actually afford depends on your savings, your income, your credit score, and what lenders in your area will accept. A lender will not approve you for a loan just because a loan type exists—they will verify you can repay it.
Key Takeaways
- VA and USDA loans allow 0% down; FHA loans require 3.5% minimum; conventional loans typically start at 3% but vary by lender.
- Putting down less than 20% on a conventional loan triggers PMI, which increases your monthly payment until you build enough equity.
- Your actual down payment limit depends on your savings, income, debt, and credit score—not just the loan type.
- A larger down payment lowers your monthly payment and total interest paid, but only if you have the cash available without depleting emergency savings.
How down payment minimums differ by loan type
FHA loans are backed by the Federal Housing Administration and are designed for first-time buyers and people with lower credit scores. The minimum down payment is 3.5%. You will pay mortgage insurance for the life of the loan if you put down less than 10%, or for at least 11 years if you put down 10% or more. FHA loans have limits on how much you can borrow, which vary by county.
Conventional loans are not backed by the government. Most lenders require 3% to 5% down, though some require 10% or 20%. Conventional loans have no mortgage insurance requirement if you put down 20% or more. Below 20%, you pay PMI, which typically costs 0.5% to 1.5% of your loan amount per year, added to your monthly payment. PMI drops off automatically once you reach 20% equity, or you can request removal once you hit that mark.
VA loans are for active-duty military, veterans, and surviving spouses. They require 0% down and have no mortgage insurance. VA loans have a funding fee (usually 2.3% of the loan amount for first-time users) that can be rolled into the loan. There is no upper limit on the loan amount, though lenders still verify your income and credit.
USDA loans are for rural properties and borrowers with moderate to low income. They require 0% down and have no mortgage insurance. USDA loans charge a may provide fee (around 1% of the loan amount) and an annual fee, both typically rolled into the loan. You must meet income limits and the property must be in a USDA-designated rural area.
What your down payment size costs you each month
A smaller down payment means a larger loan balance, which means higher monthly payments. On a $300,000 house with a 30-year mortgage at 7% interest, the difference is clear:
| Down Payment | Loan Amount | Base Payment | PMI (if applicable) | Total Monthly |
|---|---|---|---|---|
| 3% ($9,000) | $291,000 | $1,938 | $218 | $2,156 |
| 10% ($30,000) | $270,000 | $1,797 | $135 | $1,932 |
| 20% ($60,000) | $240,000 | $1,597 | $0 | $1,597 |
The PMI amount shown is an estimate based on typical rates and will vary by lender, credit score, and loan type. FHA mortgage insurance does not drop off, so your monthly payment stays higher for the full loan term unless you refinance.
Over the life of the loan, the difference compounds. A 3% down payment costs you roughly $559 more per month than a 20% down payment on this example. Over 30 years, that is an extra $201,240 in total payments—most of it going to interest and insurance, not equity.
When you can afford less than 20% down
You do not need 20% down to buy a house, and many buyers do not have it. If you have stable income, acceptable credit (usually 620 or higher for FHA, 620 or higher for conventional), and enough cash for the down payment plus closing costs, you can move forward with 3% to 10% down.
The trade-off is that you will pay more in total interest and insurance. This makes sense if you are buying now to build equity instead of waiting years to save more, or if your rent is already high and a mortgage payment would be similar or lower.
Do not drain your emergency savings to make a larger down payment. Lenders want to see that you have reserves—usually two to three months of mortgage payments in the bank after closing. If you have $40,000 saved and closing costs are $12,000, putting down $20,000 leaves you with only $8,000 in reserves, which may not be enough. A 10% down payment with $8,000 in reserves is often safer than a 15% down payment with $2,000 left over.
How down payment size affects your credit and debt-to-income ratio
Lenders look at your debt-to-income ratio (DTI), which is your total monthly debt payments divided by your gross monthly income. Most lenders want your DTI below 43%, though some go up to 50% for strong borrowers. A larger down payment lowers your monthly mortgage payment, which lowers your DTI and makes you more likely to be approved.
Your credit score also matters. FHA loans accept scores as low as 580 (with 10% down) or 500 (with 10% down and compensating factors). Conventional loans typically require 620 or higher, though some lenders go lower. A higher credit score can may have access to you for better interest rates, which reduces your monthly payment and improves your DTI.
If your DTI is too high or your credit score is too low, you have two options: save for a larger down payment to lower the loan amount, or wait to improve your credit and pay down other debts. Paying off a car loan or credit card can lower your DTI more than saving for a down payment.
Down payment assistance programs and gifts
Some employers, nonprofits, and government programs offer down payment help. These may cover part or all of your down payment, though they often come with income limits or restrictions on the property type. Examples include employer-sponsored programs, state housing finance agencies, and nonprofit lenders. You will need to search for programs in your state or county—there is no single national database.
Family gifts are allowed on most loans. The lender will ask you to sign a statement saying the money is a gift, not a loan you have to repay. The person giving the gift does not need to be a relative, though some lenders have restrictions. You will need a gift letter from the donor stating the amount, the date, and that it is a gift. The donor's funds must be seasoned (in their account for a set period, usually 30 to 60 days) before you can use them.
Down payment assistance programs and gifts do not change the loan amount or your monthly payment—they just reduce how much of your own cash you need to bring to closing. They do not lower your interest rate or remove PMI requirements.
Frequently Asked Questions
Can I put down less than 3% on a conventional loan?
Some lenders offer 1% or 2% down conventional loans, but they are rare and usually require a higher credit score (680 or above), a larger income, and lower debt. PMI will be higher on these loans. Most lenders stick to 3% or 5% minimums.
What happens if I put down 15% instead of 20%?
You will pay PMI until you reach 20% equity. On a $300,000 house, that is roughly $100 to $150 per month. You can request PMI removal once you hit 20% equity through appreciation or extra payments, though this takes time. Refinancing when rates drop can also eliminate PMI.
Do I have to put down the same percentage on a second home or investment property?
No. Investment properties and second homes typically require 15% to 25% down, and interest rates are higher than on primary residences. Down payment requirements vary more by lender for these property types.
If I get a gift for my down payment, do I have to pay it back?
No, but the lender will require a signed gift letter from the donor stating it is a gift, not a loan. Without this letter, the lender will count the money as debt you owe, which increases your DTI and may disqualify you.
Does a larger down payment lower my interest rate?
Not directly. Your interest rate is set by the lender based on your credit score, the loan type, market conditions, and the loan term. A larger down payment lowers your monthly payment by reducing the loan amount, but it does not change the rate itself. However, a lower DTI from a larger down payment can help you may have access to for better rates if you are borderline on approval.