The down payment amount depends on the loan type and your lender's rules, not a fixed number
There is no single down payment amount required for every house purchase. The percentage you need to put down ranges from 0% to 20% of the home's purchase price, depending on which loan program you use, your credit score, and what your lender will accept. A conventional loan typically requires 3% to 20% down. An FHA loan requires 3.5% down. A VA loan (for military members and veterans) requires 0% down. A USDA loan (for rural properties) also requires 0% down.
The lower your down payment, the higher your monthly mortgage payment and the more interest you pay over the life of the loan. A smaller down payment also means you will pay private mortgage insurance (PMI) — an extra monthly fee that protects the lender if you stop paying. PMI typically costs 0.5% to 1.5% of your loan amount per year, added to your monthly payment.
Key Takeaways
- Conventional loans require 3% to 20% down; FHA loans require 3.5% down; VA and USDA loans require 0% down.
- A smaller down payment means you pay private mortgage insurance (PMI) each month until you reach 20% equity in the home.
- Your down payment is calculated as a percentage of the home's purchase price, not the appraised value.
- Lenders set minimum down payment requirements based on your credit score, debt-to-income ratio, and the type of property.
- Closing costs (typically 2% to 5% of the purchase price) are separate from your down payment and must be paid at signing.
How down payment percentages work with different loan types
A conventional loan is a mortgage not backed by a government agency. Most conventional loans require 5% to 20% down, though some lenders will go as low as 3% if your credit score is 620 or higher and your debt-to-income ratio is below 43%. If you put down less than 20%, you pay PMI until you have paid down the loan to 80% of the home's original value.
An FHA loan is backed by the Federal Housing Administration and is designed for first-time buyers or people with lower credit scores (as low as 500). FHA loans require a minimum 3.5% down payment if your credit score is 580 or above. If your score is between 500 and 579, some lenders require 10% down. FHA loans also charge mortgage insurance for the life of the loan, not just until you reach 20% equity.
A VA loan is available to active-duty military members, veterans, and surviving spouses. VA loans require 0% down and do not charge PMI. You may pay a one-time VA funding fee (typically 1.4% to 3.6% of the loan amount) unless you are exempt due to disability or other circumstances.
A USDA loan is for rural properties and is available to borrowers with low to moderate income. USDA loans require 0% down and do not charge PMI. You pay an upfront may provide fee and an annual fee instead.
What your down payment actually covers
Your down payment is the cash you bring to closing. It is subtracted from the purchase price, and the lender finances the rest. If a house costs $300,000 and you put down 10%, you pay $30,000 and borrow $270,000.
Down payment money comes from your own savings. Some programs allow gifts from family members, but the lender must document where the money came from. Borrowed money (from a personal loan, credit card, or line of credit) typically cannot be used as a down payment because it increases your debt-to-income ratio and makes you look riskier to the lender.
Your down payment is separate from closing costs, which are the fees charged by the lender, title company, appraiser, and other parties involved in the sale. Closing costs typically run 2% to 5% of the purchase price. On a $300,000 home, closing costs might be $6,000 to $15,000. Some lenders allow you to roll closing costs into the loan, but that increases the amount you borrow and the interest you pay.
How lenders decide what down payment they will accept
Lenders use three main factors to set a minimum down payment: your credit score, your debt-to-income ratio, and the property type. A credit score of 740 or higher usually qualifies you for the lowest down payment options (3% to 5% on a conventional loan). A score between 620 and 739 may require 5% to 10% down. A score below 620 typically disqualifies you from conventional loans but may still may have access to you for FHA loans.
Your debt-to-income ratio is your total monthly debt payments divided by your gross monthly income. Lenders typically want this ratio below 43%. If you have high existing debt (car loans, student loans, credit cards), you may need to put down more money to lower the loan amount and keep your ratio acceptable. A larger down payment reduces the size of the mortgage, which lowers your monthly payment and improves your ratio.
The property type also matters. A single-family home is easier to finance than a condo or investment property. A condo may require 10% to 20% down even with good credit. An investment property (one you plan to rent out) typically requires 15% to 25% down.
Down payment assistance programs and where to find them
Many states, counties, and cities offer down payment assistance through grants or low-interest loans. These programs are designed to help first-time buyers or low-income buyers close the gap between their savings and the down payment required. Some programs cover the full down payment; others cover a portion.
Down payment assistance is often tied to income limits and the purchase price of the home. You may be required to complete a homebuyer education course. Some programs require you to work with a specific lender or real estate agent. The terms vary widely by location.
To find programs in your area, contact your state housing finance agency, your county assessor's office, or a nonprofit housing counselor. The National Foundation for Credit Counseling (NFCC) and HUD-approved housing counselors can point you toward local programs at no cost. Some employers and unions also offer down payment assistance to members.
What happens if you cannot save the full down payment
If you cannot save the full down payment, you have several options. You can put down a smaller percentage and pay PMI on a conventional loan. You can pursue an FHA loan, which requires only 3.5% down. You can look for down payment assistance programs in your area. You can ask the seller to cover some of your closing costs, which frees up cash for your down payment. You can delay the purchase and continue saving.
Putting down less than 20% costs more over time because of PMI, but it allows you to buy sooner. PMI is not permanent — once you reach 20% equity (either through payments or home appreciation), you can request to have it removed. On a conventional loan, your lender is required to remove PMI automatically once you reach 22% equity.
Frequently Asked Questions
Can I use a gift from family for my down payment?
Yes, most lenders allow down payment gifts from family members. The lender will ask for a gift letter stating the money is a gift, not a loan, and will verify the funds came from the family member's account. You cannot borrow the gift money from someone else.
What if I put down less than 20%?
You will pay private mortgage insurance (PMI) each month. PMI typically costs 0.5% to 1.5% of your loan amount per year. On a conventional loan, PMI is removed automatically once you reach 22% equity. On an FHA loan, PMI is charged for the life of the loan.
Is the down payment the same as closing costs?
No. Your down payment is the cash you put toward the purchase price. Closing costs are separate fees (typically 2% to 5% of the purchase price) charged by the lender, title company, and other parties. Both are due at closing, but they are calculated differently.
Can I borrow money for my down payment?
Most lenders do not allow borrowed money (personal loans, credit cards, or lines of credit) to be used as a down payment because it increases your debt and makes you appear riskier. Gifts from family are allowed; borrowed money is not.
What is the minimum down payment to avoid PMI?
On a conventional loan, 20% down eliminates PMI. On an FHA loan, PMI is charged regardless of down payment amount. On VA and USDA loans, there is no PMI at any down payment level.