The down payment amount depends on the loan type, not a fixed rule
There is no single answer because different loan programs accept different minimums. Conventional loans typically require 3% to 20% of the purchase price. FHA loans allow as little as 3.5%. VA loans and USDA loans often require 0% down if you meet their specific requirements. The amount you put down affects your monthly payment, the interest rate you receive, and whether you pay mortgage insurance.
Your down payment is the cash you bring to closing. The lender finances the rest through the mortgage. If you buy a $300,000 house with a 10% down payment, you pay $30,000 upfront and borrow $270,000. The lower your down payment, the larger your loan and the more interest you pay over time.
Key Takeaways
- Conventional loans require 3% to 20% down, with rates and terms varying based on the percentage you choose.
- FHA loans allow 3.5% down and are available to first-time buyers and repeat buyers with a valid credit history.
- VA and USDA loans may require 0% down if you meet military service or rural property requirements.
- Putting down less than 20% on a conventional loan means you will pay private mortgage insurance (PMI) until you reach 20% equity.
- Your down payment amount changes your monthly payment, interest rate, and total cost over the life of the loan.
Conventional loans: 3% to 20% down
A conventional loan is a mortgage not backed by a government agency. Lenders set their own rules within broad industry standards. Most conventional loans start at 3% down, though some lenders require 5% or more depending on your credit score and debt-to-income ratio.
If you put down less than 20%, you will pay private mortgage insurance (PMI). This is an insurance policy 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. Once you reach 20% equity in the home—either through payments or home value increase—you can request PMI removal.
Putting down 20% or more means no PMI and often a lower interest rate. However, you need significantly more cash upfront. On a $300,000 house, 20% is $60,000. For many buyers, 5% to 10% down is a middle ground: you pay PMI but keep cash available for closing costs, inspections, and emergencies.
FHA loans: 3.5% down for borrowers with lower credit
FHA loans are backed by the Federal Housing Administration and are designed for buyers who cannot put down 20%. The minimum down payment is 3.5% of the purchase price. You need a credit score of at least 580 to may have access to for the 3.5% option; scores between 500 and 579 may require 10% down.
FHA loans require mortgage insurance premiums (MIP), which is different from PMI. You pay an upfront MIP at closing (usually 1.75% of the loan amount) and an annual MIP added to your monthly payment. Unlike PMI, FHA mortgage insurance does not automatically disappear. If you put down less than 10%, you pay MIP for the life of the loan. If you put down 10% or more, MIP ends after 11 years.
FHA loans allow lower credit scores and higher debt-to-income ratios than conventional loans, making them accessible to more buyers. However, the mortgage insurance costs more over time than conventional PMI, so compare total costs before choosing FHA.
VA loans: 0% down for may be able to access veterans and service members
VA loans are available to active-duty service members, veterans, and surviving spouses. The Department of Veterans Affairs guarantees the loan, which means lenders can offer 0% down with no mortgage insurance required.
To use a VA loan, you need a Certificate of may be able to access from the VA. You can request this through the VA website, by mail, or through your lender. VA loans have no prepayment penalty, meaning you can pay off the loan early without extra fees. The interest rate is typically lower than conventional loans because the VA may provide reduces lender risk.
VA loans do charge a funding fee, which is a one-time cost paid at closing. The fee ranges from 1.4% to 3.6% of the loan amount depending on your down payment and whether you have used a VA loan before. You can roll this fee into the loan amount rather than paying it upfront.
USDA loans: 0% down for rural properties
USDA loans are backed by the U.S. Department of Agriculture and are designed for buyers purchasing in rural areas. The USDA defines may be able to access rural areas on its website; you can check whether a specific address qualifies. USDA loans require 0% down and no mortgage insurance.
Income limits apply: your household income cannot exceed 115% of the area median income for your county. USDA loans charge a may provide fee (similar to the VA funding fee), which is typically 2% of the loan amount and can be rolled into the loan.
USDA loans have flexible credit requirements and allow higher debt-to-income ratios than conventional loans. The tradeoff is that the property must be in an may be able to access rural area and you must meet income limits.
How down payment size affects your monthly payment and total cost
A larger down payment lowers your monthly mortgage payment because you borrow less. On a $300,000 house at 7% interest over 30 years, the difference is significant:
| Down Payment | Loan Amount | Approximate Monthly Payment (principal + interest) | Total Interest Paid Over 30 Years |
|---|---|---|---|
| 3% ($9,000) | $291,000 | $1,938 | $208,000 |
| 10% ($30,000) | $270,000 | $1,797 | $176,000 |
| 20% ($60,000) | $240,000 | $1,596 | $134,000 |
These numbers do not include property taxes, insurance, HOA fees, or mortgage insurance. A 3% down payment saves $21,000 in upfront cash but costs roughly $74,000 more in interest over 30 years. Whether that trade is worth it depends on what you would do with the $21,000 you keep now—invest it, pay off debt, or keep it as emergency savings.
Closing costs and cash reserves beyond the down payment
Your down payment is only part of the cash you need at closing. Closing costs typically range from 2% to 5% of the purchase price and include appraisal fees, title insurance, attorney fees, and lender fees. On a $300,000 house, closing costs could be $6,000 to $15,000.
Some lenders allow you to roll closing costs into the loan, but this increases your total borrowing and interest paid. Others require you to pay them upfront. Ask your lender which costs can be financed and which must be paid in cash.
Beyond closing costs, lenders want to see cash reserves—money left in your bank account after down payment and closing costs. Reserves show you can handle an emergency without missing a mortgage payment. Conventional loans often require 2 to 6 months of mortgage payments in reserves. FHA and VA loans have lower or no reserve requirements.
Frequently Asked Questions
Can I borrow my down payment from family or a credit card?
Lenders allow gift funds from family members, but you typically need a signed gift letter stating the money does not need to be repaid. Borrowing from a credit card or personal loan counts as debt, which increases your debt-to-income ratio and may disqualify you or lower your approved loan amount. Ask your lender about their gift fund policy before accepting money.
What happens if I put down less than 3%?
Most lenders do not offer conventional loans below 3% down. Some state and local programs offer down payment assistance or grants that can cover part or all of your down payment, but these vary by location and income. Contact your local housing authority or a nonprofit housing counselor to learn what programs exist in your area.
Can I remove PMI before reaching 20% equity?
Yes, if your home value increases. You can request a new appraisal and ask the lender to remove PMI once you reach 20% equity through appreciation. Some lenders allow PMI removal at 15% equity if you have made on-time payments. Check your loan documents for your lender's specific policy.
Is a larger down payment always better?
Not necessarily. A larger down payment reduces your monthly payment and total interest, but it ties up cash you might need for emergencies, home repairs, or investments. If you have high-interest debt, paying that off might save more money than putting extra toward a down payment. Run the numbers for your specific situation.
Do all lenders require the same down payment minimum?
No. Lenders set their own minimums within loan program guidelines. A conventional lender might require 5% down while another accepts 3%. Shop with multiple lenders to compare down payment requirements, interest rates, and fees before committing.