Down payment amounts depend on the loan type and your financial situation

There is no single down payment amount that applies to every house purchase. The amount you need depends on which loan program you use, your credit score, your income, and how much the house costs. A conventional loan (from a bank or mortgage lender, not government-backed) typically requires 3% to 20% of the purchase price. A FHA loan (Federal Housing Administration) usually requires 3.5%. A VA loan (for military members and veterans) often requires 0% down. A USDA loan (for rural properties) also often requires 0% down.

The down payment is the money you pay upfront when you buy the house. The rest of the purchase price is borrowed through a mortgage. If a house costs $300,000 and you put down 10%, you pay $30,000 out of pocket and borrow $270,000. The lender keeps the down payment as your initial ownership stake and as protection against the risk that you might not repay the loan.

Key Takeaways

  • Conventional loans require between 3% and 20% down, depending on your credit score and the lender's rules.
  • FHA loans require 3.5% down and are designed for first-time buyers or people with lower credit scores.
  • VA and USDA loans often require 0% down if you meet the program requirements.
  • A larger down payment lowers your monthly mortgage payment and may help you avoid paying mortgage insurance.
  • The down payment is separate from closing costs, which typically add another 2% to 5% of the purchase price.

Conventional loans: 3% to 20% depending on your credit and income

With a conventional loan, the minimum down payment is usually 3%, but some lenders require 5% or more. The exact amount depends on your credit score, your debt-to-income ratio (how much you owe compared to what you earn), and the lender's own rules. If your credit score is below 620, most conventional lenders will not work with you. If your score is between 620 and 680, you may need to put down 10% or more. If your score is 700 or higher, you have more options and may may have access to for a 3% down loan.

When you put down less than 20%, the lender requires you to pay private mortgage insurance (PMI). This is an extra monthly fee that protects the lender if you stop paying the loan. PMI typically costs 0.5% to 1.5% of the loan amount per year, added to your monthly payment. Once you have paid down the loan to 80% of the original purchase price (or sometimes when your home value rises), you can request to cancel PMI.

FHA loans: 3.5% down for buyers with lower credit scores

An FHA loan is backed by the Federal Housing Administration and is designed for buyers who have lower credit scores or less money saved. The minimum down payment is 3.5% of the purchase price. You can may have access to with a credit score as low as 580, though some lenders require 640 or higher. Your debt-to-income ratio can be higher than it would be for a conventional loan.

FHA loans require mortgage insurance premiums (MIP), which is similar to PMI but works differently. You pay an upfront MIP of 1.75% of the loan amount at closing, and then a monthly MIP for the life of the loan (or for at least 11 years if you put down less than 10%). This makes FHA loans more expensive over time than conventional loans, but they are easier to get if your credit is not perfect or your savings are limited.

VA and USDA loans: 0% down if you meet the requirements

A VA loan is available to active-duty military members, veterans, and some surviving spouses. VA loans typically require 0% down, meaning you can borrow the full purchase price. You do not pay PMI. Instead, you pay a one-time VA funding fee (usually 1.4% to 3.6% of the loan amount), which can be rolled into the loan itself. VA loans have no credit score minimum, though most lenders require a score of at least 580 to 620.

A USDA loan is for buyers in rural areas and requires 0% down. You must meet income limits (which vary by county) and the property must be in an may be able to access rural area. Like VA loans, USDA loans do not require PMI, but you pay a may provide fee (usually 1% to 2% of the loan amount) and an annual fee. USDA loans are often easier to get than conventional loans if you live in a may have access to area.

How down payment size affects your monthly payment and total cost

A larger down payment lowers your monthly mortgage payment because you are borrowing less money. If a house costs $300,000 and you put down 10% ($30,000), you borrow $270,000. If you put down 20% ($60,000), you borrow $240,000. On a 30-year loan at 7% interest, the difference is roughly $150 to $200 per month.

A larger down payment also saves you money on insurance and interest over the life of the loan. With less than 20% down on a conventional loan, you pay PMI until you reach 80% equity. With an FHA loan, you pay MIP for years or decades. With a VA or USDA loan, you avoid PMI entirely. Over 30 years, PMI or MIP can add tens of thousands of dollars to the total cost of the house.

Down payment is separate from closing costs

The down payment is not the only money you need at closing. You also pay closing costs, which typically range from 2% to 5% of the purchase price. Closing costs include the loan origination fee, appraisal, title search, title insurance, property taxes, homeowners insurance, and attorney fees. On a $300,000 house, closing costs might be $6,000 to $15,000.

Some lenders allow you to roll closing costs into the loan, but this increases your monthly payment and the total interest you pay. Some sellers will pay part of your closing costs as part of the sale agreement. Ask your lender and real estate agent what closing costs you should expect for your specific situation.

Saving for a down payment: timing and strategies

If you do not have the full down payment saved, you have several options. You can wait and save more money. You can look for a loan program with a lower down payment requirement (FHA, VA, or USDA if you may have access to). You can ask family members for a gift (most lenders allow down payment gifts, but require a signed letter stating it is a gift, not a loan). You can use funds from a retirement account in some cases, though this has tax consequences.

Some employers and nonprofits offer down payment assistance programs. These are grants or forgivable loans that help you cover part of the down payment. The rules vary widely by program and location. Your local housing authority or a HUD-approved housing counselor can tell you what programs exist in your area.

Frequently Asked Questions

Can I buy a house with no money down?

Yes, if you may have access to for a VA loan or USDA loan. VA loans require 0% down for may be able to access military members and veterans. USDA loans require 0% down for buyers in rural areas who meet income limits. Conventional and FHA loans require at least 3% down.

What happens if I put down less than 20%?

You will pay mortgage insurance (PMI on conventional loans, MIP on FHA loans) as part of your monthly payment. This protects the lender if you stop paying. PMI or MIP adds hundreds of dollars per year to your cost until you reach 80% equity or pay off the loan.

Can I borrow money for my down payment?

Most lenders do not allow you to borrow the down payment from another lender or credit card. However, you can receive a gift from a family member. The lender will require a signed letter stating it is a gift, not a loan you must repay.

Does a bigger down payment mean a lower interest rate?

Usually yes. Lenders offer lower interest rates to borrowers with larger down payments because the risk is lower. A 20% down payment typically gets a better rate than a 3% down payment, all else equal. Ask your lender for rate quotes at different down payment levels.

What if I cannot save enough for a down payment?

Look into FHA loans (3.5% down), VA loans (0% down if may be able to access), or USDA loans (0% down in rural areas). Ask your local housing authority about down payment assistance programs. Some nonprofits and employers also offer grants or forgivable loans for down payments.