Down payment amounts depend on the loan type and your lender's rules, not a fixed dollar amount
There is no single cost for a down payment because it is a percentage of the home's purchase price, not a flat fee. A 20% down payment on a $300,000 house costs $60,000. On a $500,000 house, it costs $100,000. The percentage you pay depends on which loan program you use and what your lender requires.
Most conventional loans ask for 10% to 20% down. FHA loans (Federal Housing Administration) allow as little as 3.5% down. VA loans (for military members and veterans) and USDA loans (for rural properties) often require 0% down. Some lenders will accept 3% down on conventional loans if you meet their credit and income standards. The lower your down payment percentage, the more you borrow and the more interest you pay over the life of the loan.
Key Takeaways
- Down payment amounts are a percentage of the home price, so a 20% down payment on a $400,000 house costs $80,000, while 3% costs $12,000.
- Conventional loans typically require 10% to 20% down, but FHA loans allow 3.5% down and VA or USDA loans may require nothing down.
- Putting down less than 20% on a conventional loan triggers mortgage insurance (PMI), which adds to your monthly payment until you reach 20% equity.
- Your down payment does not include closing costs, which are separate fees that typically run 2% to 5% of the purchase price.
- Some down payment assistance programs exist through nonprofits and state housing agencies, though they vary by location and income.
How down payment percentage affects what you actually pay
The percentage you put down changes both your monthly payment and the total interest you pay. If you buy a $300,000 house with a 30-year mortgage at 7% interest, putting 20% down ($60,000) means you borrow $240,000. Your monthly payment (principal and interest only) is roughly $1,596. Putting 3% down ($9,000) means you borrow $291,000, and your monthly payment jumps to $1,938—before mortgage insurance is added.
Mortgage insurance (called PMI on conventional loans, MIP on FHA loans) is required when you put down less than 20%. On that same $300,000 house with 3% down, PMI adds roughly $150 to $200 per month. You pay it until you reach 20% equity in the home through a combination of payments and home value increases. On FHA loans, mortgage insurance may never go away, even after you reach 20% equity, depending on when you took out the loan.
What counts toward your down payment
Your down payment is cash you bring to closing. It can come from your savings, a gift from a family member, or a down payment assistance program. Most lenders require you to document where the money came from—they want to see bank statements showing the funds have been in your account for at least two months (this is called "seasoning"). If you receive a gift, the lender typically requires a signed letter from the person giving the money stating it is a gift and does not need to be repaid.
Some lenders allow you to use a portion of your down payment from a gift and the rest from your own savings. Others have stricter rules about how much can be gifted. Borrowed money does not count as your down payment—if you take out a personal loan or credit card to fund it, the lender will see that new debt and may deny your mortgage application or require a larger down payment to offset the risk.
Down payment assistance programs and where they come from
Some states, counties, and nonprofits run programs that help with down payments, though availability and rules vary widely by location. Common sources include state housing finance agencies, community development organizations, and employer programs. Some programs offer grants (money you do not repay), while others are forgivable loans (you repay them only if you sell the home within a certain time frame). A few programs are second mortgages with no interest.
To find programs in your area, contact your state housing finance agency or search the HUD (U.S. Department of Housing and Urban Development) website for local resources. Many programs have income limits, require you to take a homebuyer education course, or limit the purchase price of the home. Some are only for first-time buyers, while others are open to anyone. Because programs change and funding runs out, calling ahead to confirm availability is necessary before planning your purchase around one.
Closing costs are separate from your down payment
Down payment and closing costs are two different expenses. Your down payment is what you put toward the home's purchase price. Closing costs are fees paid to the lender, title company, appraiser, inspector, and other parties involved in the transaction. They typically run 2% to 5% of the purchase price and include things like loan origination fees, appraisal fees, title insurance, and property taxes.
On a $300,000 home, closing costs might range from $6,000 to $15,000. Some lenders allow you to roll closing costs into your mortgage (meaning you borrow the money instead of paying it upfront), but this increases your loan amount and the total interest you pay. Your loan estimate, which the lender must provide within three business days of your application, will itemize all closing costs so you know the total amount due at closing.
How much cash you need to bring to closing
Your total cash needed is your down payment plus closing costs. If you are buying a $300,000 house with 10% down ($30,000) and closing costs of $9,000, you need $39,000 in cash at closing. Some lenders allow sellers to pay a portion of closing costs (called a seller concession), which reduces the cash you need to bring. However, if the seller pays closing costs, the lender may require a larger down payment or charge a higher interest rate to offset the risk.
Before you make an offer on a home, get a pre-approval letter from a lender. The letter will state how much you can borrow and what down payment percentage the lender requires. This tells you the total cash you need to save before you can close on a home. Many buyers save for the down payment and closing costs together, then look for homes within their budget.
Down payment requirements by loan type
| Loan Type | Minimum Down Payment | Mortgage Insurance Required | Who It Is For |
|---|---|---|---|
| Conventional | 3% to 20% | Yes, if less than 20% | Buyers with good credit and stable income |
| FHA | 3.5% | Yes, always | First-time buyers and those with lower credit scores |
| VA | 0% | No | Military members, veterans, and surviving spouses |
| USDA | 0% | No | Buyers in rural areas with moderate income |
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 (typically 700 or above), a larger income relative to the loan amount, and a cash reserve equal to several months of mortgage payments. Interest rates on these loans are also higher to offset the lender's risk.
What happens if I cannot save a full 20% down payment?
You can still buy a home with 3% to 10% down using a conventional, FHA, VA, or USDA loan. You will pay mortgage insurance until you reach 20% equity, which adds to your monthly cost, but it allows you to buy sooner rather than waiting years to save. Many buyers choose this route because home prices often rise faster than they can save.
Can my parents gift me money for a down payment?
Yes, most lenders allow down payment gifts from family members. You will need a signed gift letter stating the money is a gift and does not need to be repaid, plus bank statements showing the funds in your account. Some lenders require the gift to be in your account for 60 days before closing.
Do I have to pay my down payment all at once?
You pay your down payment at closing, which is typically 30 to 45 days after your offer is accepted. Before closing, you may be asked to put down an earnest money deposit (usually 1% to 3% of the purchase price) to show the seller you are serious. This deposit is credited toward your down payment at closing.
What if the home appraises for less than the purchase price?
If the appraisal comes in lower than the agreed price, you have a few options: renegotiate the price with the seller, increase your down payment to make up the difference, or walk away from the deal. Your lender will not lend more than the appraised value, so your down payment percentage effectively increases if the appraisal is low.