Down payment amounts depend on the loan type and your credit profile

The down payment you need ranges from 0% to 20% of the home's purchase price, depending on which loan program you use. A conventional loan typically requires 3% to 20%. An FHA loan requires 3.5% minimum. A VA loan (if you may have access to) requires 0%. A USDA loan (for rural properties) requires 0%. The lower your down payment, the higher your monthly payment and the more interest you pay over the life of the loan.

Your credit score, debt-to-income ratio, and savings history all affect what down payment amount a lender will accept. A lender may require 10% or 15% down if your credit score is below 620, even if the loan program technically allows 3%. If you have limited savings, a lower down payment option exists — but it comes with trade-offs you need to understand before you commit.

Key Takeaways

  • Conventional loans require 3% to 20% down; FHA loans require 3.5% minimum; VA and USDA loans may require 0% down if you meet other requirements.
  • A smaller down payment means a larger loan amount, higher monthly payments, and mortgage insurance costs that add hundreds to your annual expenses.
  • Your credit score and debt-to-income ratio determine whether a lender will accept the minimum down payment or require more.
  • Putting down 20% or more eliminates private mortgage insurance (PMI) on conventional loans, which can save you $100 to $300 per month.

Conventional loans: 3% to 20% down

A conventional loan is a mortgage not backed by a federal agency. Most conventional loans sold to Fannie Mae or Freddie Mac require a minimum of 3% down. Some lenders offer 3% programs; others start at 5% or 10%. The exact minimum depends on your credit score, income verification, and the lender's own rules.

If you put down less than 20%, you pay private mortgage insurance (PMI). PMI protects the lender if you default; it does not protect you. PMI typically costs 0.5% to 1% of your loan amount per year, paid monthly as part of your mortgage payment. On a $300,000 loan with 5% down, PMI might add $125 to $250 per month. You can remove PMI once you reach 20% equity in the home, but that takes years of payments.

If you have a credit score below 620, most lenders will not offer a conventional loan at all. If your score is 620 to 679, expect to put down 10% to 15% minimum. Scores of 680 to 739 may may have access to for 5% down. Scores of 740 and above typically may have access to for 3% down.

FHA loans: 3.5% minimum down

An FHA loan is backed by the Federal Housing Administration and is designed for buyers with lower credit scores or limited savings. The minimum down payment is 3.5% of the purchase price. FHA loans accept credit scores as low as 500 (though most lenders require 580 or higher). You can have past credit problems and still may have access to.

FHA loans require mortgage insurance premiums (MIP) instead of PMI. You pay an upfront MIP of 1.75% of the loan amount at closing (you can roll this into your loan). You also pay annual MIP, typically 0.55% to 0.8% of the loan amount per year, added to your monthly payment. Unlike PMI, you cannot remove MIP on an FHA loan — you pay it for the life of the loan if you put down less than 10%.

FHA loans have limits on how much you can borrow, which vary by county. In 2024, limits range from roughly $440,000 to $1.1 million depending on location. Check your county's limit before you start house hunting.

VA loans: 0% down if you may have access to

If you are a current or former member of the military, a VA loan requires 0% down. You do not pay PMI or MIP. The Department of Veterans Affairs guarantees the loan, which means the lender takes less risk and passes that savings to you.

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. Processing takes a few days to a few weeks. Active-duty service members, veterans, National Guard members, and surviving spouses of service members may may have access to.

VA loans have no upper limit on the loan amount in most cases, though some lenders set their own caps. You pay a one-time VA funding fee (0.5% to 3.3% of the loan amount depending on your service history and down payment), which you can roll into the loan. This fee is lower than PMI or MIP over time.

USDA loans: 0% down for rural properties

A USDA loan is backed by the U.S. Department of Agriculture and is designed for buyers in rural areas. The minimum down payment is 0%. You do not pay PMI. You do pay a USDA may provide fee (1% of the loan amount upfront, rolled into the loan) and an annual fee (0.35% of the loan amount).

USDA loans have income limits that vary by county and family size. In most areas, your household income cannot exceed 115% of the area median income. The property must be in an may be able to access rural area; you can check your address on the USDA website to confirm.

USDA loans are assumable, meaning if you sell the home, the buyer can take over your loan at your interest rate. This is a significant advantage in a rising-rate environment and can make your home more attractive to buyers.

What happens when you put down less than 20%

Putting down less than 20% on a conventional loan triggers PMI. On a $400,000 home with 5% down ($20,000), your loan is $380,000. PMI at 0.75% per year costs $2,850 annually, or $237 per month. Over 30 years, that is over $85,000 in insurance payments — money that goes to the lender's protection, not your home equity.

You can remove PMI once you reach 20% equity through a combination of payments and home appreciation. If your home value rises, you can request PMI removal sooner by getting a new appraisal. If your credit score improves significantly, some lenders will remove PMI earlier. But the default timeline is years, not months.

FHA and USDA loans do not have PMI, but they have annual insurance fees that serve the same purpose. These fees are often lower than PMI but are permanent on FHA loans (if you put down less than 10%) and cannot be removed.

How to decide what down payment to save

Start by checking what loan programs you might may have access to for. If you are military or a veteran, a VA loan with 0% down eliminates insurance costs entirely. If you are buying in a rural area, a USDA loan offers 0% down. If you have a lower credit score or limited savings, an FHA loan at 3.5% down may be your fastest path to homeownership.

If you may have access to for a conventional loan, calculate the cost of PMI over time. On many loans, the difference between 3% down and 10% down is $50 to $100 per month in PMI. Over five years, that is $3,000 to $6,000 extra. If you can save an additional 7% without delaying your purchase by years, it often makes financial sense to wait.

Use a mortgage calculator to compare scenarios: 3% down, 5% down, 10% down, and 20% down. Include PMI costs in each calculation. This shows you the real monthly payment difference, not just the down payment amount. Many buyers find that saving a bit longer to reach 10% or 15% down saves more money than buying immediately with 3% down.

Frequently Asked Questions

Can I use a gift for my down payment?

Yes. Most lenders accept down payment gifts from family members. You will need a gift letter stating the money is a gift, not a loan, and the donor's relationship to you. The gift must be documented in your bank account before closing. Some lenders require the gift to come from a family member; others accept gifts from anyone.

What if I do not have enough saved for the minimum down payment?

Explore down payment assistance programs run by your state, county, or city. Many offer grants or low-interest loans to help with down payments. Nonprofit organizations and some employers also offer down payment help. Ask your lender whether they participate in any assistance programs.

Does a larger down payment lower my interest rate?

Sometimes. A larger down payment reduces the lender's risk, so some lenders offer a slightly lower interest rate for 10% or 20% down compared to 3% down. The difference is usually 0.25% to 0.5%. Ask your lender for rate quotes at different down payment levels to see if the savings justify waiting to save more.

Can I put down more than 20% to avoid PMI?

Yes. Putting down 20% or more eliminates PMI on a conventional loan. Some buyers put down 25%, 30%, or more if they have the savings. A larger down payment also means a smaller loan, lower monthly payments, and less interest paid over time. The trade-off is that the money is tied up in the home instead of invested elsewhere.

What if my down payment is not enough to close?

Closing costs (typically 2% to 5% of the loan amount) are separate from your down payment. If your down payment covers the down payment but not closing costs, ask the seller for a closing cost concession, look for a lender credit, or explore assistance programs. Some lenders allow you to roll closing costs into the loan, though this increases your monthly payment.