Down payment amounts depend on your loan type and credit profile

The amount you put down on a condo ranges from 3% to 20% of the purchase price, depending on the loan program you use and your credit score. A conventional loan typically requires 5% to 20% down. An FHA loan allows 3.5% down. A VA loan (if you may have access to as a veteran) may require 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.

Your credit score affects which programs you can access and what down payment percentage lenders will accept. Borrowers with scores above 740 usually may have access to for the lowest down payment options and best interest rates. Scores between 620 and 739 narrow your choices and may require a larger down payment. Below 620, most conventional lenders will not work with you, though FHA loans remain an option.

The purchase price of the condo determines the actual dollar amount. On a $300,000 condo, 5% down is $15,000. On a $500,000 condo, 5% down is $25,000. On a $200,000 condo, 5% down is $10,000. You also need to budget for closing costs, which typically run 2% to 5% of the purchase price and cover appraisals, title insurance, inspections, and lender fees.

Key Takeaways

  • Conventional loans require 5% to 20% down; FHA loans require 3.5% down; VA loans may require 0% down.
  • Your credit score determines which loan programs you may have access to for and what down payment percentage lenders will accept.
  • Closing costs are separate from your down payment and typically add 2% to 5% of the purchase price to your upfront costs.
  • The lower your down payment, the higher your monthly payment and total interest paid, but you preserve cash for other needs.
  • Some loan programs allow you to roll closing costs into the mortgage or use down payment assistance programs to reduce what you pay upfront.

Conventional loans and the 20% benchmark

A conventional loan is a mortgage not backed by a government agency. Lenders typically prefer 20% down because it signals financial stability and eliminates the need for private mortgage insurance (PMI). With 20% down on a $300,000 condo, you pay $60,000 upfront and borrow $240,000. Your monthly payment is lower, and you build equity faster.

If you put down less than 20%, you pay PMI—an insurance premium that protects the lender if you default. PMI typically costs 0.5% to 1.5% of your loan amount per year, added to your monthly payment. On a $240,000 loan with 1% PMI, you pay roughly $200 per month extra. PMI stays on your loan until you reach 20% equity through payments or home appreciation, which can take 5 to 10 years.

Conventional loans with 5% to 10% down are common and do not require perfect credit. Lenders usually want a score of 620 or higher, though 680 or above opens better rates and terms. You can remove PMI once you reach 20% equity by requesting cancellation or refinancing into a new loan.

FHA loans and the 3.5% option

An FHA loan is backed by the Federal Housing Administration and allows down payments as low as 3.5%. On a $300,000 condo, 3.5% down is $10,500. FHA loans accept credit scores as low as 580, making them the most accessible option for first-time buyers or those rebuilding credit. The tradeoff is that FHA loans require mortgage insurance for the life of the loan, not just until you reach 20% equity.

FHA mortgage insurance has two parts: an upfront premium (1.75% of the loan amount, often rolled into the mortgage) and an annual premium (0.55% to 0.8% of the loan amount per year, added to your monthly payment). On a $290,000 FHA loan, the upfront premium is roughly $5,075, and annual insurance runs $160 to $232 per month. These costs make FHA loans more expensive over time than conventional loans, but the lower down payment requirement makes homeownership possible sooner.

FHA loans have property requirements: the condo must be in an FHA-approved building, and the building cannot have too many units in foreclosure or owned by investors. Ask the condo's seller or your real estate agent whether the building is FHA-approved before you commit to this loan type.

VA loans and zero down for veterans

If you are a veteran, active-duty service member, or surviving spouse, you may may have access to for a VA loan, which requires 0% down. You pay no down payment, no PMI, and typically no closing costs (the seller often covers them). On a $300,000 condo, you borrow the full amount and build equity from day one through your monthly payments.

VA loans do charge a funding fee, which is a one-time cost paid to the Department of Veterans Affairs. The funding fee ranges from 1.4% to 3.6% of the loan amount depending on your service history and down payment. On a $300,000 loan with a 2.3% funding fee, the cost is $6,900, usually rolled into the mortgage. This fee is lower than PMI over time and does not recur annually.

VA loans have no credit score minimum, though most lenders require 620 or higher. The property must be a primary residence, and the condo building must meet VA standards. Contact your lender or the VA directly to confirm the building qualifies before you make an offer.

Down payment assistance and gift funds

Some employers, nonprofits, and state housing agencies offer down payment assistance programs that provide grants or forgivable loans to help you cover your down payment. These programs vary by location and employer. Ask your HR department or search your state housing finance agency's website to see what programs exist in your area. Some programs have income limits or require you to complete a homebuyer education course.

Family members can also gift you down payment money. The gift must be documented in writing and cannot be a loan you are expected to repay—lenders verify this to ensure you are not taking on hidden debt. The gift giver does not need to be related to you, though some lenders have restrictions. Bring a signed gift letter from the donor to your lender stating the amount, the relationship, and that no repayment is expected.

Some loan programs allow you to roll closing costs into the mortgage instead of paying them upfront, reducing your immediate cash need. This increases your loan amount and total interest paid, but it preserves cash for your down payment or other expenses. Ask your lender whether this option is available for your loan type.

Saving for your down payment and closing costs

Calculate the total cash you need by adding your down payment and closing costs. On a $300,000 condo with 5% down ($15,000) and 3% closing costs ($9,000), you need $24,000 upfront. If you are using an FHA loan with 3.5% down ($10,500) and 3% closing costs ($9,000), you need $19,500, though the upfront mortgage insurance premium ($5,075) is rolled into the loan.

Set up a separate savings account and automate monthly transfers to reach your target. If you need $24,000 in 24 months, save $1,000 per month. If you need it in 36 months, save $667 per month. Keep this money in a high-yield savings account so it earns interest while you save. Lenders typically require you to show bank statements proving the funds are yours and have been there for at least two months.

Avoid large deposits or transfers in the months before you apply for a mortgage. Lenders ask about sudden deposits and may require documentation showing where the money came from. If you receive a gift, provide the gift letter immediately so the lender does not flag it as unexplained income.

What happens if you cannot save enough

If you cannot reach your target down payment, explore these options: apply for a down payment assistance program through your state or employer; ask family for a gift; consider an FHA loan to lower the down payment requirement; wait and continue saving; or look at less expensive properties in your area. Each choice has tradeoffs in monthly payment, total interest, or timeline.

Do not borrow down payment money from a personal loan, credit card, or retirement account. Lenders see new debt as a red flag and may deny your mortgage application. Withdrawing from a 401(k) triggers taxes and penalties. A personal loan increases your debt-to-income ratio, which lenders use to decide how much you can borrow.

If your credit score is holding you back, spend 6 to 12 months paying down existing debt and making all payments on time. Each month of on-time payments raises your score. A 50-point increase can open access to better loan programs and lower down payment requirements.

Frequently Asked Questions

Can I use a gift from a family member for my down payment?

Yes. The gift giver must provide a signed letter stating the amount, that it is a gift (not a loan), and your relationship. Lenders verify this to ensure you are not hiding debt. Bring the letter and proof of the transfer to your lender.

What is the difference between down payment and closing costs?

Your down payment is the percentage of the purchase price you pay upfront; the rest is borrowed. Closing costs are separate fees for appraisals, title insurance, inspections, and lender processing, typically 2% to 5% of the purchase price. Both are due at closing.

Can I put down less than 3% on a conventional loan?

Some lenders offer 3% conventional loans, but they are less common than 5% or 10% options. Credit score and debt-to-income ratio matter more at this level. Ask your lender what the minimum is; it varies by lender and your financial profile.

Will PMI ever go away on an FHA loan?

No. FHA loans require mortgage insurance for the life of the loan, even after you reach 20% equity. This is one reason conventional loans become cheaper over time if you can afford the higher down payment.

What if the condo building is not FHA-approved?

You cannot use an FHA loan on that property. You would need a conventional or VA loan instead. Ask your real estate agent or the seller to confirm FHA approval before you make an offer if you are planning to use an FHA loan.