Down payment amounts vary by loan type and lender, but typically range from 3% to 20% of the home's purchase price
The amount you need depends on which kind of mortgage you're getting. A conventional loan usually requires 5% to 20% down. An FHA loan (backed by the Federal Housing Administration) can go as low as 3.5% down. VA loans (for military members and veterans) and USDA loans (for rural properties) often require 0% down. Some lenders offer 3% conventional loans, though these come with higher interest rates and mortgage insurance costs.
On a $300,000 house, 3% down is $9,000. At 20% down, it's $60,000. The difference matters not just at closing, but for years afterward—a smaller down payment means a larger loan, higher monthly payments, and mortgage insurance premiums added to your bill until you reach 20% equity.
Your actual down payment also depends on what the seller will accept, what your credit score qualifies you for, and whether you're buying in a competitive market where sellers demand stronger offers. In some markets, putting down less than 10% makes your offer less attractive to sellers, even if the lender allows it.
Key Takeaways
- Conventional loans typically require 5% to 20% down, while FHA loans can go as low as 3.5% and VA or USDA loans may require nothing down.
- A smaller down payment means a larger loan balance, higher monthly payments, and mortgage insurance costs that stay on your bill until you own 20% of the home.
- Your credit score, debt-to-income ratio, and the local real estate market all affect what down payment amount a lender will accept.
- Down payment assistance programs exist through some state and local housing agencies, though they vary widely by location and have their own income limits.
How down payment percentages affect your monthly payment and total cost
The percentage you put down directly changes how much you borrow. If you put down 3%, you're borrowing 97% of the purchase price. If you put down 20%, you're borrowing 80%. That difference compounds over 15 or 30 years.
On a $300,000 house at current interest rates (which vary by lender and your credit), putting 3% down instead of 20% can add $200 to $300 to your monthly payment, depending on the loan term and rate. You'll also pay mortgage insurance—typically 0.5% to 1.5% of the loan amount per year—until you reach 20% equity. That insurance doesn't build equity; it protects the lender if you stop paying.
Over the life of a 30-year loan, the difference between 3% and 20% down can mean paying $50,000 to $100,000 more in total interest and insurance. That's why lenders and financial advisors often recommend putting down as much as you can afford without draining your emergency savings.
Minimum down payments by loan type
| Loan Type | Minimum Down Payment | Who It's For |
|---|---|---|
| Conventional | 3% to 5% (some lenders) | Borrowers with good credit and stable income |
| FHA | 3.5% | First-time buyers and those with lower credit scores |
| VA | 0% | Military members, veterans, and surviving spouses |
| USDA | 0% | Buyers in rural areas with income below local limits |
| Jumbo | 10% to 20% | Loans above conventional limits (varies by lender) |
FHA loans are popular with first-time buyers because 3.5% is the lowest down payment widely available. However, FHA loans require mortgage insurance for the life of the loan if you put down less than 10%, which adds to your monthly cost. Conventional loans stop charging mortgage insurance once you reach 20% equity, so the long-term cost can be lower even if the upfront down payment is higher.
VA and USDA loans have no down payment requirement, but they come with their own costs and restrictions. VA loans charge a funding fee (usually 1% to 3.3% of the loan amount) that can be rolled into the loan. USDA loans require mortgage insurance and have income and property location limits. Neither is available to all buyers, but if you may have access to, the 0% down option is significant.
What lenders look at when deciding your down payment
Lenders don't just look at how much you're putting down—they look at your credit score, debt-to-income ratio, employment history, and savings. A borrower with a 750 credit score and low debt might get approved for a 3% down conventional loan. A borrower with a 620 score and high existing debt might need 10% down or might only may have access to for an FHA loan.
Your debt-to-income ratio is the total of your monthly debt payments (car loans, student loans, credit cards, the new mortgage) divided by your gross monthly income. Most lenders want this below 43%, though some go to 50%. A larger down payment lowers your monthly mortgage payment, which improves your ratio and makes you a stronger candidate.
Lenders also want to see that you have savings beyond the down payment. If you're putting down 3% on a $300,000 house, that's $9,000, but lenders typically want proof of 2 to 6 months of mortgage payments in the bank afterward. This shows you can handle the payment if you lose income temporarily. If you're draining your entire savings for the down payment, lenders may deny you or require a larger down payment to offset the risk.
Down payment assistance and where to find it
Some state and local housing agencies, nonprofits, and employer programs offer down payment help. These are not loans you repay—they're grants or forgivable loans that reduce how much of your own money you need to bring. The catch is that they're not available everywhere, they have income limits, and they often require you to take a homebuyer education course.
State housing finance agencies administer many of these programs. You can find yours through the National Council of State Housing Agencies website. Some programs are tied to specific professions (teachers, nurses, first responders) or specific neighborhoods (areas targeted for revitalization). A few large employers offer down payment assistance as a benefit, so check with your HR department.
Local nonprofits and community development organizations sometimes run down payment programs too. Your city or county housing authority can point you toward what's available in your area. These programs move slowly—approval can take weeks or months—so start looking early if you're planning to buy.
Closing costs are separate from your down payment
Your down payment is only part of what you need at closing. Closing costs—appraisal, title search, title insurance, attorney fees, inspection, survey, and lender fees—typically run 2% to 5% of the purchase price. On a $300,000 house, that's $6,000 to $15,000 on top of your down payment.
Some of these costs can be rolled into the loan (the lender adds them to your balance), but not all. An appraisal fee and inspection fee usually come out of your pocket before closing. Title insurance and some lender fees can sometimes be negotiated or split with the seller, depending on local custom and market conditions.
When you're calculating how much money you need, add closing costs to your down payment. If you're putting 5% down on a $300,000 house ($15,000) and closing costs are 3% ($9,000), you need $24,000 liquid before closing, plus enough in savings to cover a few months of payments afterward.
Frequently Asked Questions
Can I borrow my down payment from family or a friend?
Most lenders allow a gift from a family member, but they require a signed gift letter stating it's a gift, not a loan you have to repay. Some lenders limit how much of your down payment can be a gift—typically 10% to 20% of the purchase price must come from your own funds. The lender will ask for bank statements to verify the money came from you, not from a loan.
What happens if I put down less than 20%?
You'll pay private mortgage insurance (PMI) on a conventional loan or mortgage insurance premium (MIP) on an FHA loan. This insurance protects the lender if you stop paying. On a conventional loan, PMI drops off once you reach 20% equity. On an FHA loan, if you put down less than 10%, the insurance stays for the life of the loan. This adds $100 to $300+ to your monthly payment depending on the loan size.
Is it better to wait and save for a larger down payment?
That depends on your situation and the market. If home prices are rising faster than you can save, waiting costs you more in the long run. If you're paying rent and could build equity instead, a smaller down payment now might make sense. If interest rates are low and you have stable income, borrowing more is cheaper. A mortgage lender or financial advisor can run the numbers for your specific case.
Do I need to show proof of where my down payment came from?
Yes. Lenders require bank statements showing the money has been in your account for at least 60 days (sometimes longer) to prevent fraud. If you received a large deposit recently, the lender will ask where it came from. Gifts, inheritances, and bonus income all need documentation. This is called "seasoning" the funds, and it's a standard part of the underwriting process.
Can I use a 401(k) or IRA withdrawal for my down payment?
You can withdraw from a traditional or Roth IRA without penalty if you're a first-time homebuyer (defined as not owning a home in the past two years), up to $10,000 lifetime. A 401(k) withdrawal is more complicated—you'd typically need to take a loan against it or do a hardship withdrawal, both of which have tax consequences. Consult a tax professional before withdrawing retirement funds, as the tax bill can be substantial.