Most mortgages require a down payment, but the amount varies widely
A down payment is not always required, but most lenders expect one. The amount ranges from zero percent to 20 percent of the home's purchase price, depending on the loan type, your credit history, and the lender's rules. Some programs—particularly those backed by the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), or the U.S. Department of Agriculture (USDA)—allow down payments as low as 3 percent or even zero percent. Conventional loans typically require at least 3 to 5 percent down, though some lenders will go lower if you have strong credit and income.
The size of your down payment affects your monthly payment, the interest rate you receive, and whether you'll pay mortgage insurance. A larger down payment means a smaller loan, lower monthly payments, and often a better interest rate. A smaller down payment means higher monthly payments and the addition of private mortgage insurance (PMI) if you put down less than 20 percent on a conventional loan.
Key Takeaways
- FHA loans allow down payments as low as 3.5 percent; VA and USDA loans may require zero percent down.
- Conventional loans typically require 3 to 20 percent down, with PMI added if you put down less than 20 percent.
- Your credit score, debt-to-income ratio, and savings history affect which down payment amounts lenders will offer you.
- A smaller down payment means higher monthly costs due to a larger loan amount and mortgage insurance premiums.
- Some first-time homebuyer programs and state or local grants can help cover part or all of your down payment.
How down payment requirements differ by loan type
FHA loans are insured by the Federal Housing Administration and are designed for borrowers with lower credit scores or limited savings. The minimum down payment is 3.5 percent of the purchase price. If you put down exactly 3.5 percent, you'll pay an upfront mortgage insurance premium (1.75 percent of the loan amount) plus an annual mortgage insurance premium that stays on your loan for the life of the loan or until you refinance.
VA loans are available to active-duty service members, veterans, and some surviving spouses. The VA does not require a down payment—you can borrow 100 percent of the home's value. You will pay a VA funding fee (typically 2.3 percent of the loan amount for first-time users) instead of mortgage insurance, though you may be exempt if you receive a disability rating from the VA.
USDA loans are backed by the U.S. Department of Agriculture and are intended for rural and some suburban homebuyers. Like VA loans, USDA loans require zero percent down. You will pay a may provide fee (1 percent upfront, plus 0.35 percent annually) instead of mortgage insurance.
Conventional loans are not backed by a government agency. Most lenders require 3 to 5 percent down, though some will accept as little as 3 percent with strong credit (usually 680 or higher). If you put down less than 20 percent, you must pay PMI, which typically costs 0.5 to 1.5 percent of the loan amount annually, divided into your monthly payment. PMI can be removed once you reach 20 percent equity in the home.
What affects whether a lender will accept a low down payment
Lenders evaluate your credit score, debt-to-income ratio, employment history, and cash reserves before deciding what down payment they'll accept. A credit score of 620 or higher opens most FHA and conventional options; scores above 740 typically may have access to for the lowest rates and smallest down payments. Your debt-to-income ratio—the percentage of your gross monthly income that goes to debt payments—usually cannot exceed 43 to 50 percent, depending on the lender and loan type.
Lenders also look at your savings history and reserves. If you have little to no savings after the down payment, some lenders will require a larger down payment or deny you. Conversely, if you have substantial reserves (three to six months of mortgage payments saved), lenders may accept a smaller down payment. Employment stability matters too; a two-year work history in the same field or company strengthens your application.
The property itself affects down payment requirements. A home inspection, appraisal, and title search all happen before closing. If the appraisal comes in lower than the purchase price, you may need to put down more cash to cover the difference, or renegotiate the price with the seller.
How to find programs that reduce or cover down payments
Many state housing finance agencies, local nonprofits, and employer programs offer down payment assistance. These grants or forgivable loans can cover 3 to 10 percent of the purchase price or more. Some are income-based; others target first-time homebuyers or specific professions (teachers, healthcare workers, law enforcement). A few programs are tied to geography—you must buy in a designated neighborhood or county.
Start by contacting your state's housing finance agency or searching the National Council of State Housing Agencies website. Local community development organizations, credit unions, and your employer's human resources department may also have programs. Some programs require you to complete a homebuyer education course before you can receive funds.
Down payment assistance programs typically have income limits and purchase price caps. If your income exceeds the limit or the home costs more than the program allows, you won't may have access to. Read the terms carefully: some assistance is a grant (you don't repay it), while others are forgivable loans (you repay them only if you sell the home within a set number of years).
What happens if you put down less than 20 percent
On a conventional loan, putting down less than 20 percent triggers PMI. This insurance protects the lender if you default; it does not protect you. PMI typically costs between 0.5 and 1.5 percent of your loan amount per year, added to your monthly mortgage payment. A $300,000 loan with 1 percent PMI costs roughly $250 per month in insurance alone.
PMI can be removed in two ways. The first is automatic: once you reach 20 percent equity (through a combination of payments and home appreciation), PMI drops off automatically on the anniversary of your loan. The second is by request: once you reach 20 percent equity, you can ask your lender to remove PMI, though you may need to pay for a new appraisal to prove the home's current value.
FHA loans handle mortgage insurance differently. The upfront mortgage insurance premium is rolled into your loan amount, and an annual premium stays on your loan for the life of the loan if you put down less than 10 percent. If you put down 10 percent or more on an FHA loan, the annual premium can be removed after 11 years of payments.
Comparing down payment costs across scenarios
The table below shows how down payment size, insurance type, and duration differ across the four main loan types. Use this to compare the total cost of borrowing under each scenario.
| Loan Type | Minimum Down Payment | Insurance/Fee | When Insurance Ends |
|---|---|---|---|
| Conventional (3% down) | 3% | PMI: 0.5–1.5% annually | When you reach 20% equity |
| FHA (3.5% down) | 3.5% | Upfront: 1.75% + Annual: ~0.55% | Life of loan (if <10% down) or 11 years (if ≥10% down) |
| VA | 0% | VA funding fee: ~2.3% | One-time fee; no ongoing insurance |
| USDA | 0% | Upfront: 1% + Annual: 0.35% | Life of loan |
On a $300,000 home, a conventional loan with 3 percent down ($9,000) and 1 percent PMI costs about $250 per month in insurance. An FHA loan with 3.5 percent down ($10,500) costs roughly $165 per month in annual mortgage insurance, plus the upfront premium rolled into the loan. A VA loan with zero down costs a one-time 2.3 percent funding fee ($6,900) with no ongoing insurance. A USDA loan with zero down costs 1 percent upfront ($3,000) plus 0.35 percent annually (about $87 per month).
Frequently Asked Questions
Can I get a mortgage with no money down?
Yes, if you may have access to for a VA or USDA loan. VA loans are available to active-duty service members, veterans, and some surviving spouses. USDA loans are for rural and some suburban homebuyers who meet income limits. Conventional and FHA loans require at least 3 to 3.5 percent down.
What's the difference between PMI and mortgage insurance on an FHA loan?
PMI is insurance on a conventional loan that protects the lender if you default. FHA mortgage insurance serves the same purpose but is structured differently: you pay an upfront premium and an annual premium. FHA insurance typically lasts longer than PMI and cannot be removed as easily once you build equity.
If I put down 10 percent instead of 3 percent, how much will I save?
On a $300,000 home, a 10 percent down payment ($30,000) versus 3 percent ($9,000) means borrowing $21,000 less. That reduces your monthly payment by roughly $120 to $140 and eliminates or significantly reduces PMI, saving you $100 to $300 per month depending on your credit and loan type.
Can I use a gift for my down payment?
Yes, most lenders allow down payment gifts from family members. You'll need a signed gift letter stating the money is a gift, not a loan, and the donor's proof of funds. Some lenders limit how much of your down payment can be a gift; others allow 100 percent.
What if I don't have enough saved for the down payment?
Explore down payment assistance programs through your state housing agency, local nonprofits, or your employer. Some programs cover 3 to 10 percent of the purchase price. You can also ask the seller to cover closing costs, which frees up more of your cash for the down payment, or look into first-time homebuyer programs with lower down payment requirements.