The down payment you need depends on the loan type, not a fixed rule

There is no single down payment percentage that applies to all house purchases. The amount you put down depends on which loan program you use, your credit score, the property type, and what the lender requires. Conventional loans often ask for 3% to 20% down. FHA loans (backed by the Federal Housing Administration) allow as little as 3.5% down. VA loans (for military members and veterans) and USDA loans (for rural properties) can require 0% down. Some lenders will go lower than 3% on conventional loans, though this is less common.

The lower your down payment, the more you borrow and the higher your monthly payment becomes. You also pay mortgage insurance if you put down less than 20% on a conventional loan—this is an extra monthly cost that protects the lender, not you. Understanding what each loan type allows helps you figure out what you can actually afford to put down and what the real cost will be each month.

Key Takeaways

  • Conventional loans typically require 3% to 20% down, while FHA loans allow 3.5% down and VA or USDA loans may require nothing down.
  • Putting down less than 20% on a conventional loan means you pay mortgage insurance as an extra monthly cost until you reach 20% equity.
  • Your credit score, debt-to-income ratio, and the property type all affect what down payment percentage a lender will accept.
  • A smaller down payment means a larger loan and higher monthly payments, so calculate the full cost before deciding how much to put down.

Conventional loans and the 20% benchmark

Conventional loans are mortgages not backed by a government agency. Lenders set their own rules, but most will accept down payments between 3% and 20%. The 20% figure is a benchmark because it lets you avoid mortgage insurance, but it is not a requirement.

If you put down less than 20%, you pay private mortgage insurance (PMI). This is a monthly fee added to your mortgage payment—typically 0.5% to 1.5% of the loan amount per year, though the exact rate depends on your credit score, the loan amount, and the lender. PMI stays on your loan until you have paid down the principal to 80% of the home's original purchase price, or until you refinance. For a $300,000 home with 10% down, PMI might add $150 to $300 per month to your payment.

Some lenders offer conventional loans with 3% down; others require 5% or 10%. Your credit score matters here—lenders are more willing to accept a lower down payment from borrowers with scores above 740 than from those below 620. Your debt-to-income ratio (the percentage of your monthly income that goes to debt payments) also affects the decision.

FHA loans and the 3.5% option

FHA loans are mortgages insured by the Federal Housing Administration. They allow down payments as low as 3.5% and are often easier to get than conventional loans if your credit score is below 640 or your debt-to-income ratio is higher than conventional lenders accept.

The trade-off is that FHA loans require mortgage insurance no matter what. You pay an upfront mortgage insurance premium (UFMIP) at closing—currently 1.75% of the loan amount—and then an annual mortgage insurance premium (MIP) added to your monthly payment. This MIP stays for the life of the loan if you put down less than 10%, or for at least 11 years if you put down 10% or more. For a $300,000 home with 3.5% down, the UFMIP alone is $5,250, and the annual MIP might add $200 to $300 per month.

FHA loans also have limits on how much you can borrow in your area—these limits vary by county and change each year. Check the FHA's website or ask a lender what the current limit is in your county.

VA and USDA loans with zero down

VA loans are available to military members, veterans, and some surviving spouses. They require no down payment and no mortgage insurance. You pay a one-time VA funding fee (0.5% to 3.3% of the loan amount, depending on your military branch and whether you have used a VA loan before), but this can be rolled into the loan amount rather than paid upfront.

USDA loans are for rural properties and are available to borrowers with low to moderate income. They also require no down payment and no mortgage insurance, though you do pay a may provide fee (1% of the loan amount) and an annual fee. Like VA loans, these fees can be included in the loan amount.

Both programs have income limits, property location requirements, and credit score minimums. VA loans have no official credit score minimum, but most lenders require at least 580 to 620. USDA loans typically require a score of 580 or higher. If you are may be able to access for either program, the zero-down option is usually the cheapest route because you avoid mortgage insurance entirely.

How down payment size affects your monthly payment

The amount you put down directly changes how much you borrow and what you pay each month. On a $300,000 home with a 7% interest rate over 30 years, putting down 3% means borrowing $291,000; putting down 20% means borrowing $240,000. The difference in principal alone is $51,000, which translates to roughly $340 more per month in principal and interest payments.

Add mortgage insurance to a smaller down payment and the gap widens. A 3% down conventional loan on that same $300,000 home might cost $340 more per month in principal and interest, plus $200 to $300 in PMI—so $540 to $640 more per month than a 20% down payment. Over 30 years, that is an extra $194,000 to $230,000 in total payments.

This does not mean you should always put down 20%. If you have the cash but need it for emergencies, closing costs, or home repairs, a smaller down payment makes sense. If you are confident your income will grow, a smaller down payment lets you buy sooner. The key is understanding the full monthly cost, not just the down payment itself.

Down payment requirements by property type

The type of property you are buying can affect down payment rules. Single-family homes have the most flexible options across all loan types. Condos often require higher down payments—some lenders ask for 10% to 15% on conventional loans because condos are riskier to lend on (the homeowners association can fail, special assessments can spike, or the building can lose its FHA approval).

Multifamily properties (duplexes, triplexes, fourplexes) typically require 15% to 25% down on conventional loans. Investment properties usually require 20% to 25% down. FHA loans generally do not cover investment properties or multifamily buildings with more than four units.

If you are buying a condo or multifamily property, ask the lender upfront what down payment they require for that property type. The answer may differ from what they require for a single-family home.

What happens if you cannot save 20% down

Most first-time buyers do not put down 20%. According to the National Association of Realtors, the median down payment for first-time buyers is around 6% to 7%. This is normal, and lenders expect it.

If you have saved 3% to 10%, a conventional loan with PMI or an FHA loan are both realistic options. Compare the monthly cost of each: an FHA loan with 3.5% down and lifetime mortgage insurance might cost less per month than a conventional loan with 5% down and PMI that you will eventually remove. Run the numbers with a lender before deciding.

If you have saved less than 3%, look into whether you may have access to for a VA or USDA loan. If not, you may need to save more, look for a lower-priced home, or explore down payment assistance programs offered by your state, county, or city. Some employers and nonprofits also offer down payment help to employees or members.

Frequently Asked Questions

Can I borrow the down payment from someone else?

Yes, but with limits. Most lenders allow a gift from a family member, and some allow gifts from employers or nonprofits. You cannot borrow the down payment as a loan—the lender will count that borrowed money as debt and it will raise your debt-to-income ratio. Ask your lender what documentation they need to prove a gift is a gift and not a loan.

Does a larger down payment lower my interest rate?

Usually, yes, but the difference is often small—maybe 0.25% to 0.5%. A larger down payment means less risk for the lender, so they offer a slightly better rate. However, the savings in interest may not outweigh the opportunity cost of tying up cash in the down payment instead of investing it or keeping it for emergencies.

What if I put down more than 20% on a conventional loan?

You avoid PMI entirely and reduce the amount you borrow, which lowers your monthly payment and total interest paid. There is no downside to putting down more than 20% except that you have less cash on hand for other needs. Some lenders offer slightly better rates to borrowers who put down 25% or more.

Can I use my 401(k) or IRA for a down payment?

You can withdraw from a traditional IRA without penalty if you are a first-time homebuyer (up to $10,000 lifetime). A 401(k) withdrawal is more complicated and usually involves a loan against your balance rather than a withdrawal. Both options have tax consequences, so talk to a tax professional before withdrawing retirement savings.

What if my down payment is not enough to close?

Closing costs (typically 2% to 5% of the loan amount) are separate from the down payment. If you do not have enough cash for both, ask the seller to pay some closing costs, look for a lender credit, or explore down payment assistance programs. Some programs cover closing costs as well as down payment help.