Down payment amounts depend on the loan type and your financial situation

There is no single down payment amount required to buy a house. The amount you put down depends on which loan program you use, your credit history, and how much cash you have available. Conventional loans typically require 3% to 20% down. Federal Housing Administration (FHA) loans allow as little as 3.5% down. Veterans Affairs (VA) loans and U.S. Department of Agriculture (USDA) loans may require zero down payment if you meet their specific requirements.

The down payment is the money you give the seller at closing. The rest of the purchase price is borrowed from a lender. A larger down payment means you borrow less money and pay less interest over the life of the loan. A smaller down payment means lower upfront costs but higher monthly payments and more total interest paid.

Key Takeaways

  • Conventional loans require down payments between 3% and 20%, with 20% avoiding mortgage insurance costs.
  • FHA loans allow down payments as low as 3.5% but require mortgage insurance premiums added to your monthly payment.
  • VA loans and USDA loans may require no down payment if you meet military service or rural property requirements.
  • The down payment amount you choose affects your monthly payment, total interest cost, and whether you pay mortgage insurance.

Conventional loans and down payment ranges

A conventional loan is a mortgage not backed by a government agency. Lenders set their own rules within industry standards. Most conventional loans require a down payment between 3% and 20% of the home's purchase price.

If you put down less than 20%, you will pay private mortgage insurance (PMI). This is an insurance policy that protects the lender if you stop paying the loan. PMI costs typically range from 0.5% to 1.5% of the loan amount per year, added to your monthly payment. Once you build equity to 20% of the home's value, you can request to stop paying PMI.

A 20% down payment avoids PMI entirely, which saves money over time. However, 20% is a large upfront sum. On a $300,000 home, 20% equals $60,000. A 5% down payment on the same home is $15,000. The choice between these amounts depends on how much cash you have saved and whether you want lower monthly payments or lower upfront costs.

FHA loans and lower down payment requirements

The Federal Housing Administration insures loans made by private lenders. An FHA loan allows down payments as low as 3.5% of the purchase price. This makes homeownership possible for people who have not saved a large down payment.

FHA loans require mortgage insurance premiums (MIP) instead of PMI. There are two parts: an upfront premium paid at closing (usually 1.75% of the loan amount) and an annual premium added to your monthly payment (typically 0.55% to 0.80% of the loan amount per year). Unlike PMI, FHA mortgage insurance does not automatically stop when you reach 20% equity. It continues for the life of the loan if you put down less than 10%.

FHA loans have lower credit score requirements than conventional loans. Some lenders will work with credit scores as low as 580, though 620 is more common. Conventional loans typically require a credit score of 620 or higher.

VA loans for military members and veterans

The U.S. Department of Veterans Affairs guarantees loans for people who served in the military. A VA loan requires no down payment if you meet the service requirements. You pay only closing costs, which typically range from 2% to 5% of the purchase price.

VA loans do not require mortgage insurance. Instead, borrowers pay a funding fee at closing, usually 1.4% to 3.6% of the loan amount depending on your down payment and military branch. This fee can be rolled into the loan amount, so you do not have to pay it upfront in cash.

To use a VA loan, you must have a Certificate of may be able to access from the VA. This document proves your military service meets the program's requirements. Active duty service members, veterans, and surviving spouses of deceased service members may be may be able to access. The VA website has a tool to check your may be able to access and request a certificate.

USDA loans for rural property purchases

The U.S. Department of Agriculture backs loans for homes in rural areas. A USDA loan requires no down payment if the property is in an may be able to access rural area and your income does not exceed the area's limit. Like VA loans, you pay only closing costs.

USDA loans require a may provide fee at closing (typically 2% of the loan amount) and an annual fee added to your monthly payment (usually 0.35% of the loan amount per year). These fees protect the USDA if you default on the loan.

USDA loans have income limits that vary by county. A family of four in one county might have a $90,000 income limit while a family of four in another county has a $110,000 limit. The USDA website has a property may be able to access map and income limit tables by county. You must check both the property location and your household income against these limits.

How down payment size affects your total cost

The down payment amount you choose changes three things: your monthly payment, the total interest you pay, and whether you pay mortgage insurance.

On a $300,000 home with a 30-year loan at 7% interest, a 3% down payment ($9,000) means borrowing $291,000. Your monthly payment (before taxes and insurance) is approximately $1,935, plus PMI of roughly $145 per month. A 10% down payment ($30,000) means borrowing $270,000, with a monthly payment of approximately $1,797 and PMI of roughly $101 per month. A 20% down payment ($60,000) means borrowing $240,000, with a monthly payment of approximately $1,598 and no PMI.

The difference between 3% and 20% down is $1,598 versus $2,080 per month — a $482 difference. Over 30 years, that adds up to $173,520 in additional payments. However, the 20% down payment requires $51,000 more cash upfront. Whether to put down more money depends on your savings, your income, and whether you could use that cash for other purposes like emergency savings or home repairs.

Frequently Asked Questions

Can I borrow the down payment from someone else?

Conventional loans allow down payment gifts from family members. The lender requires a signed letter stating the money is a gift, not a loan you must repay. FHA, VA, and USDA loans also allow gifts. Some lenders require the gift-giver to have a family relationship to you; rules vary by lender.

What if I have bad credit but want to buy a house?

FHA loans work with lower credit scores than conventional loans, typically 580 or higher. Some lenders specialize in lower credit scores. A larger down payment can sometimes offset a lower credit score. You may also have the option to wait and rebuild your credit before buying, which could lower your interest rate and reduce your total cost.

Do I have to put down the minimum amount?

No. You can put down more than the minimum. Putting down more reduces your monthly payment, reduces total interest paid, and may eliminate mortgage insurance. The trade-off is having less cash available for other needs after closing.

What costs are included in closing besides the down payment?

Closing costs typically include loan origination fees, appraisal fees, title insurance, property taxes, homeowners insurance, and attorney fees. These usually range from 2% to 5% of the purchase price. Your lender must provide a Closing Disclosure form at least three days before closing that lists all costs.

Can I use a home equity line of credit for a down payment?

Some lenders allow this, but many do not because it increases your debt before you take on a mortgage. If you already own a home with equity, a home equity loan or line of credit is one source of down payment funds. Ask your lender about their rules before pursuing this option.