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

There is no single down payment amount that works for everyone. The money you put down when you buy a house ranges from 3% to 20% of the purchase price, depending on which loan program you use, your credit score, and what the lender requires. A house that costs $300,000 could require a down payment anywhere from $9,000 to $60,000.

The most common down payment is 20% — that is the amount that lets you avoid paying mortgage insurance and often gets you the best interest rate. But most first-time buyers put down less, usually between 3% and 10%. The lower your down payment, the higher your monthly payment becomes, because you are borrowing more money and you will pay mortgage insurance on top of the loan itself.

Your lender will tell you the minimum down payment they accept for your specific situation. That minimum depends on the loan program, your credit history, your debt-to-income ratio, and the property itself. A loan officer can give you an exact number once you provide your financial information.

Key Takeaways

  • Down payments range from 3% to 20% of the house price, with 20% being the standard that avoids mortgage insurance.
  • Conventional loans typically require 3% to 20% down, while FHA loans allow as little as 3.5% and VA loans may require 0% down for may be able to access veterans.
  • Putting down less than 20% means you pay mortgage insurance, which adds to your monthly payment and total cost.
  • Your lender determines your minimum down payment based on your credit score, income, debts, and the property value.
  • Down payment information programs exist in some states and counties, though they vary widely in what they cover and who qualifies.

How down payment amounts work across loan types

Conventional loans — the most common type — typically require between 3% and 20% down. A 3% down payment is the minimum many lenders will accept, but it comes with mortgage insurance that stays on your loan until you have paid down the balance to 80% of the home's value. That insurance costs between 0.5% and 1% of your loan amount per year, added to your monthly payment.

FHA loans, backed by the Federal Housing Administration, allow down payments as low as 3.5%. These loans are designed for buyers with lower credit scores or less savings. FHA loans require mortgage insurance for the life of the loan if your down payment is less than 10%, which makes the monthly cost higher than a conventional loan at the same interest rate.

VA loans, available to military members, veterans, and some surviving spouses, often require 0% down. You still pay a funding fee (usually 1% to 3.6% of the loan amount), but you do not need to save a down payment. USDA loans, for rural properties, also allow 0% down for borrowers who meet income limits.

State and local down payment information programs exist in some places, though availability and amounts vary. Some programs give you a grant (money you do not repay), while others are forgivable loans that disappear if you stay in the house for a set number of years. Your lender or a local housing counselor can tell you what exists in your area.

What happens when you put down less than 20%

When your down payment is below 20%, your lender requires mortgage insurance — a monthly fee that protects the lender if you stop paying. On a conventional loan, this is called PMI (private mortgage insurance). On an FHA loan, it is called MIP (mortgage insurance premium). On a USDA loan, it is called a may provide fee.

The cost of mortgage insurance depends on your down payment size, your credit score, and the loan amount. On a $300,000 house with a 10% down payment ($30,000), mortgage insurance might add $150 to $250 per month to your payment. That is $1,800 to $3,000 per year in insurance alone, on top of principal, interest, and property taxes.

You can remove PMI from a conventional loan once you have paid the balance down to 80% of the original home value, or once you reach that point automatically after enough time has passed. FHA mortgage insurance stays for the life of the loan if you put down less than 10%, so you cannot remove it by paying faster. This is one reason why FHA loans cost more over time, even though they require a smaller down payment upfront.

How your credit score and income affect the down payment you need

Lenders use your credit score to decide whether to accept a low down payment and what interest rate to offer. A score above 740 usually qualifies you for the lowest rates and the smallest down payments — sometimes 3% on a conventional loan. A score between 620 and 680 may limit you to 10% down, or require you to use an FHA loan instead. Scores below 620 make conventional loans difficult; FHA becomes your main option.

Your debt-to-income ratio — the percentage of your monthly income that goes to debt payments — also matters. Lenders typically want this ratio below 43%, meaning your housing payment plus car loans, credit cards, and student loans should not exceed 43% of your gross monthly income. If your ratio is higher, you may need to put down more money to lower your monthly payment enough to meet the lender's requirement.

Employment history and income stability matter too. Lenders want to see at least two years of steady income. If you recently changed jobs, started a business, or had a gap in employment, some lenders will require a larger down payment or will not lend to you at all. Others will work with you if you can document the income change.

Calculating your down payment in dollars

To find your down payment amount, multiply the house price by the percentage you plan to put down. A house priced at $250,000 with a 10% down payment means $250,000 × 0.10 = $25,000. With a 5% down payment, it would be $250,000 × 0.05 = $12,500.

Remember that your down payment is separate from closing costs, which typically run 2% to 5% of the purchase price. Closing costs cover the appraisal, title search, inspection, loan origination, and other fees. A $250,000 house might have $5,000 to $12,500 in closing costs on top of your down payment. Some lenders allow you to roll closing costs into the loan, but that increases your monthly payment and total interest paid.

Use a mortgage calculator to see how different down payment amounts change your monthly payment. Putting down 20% instead of 10% on a $300,000 house saves you roughly $200 to $300 per month in mortgage insurance alone, plus you get a better interest rate. But if saving for that extra 10% means waiting years to buy, a smaller down payment now may make more sense for your situation.

Down payment information and gift money

Some states and counties offer down payment information through grants or forgivable loans. These programs target first-time buyers, low-income households, or specific professions like teachers and nurses. The amounts vary — some cover 3% to 5% of the purchase price, others cover more. Many require you to complete a homebuyer education course before you can use them.

Family members can also give you money for a down payment. Most lenders allow gift funds, but they require a signed letter from the person giving the money stating it is a gift, not a loan you have to repay. If the gift is large relative to your income, the lender may ask questions about where the money came from, to prevent fraud. The gift does not have to be repaid, but it does count as part of your down payment.

Borrowing the down payment from a family member as a loan is more complicated. Some lenders will not allow it because it increases your debt-to-income ratio. Others allow it if you document the loan terms in writing and show that the payments are already factored into your debt calculations. Ask your lender before you borrow.

What changes your down payment requirement after you start the process

Once you make an offer on a house, the appraisal can change what you owe. If the house appraises for less than the purchase price, your down payment percentage goes up automatically. A house you agreed to buy for $300,000 with a 10% down payment ($30,000) that appraises at $280,000 now requires $28,000 down to stay at 10% — but you already committed to $30,000, so you are putting down 10.7% instead. Some buyers renegotiate the price with the seller when this happens.

Your credit score can also shift during the mortgage process. If you miss a payment, open new credit accounts, or increase your credit card balances before closing, your score may drop. A lower score can trigger a higher interest rate or a higher down payment requirement. Lenders typically pull your credit again a few days before closing, so avoid any credit changes between your initial process and the day you sign.

Frequently Asked Questions

Can I buy a house with less than 3% down?

Yes, if you are a veteran using a VA loan or buying a rural property with a USDA loan — both allow 0% down. For conventional loans, 3% is typically the minimum. FHA loans allow 3.5% down. If you have less saved, you may need to wait and save more, or explore down payment information programs in your area.

Is 20% down always the best choice?

Twenty percent avoids mortgage insurance and usually gets you the lowest interest rate, so it saves money over time. But if you have to wait years to save 20%, buying now with 5% or 10% down and building equity sooner may be better for your situation. A mortgage calculator can show you the total cost difference.

What if I do not have enough for the down payment I need?

Ask your lender about down payment information programs in your state or county. Contact a nonprofit housing counselor through HUD (Housing and Urban Development) — they offer free guidance and know local programs. Family gifts are also an option if someone can help you. Some employers offer down payment information too.

Does my down payment affect my interest rate?

Yes. A larger down payment usually qualifies you for a lower interest rate because the lender is lending less money relative to the home's value. The difference is typically 0.25% to 0.5%, which adds up to thousands of dollars over 30 years. Your credit score and loan type also affect the rate.

Can I use retirement savings for my down payment?

Some retirement accounts allow withdrawals for first-time home purchases. A traditional or Roth IRA lets you withdraw up to $10,000 lifetime for a first home purchase without the early withdrawal penalty. A 401(k) may allow a loan against your balance. Talk to your plan administrator and a tax professional before withdrawing, because the rules vary by account type.