The down payment amount depends on the loan type and your lender, not a fixed rule

There is no single down payment amount that works everywhere. A conventional loan from a bank might ask for 20 percent of the home's price, but an FHA loan (backed by the Federal Housing Administration) can work with 3.5 percent. A VA loan (for military members and veterans) can require zero down. The lender you choose, the type of loan they offer, and sometimes your credit history all change what you need to bring to closing.

The home price itself sets the scale. If you are buying a $200,000 house, 20 percent down is $40,000. At 3.5 percent, it is $7,000. The same percentage means very different dollar amounts depending on where you are buying and what homes cost in your area.

Key Takeaways

  • Conventional loans typically ask for 10 to 20 percent down, but some lenders accept as little as 3 percent if you have decent credit and income.
  • FHA loans require 3.5 percent down and are designed for first-time buyers or people with lower credit scores, though you will pay mortgage insurance on top of your monthly payment.
  • VA loans and USDA loans can require zero down if you meet the program requirements, making them the lowest-barrier options for those who may have access to.
  • Putting down less than 20 percent on a conventional loan means paying private mortgage insurance (PMI), which adds to your monthly cost until you build enough equity.
  • Your actual down payment amount depends on the home price, the loan program, your credit score, and your income — not on a fixed percentage everyone pays.

Conventional loans: the 20 percent standard and what actually happens

Twenty percent down is what lenders call the "standard" for a conventional loan — a mortgage from a bank or mortgage company, not backed by a government program. At 20 percent, you own a meaningful chunk of the house from day one, the lender's risk is lower, and you avoid paying mortgage insurance. This is why 20 percent is often mentioned as the goal.

In practice, many people put down less. Conventional loans can work with 10 percent, 5 percent, or even 3 percent down, depending on the lender and your financial profile. The trade-off is private mortgage insurance (PMI) — an extra monthly payment that protects the lender if you stop paying. PMI typically costs 0.5 to 1.5 percent of the loan amount per year, split into monthly payments. On a $200,000 loan, that could be $100 to $300 a month on top of your regular mortgage payment.

You can remove PMI once you have paid down the loan enough that you own 20 percent of the home's value. This happens through a combination of your monthly payments and (if the home appreciates) the home gaining value. The timeline depends on the home price, your down payment, and your interest rate.

FHA loans: lower down payment, mortgage insurance you keep

An FHA loan is a mortgage insured by the Federal Housing Administration, designed to help people who cannot put down 20 percent or who have credit scores below what conventional lenders accept. The minimum down payment is 3.5 percent, which is why FHA loans are common for first-time buyers.

The catch is that FHA loans require mortgage insurance premiums (MIP) — similar to PMI but different in one key way. You pay an upfront MIP at closing (usually 1.75 percent of the loan amount) and then a monthly MIP for the life of the loan. Unlike PMI on a conventional loan, you cannot remove FHA mortgage insurance by building equity. It stays for as long as you have the loan, even after you own 50 percent of the home.

FHA loans make sense if you have limited savings, a lower credit score, or are buying your first home. The lower down payment requirement means you can buy sooner. The permanent mortgage insurance means your monthly payment will be higher than a conventional loan on the same house, but you may not have another option at that moment.

VA and USDA loans: zero down for those who may have access to

If you are a military member, veteran, or surviving spouse, a VA loan can require zero down. The Department of Veterans Affairs guarantees the loan, which means the lender takes less risk and does not need you to put money down first. You still pay a funding fee (usually 2 to 3 percent of the loan amount), which can be rolled into the loan itself, so you do not pay it upfront.

A USDA loan is for rural homebuyers who meet income limits. It also requires zero down and is backed by the U.S. Department of Agriculture. Like VA loans, USDA loans have an upfront may provide fee that can be included in the loan amount. Neither program requires mortgage insurance in the traditional sense.

These programs exist because Congress decided certain groups — military families and rural homebuyers — should not be blocked from homeownership by the need for a large down payment. If you may have access to for either, the zero-down option is genuinely available to you.

What changes the down payment amount you need

Your credit score affects what down payment a lender will accept. A higher score (usually 740 or above) opens doors to lower down payments and better interest rates. A lower score (below 620) may mean you can only get an FHA loan, or that a lender asks for a larger down payment to offset the risk they perceive.

Your debt-to-income ratio — the percentage of your monthly income that goes to debt payments — also matters. If you already owe money on a car, student loans, or credit cards, lenders factor that in. A higher ratio can mean a larger down payment is required to show you can handle a mortgage payment too.

The home price and location set the dollar amount. A 10 percent down payment on a $150,000 house is $15,000. The same percentage on a $400,000 house is $40,000. If you are buying in an expensive market, the down payment in dollars will be larger even if the percentage is the same.

Whether you have a co-borrower (someone explore with you) can change the calculation. Two incomes and two credit scores may may have access to you for a lower down payment than you could get alone.

How to figure out what you actually need to save

Start by deciding which loan type makes sense for you. If you are a veteran, look at VA loans first — zero down is hard to beat. If you are buying in a rural area and meet income limits, research USDA loans. If neither applies, compare FHA and conventional options.

Once you have picked a loan type, contact lenders and ask what down payment they will accept given your credit score and income. Do not assume you know — lenders vary, and some are more flexible than others. A mortgage broker can shop multiple lenders at once and tell you what each one requires.

Remember that down payment is only part of the closing cost. You will also pay for a home inspection, appraisal, title search, and other fees. These typically add 2 to 5 percent of the home price on top of your down payment. If you are putting down 3 percent, you might need 5 to 8 percent of the home price in total cash to close.

The real cost of a smaller down payment

Putting down less money means a larger loan, which means higher monthly payments. If you put down 3 percent instead of 20 percent on a $300,000 house, your loan is $291,000 instead of $240,000. That extra $51,000 in borrowed money costs you interest over 30 years — thousands of dollars in total.

Add mortgage insurance on top, and the monthly payment climbs further. On a conventional loan with 5 percent down, PMI might add $150 to $250 a month. On an FHA loan with 3.5 percent down, MIP might add $200 to $400 a month. Over 30 years, that is tens of thousands of dollars.

This does not mean you should wait years to save 20 percent. If you can buy now with 5 or 10 percent down, you start building equity when ready, and you may be able to remove PMI later. Waiting five years to save more might mean paying higher prices for homes in your area. The math is personal and depends on your situation.

Frequently Asked Questions

Can I borrow the down payment from family?

Yes, but lenders have rules about it. Most require a signed letter from the family member stating it is a gift, not a loan you have to repay. Some lenders ask for proof the money has been in your account for a certain period (usually two months) before closing. Ask your lender upfront what documentation they need.

What if I do not have enough saved yet?

Look into down payment information programs run by your state or local government, nonprofits, or employers. These vary widely by location and income level. Your local housing authority or a 211 referral can point you toward programs in your area. Some programs offer grants (money you do not repay) rather than loans.

Does a larger down payment always mean a better interest rate?

Usually yes, but not always by much. A larger down payment shows the lender you have skin in the game, which can lower your interest rate by 0.25 to 0.5 percent. That matters over 30 years, but the difference is smaller than many people expect. Your credit score and the current market rate matter more.

What happens if the home appraises for less than the purchase price?

The appraisal determines the loan amount, not the purchase price. If you agreed to pay $300,000 but it appraises at $280,000, the lender will only loan 80 or 90 percent of $280,000. You either need to put more cash down to cover the gap, renegotiate the price, or walk away. This is why a home inspection and appraisal are critical before you commit.

Can I put down more than 20 percent to avoid PMI?

Yes. Putting down 25, 30, or more percent avoids PMI entirely on a conventional loan and means a smaller monthly payment. The trade-off is that money is tied up in the house instead of in savings or investments. There is no single right answer — it depends on whether you have other financial goals and how comfortable you are with less liquid savings.