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

A down payment on a house is the cash you give the seller at closing, and it ranges from 0% to 20% of the home's purchase price. A $300,000 house could require anywhere from $0 to $60,000 down, depending on which loan program you use and what the lender requires. The amount you pay affects your monthly mortgage payment, how much interest you'll pay over time, and whether you'll owe private mortgage insurance (PMI).

The most common down payment amounts are 3%, 5%, 10%, and 20%. Conventional loans (the most common type) typically require 3% to 5% minimum. Federal Housing Administration (FHA) loans allow 3.5% down. Veterans Affairs (VA) loans and United States Department of Agriculture (USDA) loans often require 0% down. The lower your down payment, the higher your monthly payment and the more interest you'll pay over the life of the loan.

Key Takeaways

  • Down payments range from 0% to 20% of the home price, with 3% to 5% being most common for conventional loans.
  • A smaller down payment means a higher monthly mortgage payment and more total interest paid over the loan term.
  • If you put down less than 20%, you will owe private mortgage insurance (PMI), which adds to your monthly cost.
  • Your credit score, income, and savings affect both the down payment amount required and the interest rate you receive.
  • Down payment information programs exist through state and local housing agencies, though they vary by location and income level.

How down payment percentages translate to actual dollar amounts

The dollar amount you pay depends on the home's purchase price. On a $250,000 house, a 3% down payment is $7,500. A 5% down payment is $12,500. A 10% down payment is $25,000. A 20% down payment is $50,000. These numbers shift proportionally with the home price—a $400,000 house would require $12,000 at 3%, $20,000 at 5%, $40,000 at 10%, and $80,000 at 20%.

Most first-time buyers put down 3% to 5% because they don't have $50,000 or more saved. A 3% down payment is the minimum for most conventional loans, though some lenders require 5% or higher depending on your credit score and debt-to-income ratio. If you have a lower credit score or higher existing debt, lenders may require a larger down payment to offset the risk.

What happens when you put down less than 20%

If your down payment is less than 20%, you will owe private mortgage insurance (PMI). PMI protects the lender if you stop paying the mortgage, and the cost is added to your monthly payment. PMI typically costs 0.5% to 1.5% of the loan amount per year, paid monthly. On a $300,000 home with a 5% down payment ($15,000), your loan amount is $285,000, and PMI might add $120 to $360 per month.

You can remove PMI once you've paid down the loan to 80% of the home's original purchase price, or when the home appreciates enough that you reach 20% equity. This usually takes 5 to 10 years depending on your payment schedule and local home values. Some loans allow you to request PMI removal once you reach 20% equity; others remove it automatically at that point.

Down payment costs beyond the percentage

The down payment itself is only one closing cost. You'll also pay for a home inspection (typically $300 to $500), an appraisal ($400 to $600), title insurance, property taxes, homeowners insurance, and lender fees. These additional costs usually total 2% to 5% of the home price. On a $300,000 house, closing costs might be $6,000 to $15,000 on top of your down payment.

Some lenders offer "no closing cost" loans, but this means the costs are rolled into your loan amount or your interest rate is higher. You're not avoiding the costs—you're paying them differently. Ask your lender for a Loan Estimate, which shows all costs upfront so you can compare offers from different lenders.

How your credit score and income affect the down payment required

Lenders use your credit score and debt-to-income ratio to decide what down payment they'll accept. A credit score above 740 typically qualifies you for a 3% down payment on a conventional loan. A score between 620 and 739 may require 5% to 10% down. A score below 620 may disqualify you from conventional loans entirely, leaving FHA loans as your option (which require 3.5% down but have higher insurance costs).

Your debt-to-income ratio is your total monthly debt payments divided by your gross monthly income. Most lenders want this ratio below 43%, though some go up to 50%. If you have high student loans, car payments, or credit card debt, you may need a larger down payment to lower your loan amount and improve your ratio. A mortgage broker can tell you what down payment amount will get you approved.

Down payment information programs and where to find them

Many states and local housing agencies offer down payment information through grants or low-interest loans. These programs vary widely by location and income level. Some cover 3% to 5% of the purchase price; others cover up to 15%. Some are forgivable (you don't repay them); others are loans you repay alongside your mortgage.

To find programs in your area, contact your state housing finance agency or search the HUD website for local resources. Many nonprofits and community development organizations also administer information programs. Income limits explore to most programs, and you typically must be a first-time homebuyer or meet other criteria. Programs often have waiting lists or limited funding, so ask about current availability before planning your purchase.

Frequently Asked Questions

Can I borrow my down payment from family or friends?

Yes, but lenders require documentation. If the money is a gift, you'll need a signed gift letter stating it doesn't need to be repaid. If it's a loan, the lender will count the repayment as debt on your process, which affects how much you can borrow. Some lenders require the gift to be in your account for 60 days before closing to prove it's not borrowed money.

What's the difference between putting 5% down versus 10% down?

A 5% down payment means a higher monthly payment and more PMI cost. On a $300,000 house, 5% down is $15,000 and 10% down is $30,000—a $15,000 difference. Your monthly payment will be roughly $100 to $150 higher with 5% down, and PMI will be slightly higher. Over 30 years, the extra cost adds up significantly, but 5% down is more realistic for most buyers.

Do I need to have the full down payment saved before I make an offer?

You need proof that you can access the funds, but not necessarily that it's all in one account. Lenders will ask for bank statements, investment account statements, and documentation of any gifts. If you're close to your down payment goal, you can make an offer contingent on your ability to find the funds, though this weakens your offer in a competitive market.

What if I can't save a 20% down payment?

Most buyers don't. A 3% to 5% down payment is standard and widely available through conventional, FHA, VA, and USDA loans. You'll pay PMI with a smaller down payment, but PMI is temporary and removable once you reach 20% equity. Waiting years to save 20% often costs more than buying now with PMI and building equity.