The down payment amount depends on the loan type, not on a single rule

There is no single down payment requirement that applies to everyone. A conventional mortgage might require 3 to 20 percent of the home price, while an FHA loan might require 3.5 percent, and a VA loan might require zero. The lender, the loan program, your credit history, and the property itself all affect what you will need to put down. The lowest down payment available to you is not always the best choice, because a smaller down payment usually means higher monthly payments and more interest paid over the life of the loan.

The down payment is the cash you bring to closing. It reduces the amount you need to borrow. If a home costs $300,000 and you put down $60,000, you borrow $240,000. The down payment also affects whether you will pay private mortgage insurance (PMI), a monthly fee that protects the lender if you default. PMI typically applies when your down payment is less than 20 percent.

Key Takeaways

  • Conventional loans usually require 3 to 20 percent down, while FHA loans require 3.5 percent minimum, and VA loans may require zero percent.
  • A smaller down payment means a larger loan, higher monthly payments, and PMI fees that can add hundreds of dollars per year.
  • Your credit score, debt-to-income ratio, and savings history affect both the down payment amount a lender will accept and the interest rate you receive.
  • Down payment information programs exist through nonprofits, state housing agencies, and some employers, though they vary by location and income.
  • Putting down less than 20 percent triggers PMI, which you can sometimes remove once you reach 20 percent equity, but the rules depend on your loan type.

Conventional loans: 3 to 20 percent, depending on your profile

A conventional loan is a mortgage not backed by a government agency. Lenders set their own rules, but most require a minimum down payment between 3 and 5 percent. Some lenders will go as low as 3 percent if your credit score is 680 or higher and your debt-to-income ratio is below 43 percent. Others require 5 percent or more, or may not lend to borrowers with lower credit scores at all.

If you put down less than 20 percent on a conventional loan, you will pay PMI. The cost varies but typically runs 0.5 to 1.5 percent of the loan amount per year, paid as part of your monthly mortgage payment. On a $240,000 loan, that could be $100 to $300 per month. You can remove PMI once you reach 20 percent equity in the home, either by paying down the principal or by the home appreciating in value, but you usually have to request the removal and meet the lender's conditions.

FHA loans: 3.5 percent minimum, with mortgage insurance that stays

FHA loans are backed by the Federal Housing Administration and are designed for borrowers with lower credit scores or smaller down payments. The minimum down payment is 3.5 percent if your credit score is 580 or higher. If your score is between 500 and 579, some lenders will still work with you but may require 10 percent down.

FHA loans require two forms of mortgage insurance: an upfront premium paid at closing (usually rolled into the loan) and an annual premium paid monthly. The annual premium stays for the life of the loan if your down payment is less than 10 percent. If you put down 10 percent or more, you can remove the annual insurance after 11 years of payments. This makes FHA loans more expensive over time than conventional loans, even though the initial down payment is lower.

VA loans and USDA loans: Zero or minimal down payment

VA loans are available to military members, veterans, and surviving spouses. They require zero down payment and no PMI. You do pay a one-time VA funding fee (usually 1.5 to 3.3 percent of the loan amount), which can be rolled into the loan. VA loans have no income limits and no minimum credit score requirement, though individual lenders may set their own minimums.

USDA loans are for rural properties and are available to borrowers with moderate incomes. They also require zero down payment and no PMI, though they do charge a may provide fee. USDA loans have income limits that vary by county and family size, and the property must be in an may be able to access rural area.

How your credit score and debt affect the down payment you can make

Lenders use your credit score and debt-to-income ratio to decide whether to lend to you and what down payment they will accept. A higher credit score (typically 740 or above) opens doors to lower down payments and better interest rates. A score below 620 may disqualify you from conventional loans entirely, pushing you toward FHA or other government-backed options.

Your debt-to-income ratio is the total of your monthly debt payments divided by your gross monthly income. Most lenders want this below 43 percent, though some will go to 50 percent if your credit is strong or your down payment is large. If you have high existing debt—car loans, student loans, credit cards—you may need a larger down payment to offset the risk in the lender's eyes, or you may need to pay down debt before explore.

Down payment information: Where it comes from and what it costs

Many states, cities, and nonprofits offer down payment information through grants or low-interest loans. These programs vary widely by location. Some cover 3 to 5 percent of the purchase price as a grant (money you do not repay). Others are forgivable loans that become a grant if you stay in the home for a set period, usually 5 to 10 years. A few are second mortgages with below-market interest rates.

To find programs in your area, contact your state housing finance agency or search the National Council of State Housing Agencies website. Local nonprofits and community development organizations often administer these programs. Some employers, particularly in healthcare and education, offer down payment help as a benefit. Be cautious of any program that charges an upfront fee to help you find information—legitimate programs do not charge you to explore.

What happens if you put down less than 20 percent

Putting down less than 20 percent triggers mortgage insurance, which protects the lender but costs you. On a $300,000 home with 5 percent down ($15,000), you borrow $285,000 and pay PMI on top of your principal, interest, taxes, and insurance. Over 30 years, PMI can add $30,000 to $60,000 to the total cost of the loan.

You can sometimes remove PMI once you reach 20 percent equity, but the rules differ. On a conventional loan, you can request removal once you hit 20 percent equity through principal paydown or home appreciation. On an FHA loan with less than 10 percent down, the insurance stays for the life of the loan. On a VA or USDA loan, there is no PMI at all. Ask your lender about their PMI removal policy before you sign, because some lenders make it easier than others.

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, but they require a signed letter stating it is a gift, not a loan you must repay. Some lenders allow you to borrow part of the down payment from a family member's home equity line of credit, but this counts as debt on your process. You cannot borrow from the seller or from the lender itself.

What if I have saved only 2 percent?

You have options. FHA loans accept 3.5 percent down, so you could save a bit more or look for down payment information in your area. Some conventional lenders will work with 3 percent down if your credit is strong. VA and USDA loans require zero down if you are may be able to access. The trade-off is that lower down payments mean higher monthly payments and, on most loans, mortgage insurance.

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

Usually, yes. A larger down payment reduces the lender's risk, so they often offer a lower interest rate. The difference can be 0.25 to 0.5 percent, which adds up over 30 years. However, the best rate also depends on your credit score, the loan type, and current market conditions. Always compare offers from multiple lenders before deciding.

Can I remove PMI early if I pay extra toward principal?

Yes, on a conventional loan. If you pay down the principal faster and reach 20 percent equity sooner, you can request PMI removal. On an FHA loan with less than 10 percent down, PMI cannot be removed. Check your loan documents or ask your lender about their specific PMI removal policy.

What is the difference between a down payment and closing costs?

The down payment is the cash you put toward the purchase price. Closing costs are separate fees for the loan itself—appraisal, title search, underwriting, attorney fees, and other services. Closing costs typically run 2 to 5 percent of the loan amount. You need to save for both, and some information programs cover closing costs while others cover only the down payment.