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

There is no single down payment amount that works for everyone. Most home loans fall into a few categories, and each has different rules about how much cash you need upfront. A down payment is the money you give the seller at closing — the rest of the home's price comes from borrowed money (your mortgage). The more you put down, the less you borrow, which changes your monthly payment and the total interest you pay over time.

The most common down payment amounts are 3%, 5%, 10%, and 20% of the home's purchase price. On a $300,000 home, that means $9,000, $15,000, $30,000, or $60,000 respectively. But the amount you actually need depends on which loan program you use, your credit history, and what lenders in your area will accept.

Key Takeaways

  • Federal Housing Administration (FHA) loans often require 3.5% down, while conventional loans typically start at 3% to 5%, though some lenders require 10% or more.
  • If you put down less than 20%, you will pay mortgage insurance (an extra monthly fee) until you reach 20% equity in the home.
  • Down payment requirements vary by lender, so comparing offers from multiple banks or mortgage brokers can reveal different minimums.
  • Your credit score, income, and debt levels affect whether a lender will accept a lower down payment from you specifically.
  • Some programs for first-time buyers or lower-income households offer down payment help through grants or loans that do not have to be repaid.

FHA loans: 3.5% down is the standard minimum

An FHA loan is backed by the Federal Housing Administration, a government agency. These loans are designed for people who have less cash saved or a lower credit score. The minimum down payment is 3.5% of the purchase price. On a $300,000 home, that is $10,500.

The tradeoff is that FHA loans require mortgage insurance no matter how much you put down. You pay this insurance as part of your monthly mortgage payment, and it does not go away until you refinance into a different loan type. FHA loans also have limits on how much you can borrow — the maximum varies by county and changes yearly.

Conventional loans: 3% to 20% depending on the lender

Conventional loans are not backed by the government. They come from banks, credit unions, and mortgage companies. The down payment requirement varies widely. Some lenders will accept 3% down, others require 5%, and many want 10% or more. You will need to contact lenders directly to find out what they offer.

If you put down less than 20% on a conventional loan, you will pay private mortgage insurance (PMI) — an extra monthly fee that protects the lender if you stop paying. PMI typically costs between 0.5% and 1% of your loan amount per year, split into monthly payments. Once you own 20% of the home (called 20% equity), you can ask the lender to remove PMI, though the process varies by lender.

VA and USDA loans: 0% down for may be able to access borrowers

If you are a current or former military member, a VA loan (backed by the Department of Veterans Affairs) requires no down payment. You pay a one-time funding fee instead, which is typically 1% to 3.3% of the loan amount and can be rolled into your mortgage.

USDA loans, backed by the U.S. Department of Agriculture, also require 0% down for people buying in rural areas and meeting income limits. Like VA loans, USDA loans include an upfront may provide fee. Both programs have their own credit and income requirements, and not all lenders offer them, so you will need to search for a lender that does.

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

Even if a loan program allows 3% down, your personal finances may require more. Lenders look at your credit score, monthly debt payments, and income to decide whether to lend to you and at what terms. A lower credit score (typically below 620) may disqualify you from conventional loans entirely, pushing you toward FHA. A higher debt-to-income ratio — meaning your monthly debts are large compared to your income — may require you to put down more cash to offset the risk in the lender's eyes.

This is why two people buying the same home might face different down payment requirements. One person with a 750 credit score and low debt might get approved for 3% down, while another with a 600 score and high debt might need 10% or be steered toward FHA at 3.5%.

Down payment information programs in your area

Many states, cities, and nonprofits offer down payment help for first-time buyers or people with lower incomes. These come in two forms: grants (money you do not repay) and forgivable loans (loans that disappear if you stay in the home for a set number of years). The amount varies — some programs cover a few thousand dollars, others cover 5% to 10% of the purchase price.

To find programs in your area, start with your city or county housing authority or a nonprofit like the National Council of State Housing Agencies. Your mortgage lender may also know of local programs. These programs often have income limits and require you to take a homebuyer education course, but they can significantly reduce the cash you need upfront.

What happens if you cannot save the full down payment

If you have saved less than the minimum for any loan program, you have a few options. You can wait and save more, which delays buying but reduces your monthly mortgage payment and total interest. You can look for down payment information in your area. You can ask the seller to cover some closing costs (the fees at the end of the sale), which frees up your cash for the down payment. Or you can explore whether a co-borrower — a family member or partner — can help you reach the minimum.

Some people also use a gift from a family member. Most loan programs allow down payment gifts as long as the giver signs a letter stating it is a gift, not a loan you have to repay. The rules vary by program, so ask your lender before accepting money.

Frequently Asked Questions

What is the difference between putting 5% down and 20% down?

On a $300,000 home, 5% is $15,000 and 20% is $60,000. With 5% down on a conventional loan, you pay PMI until you reach 20% equity. With 20% down, there is no PMI. Your monthly payment is lower with 20% down because you borrowed less, and you pay less total interest over the life of the loan. The tradeoff is that you need more cash upfront.

Can I use a credit card or personal loan for my down payment?

Most lenders will not allow this. They want to see that the down payment comes from your own savings, a gift, or a down payment information program. Using borrowed money signals higher financial risk. If you have already borrowed money, lenders count that debt when deciding whether to lend to you.

Do I have to put down 20% to avoid mortgage insurance?

On conventional loans, yes — 20% is the threshold for removing PMI. On FHA loans, mortgage insurance is required regardless of how much you put down. VA and USDA loans do not require mortgage insurance at all, even with 0% down.

What if I put down more than the minimum — can I change it later?

Your down payment is set at closing and does not change. However, once you own enough of the home (usually 20% equity), you can refinance into a new loan without PMI or with better terms. Refinancing means taking out a new loan to pay off the old one, and it involves new closing costs and a new process process.

Does the down payment amount affect my interest rate?

Yes, typically. A larger down payment often qualifies you for a lower interest rate because you are borrowing less and the lender sees you as lower risk. The difference might be 0.25% to 0.5%, which adds up significantly over 30 years. Your credit score, loan type, and current market rates also affect your interest rate.