Down payment amounts vary by loan type, not by a single rule

There is no single down payment requirement for buying a house. The amount you need depends on which type of loan you get, what the lender's rules are, and sometimes what the seller will accept. A conventional loan from a bank might require 3% to 20% of the home's price. A Federal Housing Administration (FHA) loan typically requires 3.5%. A Veterans Affairs (VA) loan often requires 0%. A USDA loan for rural properties can also require 0%.

The down payment is the cash you bring to closing. The rest of the home's price is borrowed through the mortgage. A larger down payment means a smaller loan, lower monthly payments, and usually a lower interest rate. A smaller down payment means you borrow more, pay more interest over time, and may have to pay an extra fee called mortgage insurance if you put down less than 20%.

Your credit score, income, debt, and savings all affect what lenders will actually offer you, even if a loan type theoretically allows a lower down payment. A lender might require 10% down from one buyer and 5% from another, depending on their financial profile.

Key Takeaways

  • Conventional loans typically require 3% to 20% down, FHA loans require 3.5%, VA loans often require 0%, and USDA loans can require 0% for rural properties.
  • Putting down less than 20% on a conventional loan means paying mortgage insurance, which adds to your monthly payment and total cost.
  • Your credit score, income, and existing debt affect what down payment percentage a lender will actually offer you, even within the same loan type.
  • The down payment is paid at closing and covers part of the home's purchase price; the rest is borrowed through your mortgage.

Conventional loans: the most common path

A conventional loan is a mortgage not backed by a government agency. Most conventional loans require a down payment between 3% and 20% of the home's purchase price. A lender might offer you 3% down if your credit score is strong and your debt-to-income ratio is low. The same lender might require 10% or 15% down if your credit is fair or your income is tight relative to your debts.

If you put down less than 20% on a conventional loan, you will pay private mortgage insurance (PMI). This is an insurance policy that protects the lender if you stop paying. PMI typically costs 0.5% to 1.5% of your loan amount per year, added to your monthly payment. It stays on your loan until you have paid down the balance to 80% of the home's original value, or until you refinance.

Example: You buy a $300,000 home with 5% down ($15,000). You borrow $285,000. PMI might cost $1,425 to $4,275 per year, or roughly $120 to $360 per month, depending on the lender and your credit score. That PMI payment ends once you owe $240,000 or less on the loan.

FHA loans: lower down payment, mortgage insurance that stays

An FHA loan is backed by the Federal Housing Administration and is designed for buyers with lower credit scores or smaller down payments. FHA loans require a minimum 3.5% down payment. You can have a credit score as low as 580 and still be considered. Some lenders will work with scores in the 500s, though the terms will be less favorable.

FHA loans require mortgage insurance premiums (MIP), which work differently than PMI on conventional loans. You pay an upfront MIP at closing (usually 1.75% of the loan amount) and an annual MIP added to your monthly payment (usually 0.55% to 0.8% of the loan amount per year). Unlike PMI, FHA mortgage insurance does not automatically fall off. It stays for the life of the loan if you put down less than 10%, or for at least 11 years if you put down 10% or more.

FHA loans are useful if your credit is not yet strong enough for a conventional loan or if you do not have 10% to 20% saved. The trade-off is that you will pay mortgage insurance for longer and possibly at a higher total cost than a conventional loan with PMI.

VA loans: no down payment for may be able to access veterans

A VA loan is available to active-duty service members, veterans, and some surviving spouses. VA loans typically require 0% down. You do not need a down payment at all. You also do not pay PMI or mortgage insurance of any kind.

Instead, you pay a VA funding fee at closing, which is a one-time charge that protects the VA's may provide on the loan. The funding fee is usually 2.3% of the loan amount for first-time users with no down payment, though it varies based on your military status and whether you have used a VA loan before. You can roll this fee into your loan, meaning you do not have to pay it in cash at closing.

To use a VA loan, you need a Certificate of may be able to access (COE), which you can request through the VA website or through your lender. VA loans have no credit score minimum, though most lenders require a score of at least 580 to 620. If you are may be able to access, a VA loan is often the cheapest option because there is no down payment and no ongoing mortgage insurance.

USDA loans: zero down for rural and some suburban areas

A USDA loan is backed by the U.S. Department of Agriculture and is for buyers in rural areas and some suburban communities. USDA loans require 0% down. Like VA loans, they do not require PMI or mortgage insurance.

Instead, you pay a USDA may provide fee, which is typically 2% of the loan amount at closing. You can roll this into your loan as well. USDA loans have income limits that vary by county and family size, and the property must be in an area the USDA designates as rural or may be able to access. You can check whether a specific address qualifies on the USDA website.

USDA loans are useful if you are buying outside a major city and your income is moderate. The zero down payment and no mortgage insurance make them competitive with VA loans for those who may have access to.

What affects the down payment a lender will actually offer you

Even if a loan type allows a 3% down payment, a lender might require 10% or 15% based on your financial situation. Lenders look at your credit score, debt-to-income ratio, employment history, savings, and the home's condition and location.

A strong credit score (usually 740 or higher) and a low debt-to-income ratio (usually 43% or lower) make lenders more comfortable with smaller down payments. A lower credit score or higher debt load pushes lenders toward requiring more cash down. If you have a large emergency fund or significant assets, lenders may also be more flexible.

The home itself matters too. If the home is in a desirable area, in good condition, and priced fairly relative to comparable homes, a lender is more likely to accept a smaller down payment. If the home is in poor condition, in a declining area, or priced high relative to similar homes, the lender may require more down to protect themselves.

How to figure out what you can afford to put down

Start by calculating how much you have saved for a down payment and closing costs. Closing costs typically run 2% to 5% of the home's purchase price and include appraisal fees, title insurance, attorney fees, and other charges. You need cash for both the down payment and closing costs.

Next, talk to a lender before you start house hunting. A lender can tell you what down payment percentage they will offer based on your credit, income, and debts. This is called a pre-qualification or pre-approval. Pre-approval is more thorough and involves a credit check; pre-qualification is a rough estimate. Either one tells you what you are working with.

Then decide: do you want to put down the minimum to preserve cash, or put down more to lower your monthly payment and avoid or reduce mortgage insurance? A larger down payment costs you more upfront but saves money over time. A smaller down payment keeps more cash in your pocket now but costs more in interest and insurance over the life of the loan.

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, and some allow gifts from close friends or employers. The gift giver usually has to sign a letter stating it is a gift, not a loan. Some lenders require the gift to cover only part of the down payment; you still have to contribute some of your own money. Borrowed money from a bank or credit card does not count as a gift and will disqualify you.

What happens if I put down less than 3%?

Most conventional loans require at least 3% down. Some lenders offer 1% or 2% down programs, but they are rare and come with higher interest rates and mortgage insurance costs. FHA loans allow 3.5% as the minimum. If you have less than 3% saved, a VA or USDA loan (if you may have access to) is your best option because they require 0% down.

Can I increase my down payment after I make an offer?

Yes. If you save more money between making an offer and closing, you can ask your lender to increase the down payment. This lowers your loan amount and monthly payment. Tell your lender as soon as you know you have the extra cash so they can adjust your loan documents before closing.

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

Usually, but not always. A larger down payment shows the lender you are less risky, which often results in a lower rate. However, your credit score, the loan type, and current market rates matter more. A buyer with a 750 credit score and 5% down might get a better rate than a buyer with a 650 score and 20% down. Always compare rate quotes from multiple lenders.

What if I want to put down 0% but do not may have access to for VA or USDA?

An FHA loan with 3.5% down is your next option. If you cannot save 3.5%, some lenders offer down payment information programs through nonprofits or state housing agencies. These programs vary by location and income level. Your local housing authority or a housing counselor can tell you what programs exist in your area.