Minimum down payments range from 0% to 20%, depending on the loan type and your financial situation
The smallest down payment you can make is 0% on a VA loan (if you are a may have access to veteran) or USDA loan (if you are buying in a rural area). The next lowest is 3% on a conventional loan or 3.5% on an FHA loan. The 20% figure you hear often is not a minimum—it is the threshold where you stop paying mortgage insurance, which costs extra each month. Most first-time buyers put down 5% to 10%.
What you actually need depends on three things: the loan program you use, your credit score, and whether you have cash reserves. A lender will not approve you at 3% down if your credit is below 620, for example. And some lenders require you to show savings equal to two months of mortgage payments before they will close the loan. The minimum is not the same as what you can actually get.
Key Takeaways
- VA loans and USDA loans require 0% down; FHA loans require 3.5%; conventional loans require 3% to 5% depending on credit score and lender.
- Putting down less than 20% means you pay private mortgage insurance (PMI) or mortgage insurance premium (MIP) each month until you reach 20% equity.
- Your credit score, debt-to-income ratio, and cash reserves all affect whether a lender will approve you at the minimum down payment.
- The minimum down payment is not the same as the lowest payment you can afford—lenders also look at your total monthly obligations and savings.
How down payment minimums differ by loan type
Conventional loans (not backed by a government agency) typically require 3% to 5% down. The exact minimum depends on your credit score and the lender. If your score is 740 or higher, most lenders will accept 3%. If it is between 680 and 739, you may need 5% or 10%. Below 680, conventional loans become harder to find.
FHA loans (backed by the Federal Housing Administration) require 3.5% down if your credit score is 580 or higher. If your score is between 500 and 579, some lenders will go to 10% down, but options shrink. FHA loans are common for first-time buyers with lower credit scores or smaller savings.
VA loans (for active-duty service members, veterans, and some surviving spouses) require 0% down. You do not pay mortgage insurance. This is the only loan type with no down payment requirement.
USDA loans (for rural and some suburban properties) also require 0% down if you meet income limits. Like VA loans, they do not require mortgage insurance, though they do charge a may provide fee built into the loan.
What mortgage insurance costs when you put down less than 20%
If you put down less than 20%, you pay either private mortgage insurance (PMI) on conventional loans or mortgage insurance premium (MIP) on FHA loans. This is not optional—it is required by the lender to protect themselves if you default.
PMI on a conventional loan typically costs 0.5% to 1.5% of the loan amount per year, paid monthly. On a $300,000 loan with 5% down, PMI might run $125 to $375 per month. You can remove PMI once you reach 20% equity in the home, either by paying down the loan or by the home appreciating in value.
MIP on an FHA loan is higher and stickier. You pay an upfront mortgage insurance premium (1.75% of the loan amount, rolled into the loan) plus annual MIP (0.55% to 0.8% of the loan amount per year). If you put down less than 10%, you pay MIP for the life of the loan—you cannot remove it even after reaching 20% equity. If you put down 10% or more, MIP drops off after 11 years.
How lenders decide if you can actually put down the minimum
A lender will not approve you at 3% down just because the program allows it. They look at your debt-to-income ratio (DTI)—the percentage of your gross monthly income that goes to debt payments. Most lenders want your DTI at 43% or lower. If you already have car loans, student loans, or credit card payments, a low down payment can push your DTI over that limit because your mortgage payment will be higher.
Lenders also check your cash reserves—savings left over after closing. Some require you to have two months of mortgage payments in the bank. Others require three or six months, especially if you are putting down less than 10%. If you have no savings after closing, some lenders will deny you even if your income and credit are strong.
Your credit score sets the floor. Below 580, you cannot get an FHA loan. Below 620, conventional loans are nearly impossible. Between 620 and 680, you may need 10% down instead of 3%. Above 740, you have the most options and the lowest rates.
Down payment amounts for different price ranges
| Home Price | 3% Down | 5% Down | 10% Down | 20% Down |
|---|---|---|---|---|
| $200,000 | $6,000 | $10,000 | $20,000 | $40,000 |
| $300,000 | $9,000 | $15,000 | $30,000 | $60,000 |
| $400,000 | $12,000 | $20,000 | $40,000 | $80,000 |
| $500,000 | $15,000 | $25,000 | $50,000 | $100,000 |
These are the down payment amounts only. They do not include closing costs, which typically run 2% to 5% of the home price and are due at closing. You may be able to roll some closing costs into the loan, but lenders have limits on how much you can finance.
Ways to lower the down payment you need to save
If you cannot reach 3% or 5% right now, a few paths exist. Down payment information programs run by nonprofits, state housing agencies, and some employers offer grants or forgivable loans that count toward your down payment. These are not loans you repay—they are money given to you. Availability and amounts vary by state and income level. Your lender can point you toward programs in your area, or you can search your state housing finance agency's website.
Gifts from family count as down payment money on most loans. The lender will ask you to sign a letter stating the money is a gift, not a loan you have to repay. You cannot borrow the down payment from someone else—that would increase your debt and likely disqualify you.
Improving your credit score before you explore can lower the down payment requirement. A 60-point increase from 680 to 740 can drop your required down payment from 10% to 3% on a conventional loan. This takes time but saves thousands in down payment cash and mortgage insurance.
Frequently Asked Questions
Can I borrow my down payment from a friend or family member?
No. If the money is a loan you have to repay, the lender will count it as debt and your debt-to-income ratio will be too high. If it is a gift, you can use it, but you must sign a gift letter stating you do not have to repay it. The lender will verify the money came from the person who signed the letter.
What happens if I put down 0% on a VA or USDA loan and the home value drops?
You owe more than the home is worth, called being underwater. You cannot remove the loan or walk away without consequences. But VA and USDA loans do not require mortgage insurance, so your monthly payment is lower than it would be on a conventional loan with PMI, which offsets some of the risk.
Can I remove PMI before I reach 20% equity?
On a conventional loan, yes—once you reach 20% equity through payments or home appreciation, you can request PMI removal. On an FHA loan, it depends. If you put down 10% or more, MIP drops after 11 years. If you put down less than 10%, you pay MIP for the life of the loan.
Do I have to put down 20% to avoid mortgage insurance?
On a conventional loan, yes—20% is the threshold where PMI stops. On an FHA loan, you cannot avoid MIP if you put down less than 10%. On VA and USDA loans, there is no mortgage insurance at any down payment level.
What if my credit score is below 620?
Conventional loans are not available. FHA loans require a score of at least 580, and some lenders go lower with manual underwriting. If your score is below 580, you may need to wait and build credit before you can borrow. Some credit unions and community banks have lower minimums than national lenders.