The down payment amount depends on the loan type and your lender, not a fixed rule

There is no single answer because different loan programs accept different down payment amounts. A conventional loan (the most common type from a bank or mortgage company) often requires 3% to 20% of the home's purchase price. A Federal Housing Administration (FHA) loan typically accepts 3.5%. A Veterans Affairs (VA) loan for military members and veterans may require 0% down. A USDA loan for rural properties also may require 0% down.

The percentage you pay depends on which loan program you use, your credit history, your income, and what your lender will accept. A lower down payment means you borrow more money and pay more interest over time. A higher down payment means you borrow less and pay less interest, but you need more cash upfront.

The best way to know what you personally need is to talk to a lender before you start house hunting. They will tell you what down payment amount they will accept based on your situation.

Key Takeaways

  • Conventional loans typically require 3% to 20% down, while FHA loans often accept 3.5%, and VA or USDA loans may accept 0% down.
  • Your credit score, income, and the lender you choose all affect what down payment percentage they will accept.
  • A smaller down payment means a larger loan and more interest paid over time; a larger down payment means less interest but more cash needed now.
  • Talking to a lender before house hunting tells you exactly what down payment amount works for your finances.
  • Down payment is separate from closing costs, which are additional fees due at the time you close the loan.

How down payment percentage changes by loan type

Conventional loans are mortgages from banks, credit unions, or mortgage companies that are not backed by a government agency. Most conventional lenders want 3% to 20% down, though some will go lower or higher. The exact amount depends on your credit score and how much debt you already carry. If you put down less than 20%, you will pay an extra monthly fee called private mortgage insurance (PMI) until you have paid down the loan enough.

FHA loans are backed by the Federal Housing Administration and are designed for people with lower credit scores or smaller savings. Most FHA lenders accept 3.5% down. You will pay mortgage insurance on an FHA loan no matter how much you put down, and that insurance stays for the life of the loan (or until you refinance).

VA loans are for active-duty military members, veterans, and some surviving spouses. The Department of Veterans Affairs guarantees the loan, which means many VA lenders will accept 0% down. You do not pay PMI on a VA loan, though you may pay a one-time funding fee.

USDA loans are for people buying in rural areas and meet income limits. The U.S. Department of Agriculture backs these loans, and many USDA lenders accept 0% down. Like VA loans, you do not pay PMI, though you will pay an upfront may provide fee and an annual fee.

What affects the down payment amount a lender will accept

Your credit score is the first thing a lender checks. A higher credit score (usually 620 or above for conventional loans, 580 or above for FHA) makes lenders more willing to accept a smaller down payment. A lower credit score may require you to put down more money to reduce the lender's risk.

Your debt-to-income ratio is the percentage of your monthly income that goes to debt payments. Lenders calculate this by adding up all your monthly debt (car loans, credit cards, student loans, the new mortgage payment) and dividing by your gross monthly income. Most lenders want this ratio to be 43% or lower, though some go to 50%. If your ratio is too high, you may need to put down more money or pay off other debts first.

Your savings history matters to some lenders. If you have been saving steadily for months, a lender sees you as more reliable than someone who suddenly has a large deposit. Some lenders also want to see that you have savings left over after the down payment and closing costs, in case you need to make repairs.

The type of property affects down payment rules too. A single-family home usually has the most flexible down payment options. A condo, townhouse, or multi-unit property may require a higher down payment from some lenders.

Down payment versus closing costs

Down payment and closing costs are two separate amounts of money. The down payment is the percentage of the home price you pay upfront to reduce the loan amount. Closing costs are fees paid to the lender, title company, appraiser, inspector, and other parties involved in the sale. Closing costs typically range from 2% to 5% of the home price, though this varies by location and lender.

If you are buying a $200,000 home with 5% down, your down payment is $10,000. Your closing costs might be another $4,000 to $10,000. You need to save for both. Some lenders allow you to roll closing costs into the loan, but that means you pay interest on those costs over 15 or 30 years.

How to figure out your target down payment amount

Start by deciding what price range of homes you want to look at. Then multiply that price by the down payment percentage you are considering. For example, if you want to buy a $250,000 home and put down 5%, you need $12,500. If you put down 10%, you need $25,000.

Next, add closing costs. Use 3% of the home price as a rough estimate. For a $250,000 home, that is $7,500. So for 5% down plus closing costs, you would need roughly $20,000 saved.

Then talk to a lender. Tell them the home price you are targeting, how much you have saved, and your credit score. They will tell you what down payment percentage they will accept and what your monthly payment would be. This conversation takes 15 to 30 minutes and costs nothing. Many lenders offer this as a free pre-qualification call.

Down payment information programs in your area

If saving a large down payment feels out of reach, some cities, counties, and nonprofits offer down payment help. These programs may give you a grant (money you do not repay), a loan at low interest, or a combination. The amount and rules vary widely by location.

To find programs near you, start with your city or county housing authority website. You can also call 211 (a free helpline in most areas) and ask about down payment help. Some employers, unions, and religious organizations also offer down payment programs for their members.

Be aware that down payment help programs often have income limits, credit score minimums, and rules about the type of home you can buy. Some require you to take a homebuying class first. Ask what the requirements are before you count on the money.

Frequently Asked Questions

Can I borrow money from family for my down payment?

Most lenders allow it, but they want to see proof that the money is a gift, not a loan you have to repay. Your family member usually needs to sign a gift letter stating the money is a gift with no repayment expected. Some lenders also want to see the money in your bank account for 30 to 60 days before you close, to prove it is really yours.

What if I do not have enough saved yet?

You have several options: keep saving, look for a loan program with a lower down payment requirement (like FHA at 3.5%), explore down payment help programs in your area, or wait until your credit score improves so lenders will accept a smaller down payment. Talking to a lender first tells you which path makes sense for your situation.

Does a bigger down payment always mean a better deal?

A bigger down payment lowers your monthly payment and the total interest you pay over time. But it also means less money in your savings for emergencies or home repairs. The right down payment amount balances what you can afford now with what you can afford to borrow.

Can I use my retirement account for a down payment?

Some retirement accounts allow withdrawals for a first-time home purchase, but you may owe taxes and penalties. Talk to your account holder and a tax professional before withdrawing. In many cases, it costs less to borrow the money or wait until you have saved more.