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

There is no single minimum down payment for every house purchase. What you need to put down depends on which loan program you use — a conventional mortgage, an FHA loan, a VA loan, or a USDA loan all have different requirements. A conventional loan typically requires 3 to 5 percent down. An FHA loan requires 3.5 percent. A VA loan requires zero percent if you have military service. A USDA loan also requires zero percent if you buy in a may have access to rural area.

The lender you choose matters too. Some conventional lenders will go as low as 3 percent down; others require 5 or more. The interest rate you receive often depends on how much you put down — a smaller down payment usually means a higher rate, because the lender takes on more risk.

Your credit score, income, and debt also affect what down payment a lender will accept. A person with a 750 credit score and stable income may may have access to for 3 percent down on a conventional loan. Someone with a 620 score may need 10 percent, or may not may have access to at all.

Key Takeaways

  • Conventional loans typically require 3 to 5 percent down, but the exact minimum varies by lender and your financial profile.
  • FHA loans require 3.5 percent down and are designed for borrowers with lower credit scores or smaller savings.
  • VA loans (for military members and veterans) and USDA loans (for rural properties) both allow zero percent down.
  • A smaller down payment usually means a higher interest rate and the addition of mortgage insurance, which increases your monthly payment.
  • Your credit score, income, and existing debt determine whether a lender will accept you at the minimum down payment or require more.

How down payment minimums work with conventional loans

A conventional loan is a mortgage not backed by a government agency. Most conventional loans require between 3 and 5 percent down, but the exact minimum depends on the lender and your financial situation. Some lenders advertise 3 percent down programs; others start at 5 percent.

When you put down less than 20 percent on a conventional loan, the lender requires you to carry 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 percent of your loan amount per year, added to your monthly payment. On a $300,000 loan with 3 percent down, PMI might add $150 to $300 per month.

You can remove PMI once you have paid down the loan to 80 percent of the home's original purchase price, or once the home appreciates enough that you own 20 percent equity. This usually takes 5 to 10 years, depending on your payment schedule and local home values.

FHA loans and the 3.5 percent minimum

An FHA loan is backed by the Federal Housing Administration and is designed for borrowers who have lower credit scores or smaller savings. The minimum down payment is 3.5 percent. You can use an FHA loan to buy a single-family home, a condo, or a townhouse.

FHA loans require two types of insurance. Upfront mortgage insurance (UFMIP) is a one-time fee of 1.75 percent of the loan amount, usually rolled into your loan. Annual mortgage insurance (MIP) is paid monthly and typically costs 0.55 to 0.8 percent of the loan amount per year. Unlike PMI on conventional loans, FHA mortgage insurance does not automatically drop off — you pay it for the life of the loan if you put down less than 10 percent.

FHA loans accept credit scores as low as 580 (some lenders go lower). If your score is between 580 and 619, you may still may have access to but with a higher interest rate. The program also allows you to use gift funds from family members to cover the down payment, which conventional loans sometimes restrict.

VA loans and USDA loans with zero down

A VA loan is available to active-duty service members, veterans, and surviving spouses. The minimum down payment is zero percent. You do not need to carry mortgage insurance. Instead, you pay a one-time VA funding fee — typically 2.3 percent of the loan amount for first-time users, though this can be rolled into the loan. The fee is waived if you receive disability compensation from the VA.

A USDA loan is available if you buy a home in a may have access to rural area (the USDA website has a property lookup tool). The minimum down payment is zero percent. You do not need mortgage insurance, but you do pay a USDA may provide fee of 2 percent upfront and an annual fee of 0.35 percent. Like the VA fee, these can be rolled into the loan amount.

Both programs have income limits and debt-to-income requirements. VA loans have no income cap, but USDA loans limit your household income based on the county where you buy. Both programs are slower to process than conventional loans — expect 45 to 60 days from process to closing.

What happens when you put down less than 20 percent

Putting down less than 20 percent on a conventional loan triggers mortgage insurance, which increases your monthly payment. On a $300,000 home with 5 percent down ($15,000), you borrow $285,000. PMI might add $150 to $300 per month. Over 10 years, that is $18,000 to $36,000 in insurance payments.

A smaller down payment also means you start with less equity in the home. If the housing market declines and your home value drops, you could end up owing more than the home is worth — a situation called being underwater. This makes it harder to sell or refinance.

However, a smaller down payment lets you buy sooner instead of saving for years. If you are renting and paying $1,500 per month, buying with 3 percent down might cost less than waiting to save 20 percent. Run the numbers for your situation: compare your current rent plus the cost of PMI against the interest rate you would receive with a larger down payment.

How your credit score and income affect the minimum

Lenders use your credit score, income, and debt-to-income ratio to decide whether to accept you at the minimum down payment or require more. A credit score above 740 and a debt-to-income ratio below 36 percent usually qualifies you for the advertised minimum. A score between 620 and 680, or a debt-to-income ratio above 43 percent, may require 10 percent down or more.

Your debt-to-income ratio is your total monthly debt payments divided by your gross monthly income. If you earn $5,000 per month and have $1,500 in existing debt payments (car loans, credit cards, student loans), your ratio is 30 percent. Most lenders accept up to 43 to 50 percent, but the lower your ratio, the lower the down payment they will accept.

If you have recent late payments, collections, or a bankruptcy, conventional lenders may require 10 to 20 percent down or decline you entirely. FHA loans are more flexible — they accept borrowers with recent credit problems, but you may still need a larger down payment or a higher interest rate.

Down payment information programs and gift funds

Some states, counties, and nonprofits offer down payment information programs that provide grants or low-interest loans to help you cover the down payment. These programs vary widely by location. Some cover up to 10 percent of the purchase price; others cover less. Many have income limits or require you to take a homebuyer education course.

You can also use gift funds from family members to cover part or all of the down payment on an FHA or VA loan. Conventional loans allow gifts too, but usually only for a portion of the down payment — you typically need to contribute at least 3 percent of your own funds. The lender will ask for a gift letter from the family member stating that the money is a gift, not a loan.

Down payment information does not reduce the amount you borrow — it reduces the amount you need to save. If a program gives you $10,000 toward a $20,000 down payment, you still need to save $10,000 yourself. The information straightforward closes the gap.

Frequently Asked Questions

Can I buy a house with no money down?

Yes, if you may have access to for a VA loan or a USDA loan. VA loans require zero down for military members and veterans. USDA loans require zero down if you buy in a may have access to rural area. Conventional and FHA loans require at least 3 to 3.5 percent down.

What is the difference between PMI and mortgage insurance on an FHA loan?

PMI (private mortgage insurance) is used on conventional loans and can be removed once you reach 20 percent equity. FHA mortgage insurance (MIP) is used on FHA loans and continues for the life of the loan if you put down less than 10 percent. FHA insurance is typically cheaper per month but lasts longer.

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

Usually, yes. A larger down payment reduces the lender's risk, so they often offer a lower rate. However, the difference may be small — sometimes only 0.25 percent. Compare loan offers at different down payment levels to see if the rate savings justify the extra cash you need to save.

Can I use a gift from a friend to cover my down payment?

Most lenders accept gifts from family members but not from friends or employers. The lender will ask for a gift letter stating the money is a gift, not a loan. Some conventional loans require you to contribute at least 3 percent of your own funds, even if someone gifts the rest.

What if I do not have enough saved for the minimum down payment?

Look into down payment information programs in your state or county — many offer grants or low-interest loans. You can also ask your employer or union if they offer down payment help. Some nonprofits and community organizations also run programs. A homebuyer education course may be required to use these funds.