How Much Down Payment You Actually Need to Buy a House

Down payment amounts depend on your loan type, not a fixed rule

There is no single down payment amount required to buy a house. What you need depends on which type of mortgage you get, your credit score, your debt-to-income ratio, and the lender you choose. A conventional loan might require 3 to 20 percent of the home's purchase price, while an FHA loan can go as low as 3.5 percent. VA loans and USDA loans may require zero down in some cases. The lender sets the minimum; you decide whether to put down more.

The purchase price of the home determines the dollar amount. On a $300,000 house, a 5 percent down payment is $15,000. On a $500,000 house, the same 5 percent is $25,000. Lenders calculate this as a percentage, so the actual money you need scales with the price of the home you choose.

Key Takeaways

• Conventional loans typically require 3 to 20 percent down, but the exact minimum depends on your credit score and the lender's rules.
• FHA loans allow down payments as low as 3.5 percent, making them an option for buyers with less cash saved.
• VA and USDA loans may require zero down payment if you meet the program's other requirements.
• Putting down less than 20 percent usually means paying mortgage insurance, which adds to your monthly payment.
• Your down payment is only one cost; you also need money for closing costs, inspections, and appraisals before you close.

Conventional loans and the 20 percent benchmark

The 20 percent figure is traditional but not required. Lenders offer conventional loans with down payments as low as 3 percent, though most require a credit score of at least 620 and some prefer 640 or higher. The lower your down payment, the stricter the lender's other requirements usually are. A 3 percent down payment on a $300,000 home is $9,000. A 10 percent down payment on the same home is $30,000.

When you put down less than 20 percent on a conventional loan, you pay private mortgage insurance (PMI). This is an extra monthly charge 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 mortgage payment. You can remove PMI once you build enough equity in the home, usually when you have paid down the loan to 80 percent of the original purchase price.

FHA loans for lower down payments

An FHA loan is backed by the Federal Housing Administration and allows down payments as low as 3.5 percent. On a $300,000 home, that is $10,500. FHA loans are available to first-time buyers and repeat buyers, though you must meet income and credit requirements set by your lender. Most FHA lenders require a credit score of at least 580 to may have access to for the 3.5 percent down payment; some require 640 or higher.

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 percent of the loan amount, and then an annual MIP added to your monthly payment. Unlike PMI, FHA mortgage insurance does not automatically disappear. You pay it for the life of the loan if you put down less than 10 percent, or for at least 11 years if you put down 10 percent or more.

VA and USDA loans with zero down

If you are a veteran, active-duty service member, or surviving spouse, a VA loan may allow you to buy a home with zero down payment. VA loans are may provide by the Department of Veterans Affairs and do not require PMI. You pay a one-time funding fee instead, usually 2.3 percent of the loan amount for first-time users, though some borrowers are exempt. On a $300,000 home, that fee is $6,900, added to your loan balance.

A USDA loan is for rural and some suburban properties and also allows zero down payment if you meet income limits and the property qualifies. USDA loans require an upfront may provide fee of 1 percent of the loan amount and an annual fee of 0.35 percent, both added to your monthly payment. USDA loans do not require PMI. may be able to access depends on your income relative to the area's median income and the property's location.

Closing costs and other money you need at the table

Your down payment is separate from closing costs, which are fees paid at the end of the home purchase. Closing costs typically range from 2 to 5 percent of the home's purchase price and include the lender's origination fee, title insurance, appraisal, inspection, property taxes, homeowners insurance, and attorney fees. On a $300,000 home, closing costs might be $6,000 to $15,000. Some lenders allow you to roll closing costs into your loan; others require you to pay them upfront.

Before closing, you also pay for the home inspection and appraisal out of pocket, usually $300 to $500 each. Some lenders require these before they commit to the loan. Budget for these costs separately from your down payment and closing costs.

How your credit score and debt affect the down payment you need

Lenders use your credit score to decide the minimum down payment they will accept. A score of 740 or higher often qualifies you for the lowest down payment options and the best interest rates. A score between 620 and 680 may require a higher down payment, sometimes 10 to 15 percent, even on a conventional loan. A score below 620 may disqualify you from conventional loans entirely, leaving FHA as your option.

Your debt-to-income ratio also matters. This is the total of your monthly debt payments divided by your gross monthly income. Lenders typically want this ratio to be 43 percent or lower. If you have high student loans, car payments, or credit card balances, a larger down payment can help offset a higher debt-to-income ratio and make you more attractive to lenders.

Strategies for saving or reducing your down payment

If you do not have 20 percent saved, you have options. Putting down 3 to 10 percent and paying PMI or MIP is often faster than waiting years to save more. Calculate the total cost of PMI over time and compare it to how long it would take to save the extra money. Sometimes paying insurance is the better financial choice.

Some employers, nonprofits, and government programs offer down payment assistance. These are grants or forgivable loans that do not have to be repaid. Availability varies by location and employer. Ask your lender whether they work with any assistance programs, or contact your local housing authority to learn what programs exist in your area.

Family gifts are another source. Many lenders allow down payment gifts from relatives, though you must document that the money is a gift and not a loan. The lender will ask for a gift letter signed by the person giving the money.

Frequently Asked Questions

Can I buy a house with no money down?

Yes, if you may have access to for a VA loan or USDA loan. VA loans are for veterans and active-duty service members. USDA loans are for rural and some suburban properties and have income limits. Both require you to pay a funding fee or may provide fee instead of a down payment. Conventional and FHA loans require at least 3 to 3.5 percent down.

What happens if I put down less than 20 percent?

You pay mortgage insurance—either PMI on a conventional loan or MIP on an FHA loan. This adds $100 to $300 or more to your monthly payment, depending on your loan amount and the insurance rate. You can remove PMI once you reach 80 percent equity in the home, but FHA mortgage insurance may last the life of the loan.

Do I have to pay closing costs in addition to my down payment?

Yes, closing costs are separate from your down payment. They typically run 2 to 5 percent of the purchase price. Some lenders allow you to roll them into your loan; others require you to pay them at closing. Ask your lender upfront what closing costs will be and whether you can finance them.

Can my family give me money for a down payment?

Yes. Most lenders allow down payment gifts from family members, but you must provide a gift letter stating the money does not have to be repaid. The lender will ask to see the gift letter and proof that the money came from the family member's account into yours.

How do I know what down payment I can afford?

Calculate what your monthly payment would be at different down payment amounts, including the mortgage payment, property taxes, homeowners insurance, and PMI or MIP if applicable. Make sure the total does not exceed 28 percent of your gross monthly income. Use a mortgage calculator to see how different down payments affect your monthly cost.