Down payment amounts vary by loan type, but you can buy with as little as 3% down on a conventional mortgage or 0% on a VA or USDA loan

The down payment is the cash you bring to closing. The lender finances the rest through your mortgage. How much you need depends entirely on which loan program you may have access to for — not on some universal rule. A conventional loan typically requires 3% to 20% down. An FHA loan requires 3.5% down. VA loans (for military members and veterans) require 0% down. USDA loans (for rural properties) also require 0% down. The lower your down payment, the higher your monthly payment and the more interest you pay over the life of the loan, because you're borrowing more.

Your down payment also affects whether you pay private mortgage insurance (PMI). If you put down less than 20% on a conventional loan, the lender requires PMI — an extra monthly fee that protects them if you default. On an FHA loan, mortgage insurance is built in regardless of your down payment size. Understanding this trade-off matters: a smaller down payment gets you into a home faster, but costs more per month.

Key Takeaways

  • Conventional loans typically require 3% to 20% down, while FHA loans require 3.5%, and VA or USDA loans require 0% down.
  • Putting down less than 20% on a conventional loan triggers PMI, which adds to your monthly payment until you reach 20% equity.
  • Your down payment size directly affects your monthly mortgage payment — a smaller down payment means a larger loan and higher payments.
  • Down payment funds must come from your own savings, a gift from a family member, or a down payment assistance program; you cannot borrow them.
  • The amount you can afford to put down depends on your savings, your monthly budget, and how soon you want to buy.

Down payment requirements by loan type

Conventional loans are mortgages not backed by a government agency. Lenders set their own rules, but most require 3% to 5% down for first-time buyers and 5% to 20% for others. Some lenders offer 3% down programs specifically for first-time buyers. The lower your down payment, the higher your interest rate may be, because the lender sees you as higher risk.

FHA loans are backed by the Federal Housing Administration and are designed for buyers with lower credit scores or smaller down payments. FHA requires 3.5% down. You must also pay an upfront mortgage insurance premium (1.75% of the loan amount, rolled into your mortgage) plus annual mortgage insurance premiums added to your monthly payment. FHA mortgage insurance does not go away — you pay it for the life of the loan if you put down less than 10%.

VA loans are available to military members, veterans, and surviving spouses. They require 0% down and no PMI. You do pay a one-time VA funding fee (typically 2.3% of the loan amount for first-time users, lower for subsequent loans), which can be rolled into the mortgage. VA loans often have lower interest rates than conventional loans.

USDA loans are for rural properties and are available to borrowers with moderate income. They require 0% down and no PMI. You pay a may provide fee (1% of the loan amount upfront, plus 0.35% annually), both rolled into the mortgage. USDA loans have income limits and property location restrictions.

What happens to your monthly payment when you put down less

The down payment directly changes your loan amount. If a house costs $300,000 and you put down $9,000 (3%), you borrow $291,000. If you put down $60,000 (20%), you borrow $240,000. The larger the loan, the larger your monthly principal and interest payment. On a 30-year mortgage at 7% interest, the difference between borrowing $240,000 and $291,000 is roughly $350 per month in principal and interest alone.

If you put down less than 20% on a conventional loan, you also pay PMI. PMI typically costs 0.5% to 1.5% of the loan amount per year, divided into your monthly payment. On a $291,000 loan, PMI might add $120 to $360 per month. PMI stays on your loan until you reach 20% equity (either through payments or home appreciation), then you can request it be removed.

The trade-off is real: a smaller down payment lets you buy sooner with less cash upfront, but your monthly payment is higher. A larger down payment reduces your monthly payment and eliminates PMI, but requires more savings before you can close.

Where down payment money can come from

Your down payment must come from funds you actually own. Lenders verify this by asking for bank statements, investment account statements, or gift letters. You cannot borrow the down payment from another lender — that would be a second loan, and most mortgage lenders prohibit it.

Your savings is the most straightforward source. Lenders typically want to see the money in your account for at least 60 days before closing, to prove it is not borrowed.

A gift from a family member is allowed on most loans. The giver must sign a gift letter stating the money is a gift, not a loan, and does not need to be repaid. The gift can cover part or all of your down payment. Some loan programs limit how much of your down payment can be a gift.

Down payment assistance programs exist in many states and cities. These are grants or forgivable loans that help with down payment and closing costs. They are usually income-based and may require you to take a homebuyer education course. Your real estate agent or local housing authority can point you toward programs in your area.

Retirement account withdrawals are possible in limited cases. First-time homebuyers can withdraw up to $35,000 from a Roth IRA without penalty. Traditional IRA withdrawals trigger taxes and penalties. 401(k) loans are possible but tie you to your employer. These options have serious long-term costs and should be a last resort.

How to decide what down payment makes sense for you

Start by calculating what you can afford to save without draining your emergency fund. Most financial advisors recommend keeping three to six months of expenses in savings separate from your down payment. If you have high-interest debt (credit cards, personal loans), paying that down before saving aggressively for a down payment often makes more financial sense.

Next, run the numbers on different down payment amounts. Use a mortgage calculator to see how your monthly payment changes at 3%, 5%, 10%, and 20% down. Factor in PMI if you're looking at conventional loans under 20%. Compare the monthly payment to your actual budget — can you afford it comfortably, or would a larger down payment and lower payment be worth the wait?

Consider your timeline. If you need to buy within six months, a 3% down payment may be your only option. If you can wait two years, saving toward 10% or 15% down might lower your monthly payment enough to justify the wait. There is no universally correct answer — it depends on your savings rate, your income, and your life circumstances.

Also think about the loan program that fits you. If you may have access to for a VA or USDA loan, 0% down eliminates the down payment question entirely. If you're a first-time buyer with modest savings, an FHA loan at 3.5% down might be more realistic than waiting to save 20% for a conventional loan.

Closing costs are separate from your down payment

Your down payment is not the only cash you need at closing. Closing costs typically run 2% to 5% of the loan amount and cover the lender's fees, title insurance, appraisal, inspection, and other services. On a $300,000 home with a $291,000 loan, closing costs might be $5,800 to $14,500.

Some of these costs can be rolled into your mortgage (increasing your loan amount), but lenders limit how much. Some can be negotiated or paid by the seller. Many down payment assistance programs also cover closing costs, which is why they are worth investigating.

Budget for closing costs separately from your down payment. If you're planning to put down 3% and have no other savings, you may not have enough left for closing costs. This is a common reason buyers get stuck or have to delay closing.

Frequently Asked Questions

Can I borrow my down payment from someone other than a family member?

No. Mortgage lenders prohibit borrowed down payments because they increase your debt-to-income ratio and your risk of default. A gift from a family member is allowed and does not count as debt, but a loan from a friend, employer, or credit card does. If you borrow it, you must disclose it to your lender, and most will deny your application.

What if I don't have 3% saved yet?

Look into down payment assistance programs in your state or city — many cover 3% to 5% of the purchase price as a grant or forgivable loan. Your local housing authority or a nonprofit housing counselor can tell you what programs exist and whether you meet the income requirements. Some programs require a homebuyer education course, which takes a few hours.

Does putting down more than 20% save me money?

Putting down exactly 20% eliminates PMI on a conventional loan, so there is no additional benefit to putting down 25% or 30% from an insurance standpoint. However, a larger down payment does lower your monthly payment and the total interest you pay over 30 years. The trade-off is whether that monthly savings is worth tying up more cash now instead of investing it elsewhere.

If I put down 3%, how long until I can remove PMI?

PMI stays on your loan until you reach 20% equity. On a $300,000 home with a $9,000 down payment, you start with 3% equity. Reaching 20% equity takes years of payments plus any home appreciation. You can request PMI removal once you hit 20% equity, but the lender may require a new appraisal to confirm the home's value. Some loans allow automatic removal at 22% equity.

Are there down payment requirements I should know about before I start house hunting?

Yes. Know which loan programs you likely may have access to for (conventional, FHA, VA, USDA) before you make an offer, because each has different down payment rules and costs. Get pre-approved by a lender so you know your actual budget and down payment options. This prevents you from falling in love with a house you cannot afford or finding out too late that you don't have enough for closing costs.