Buying a house with 10% down is a routine path to homeownership, not a workaround. Conventional, FHA, and jumbo lenders all write loans at that level, and on a $400,000 home it means bringing $40,000 to closing instead of $80,000. The cost of going in with less equity is private mortgage insurance on most loans and, depending on your credit, a slightly higher rate. Whether that tradeoff is worth it comes down to the loan type you choose, how long you plan to stay, and whether you have cash left over for closing costs and reserves.
Loan Types That Accept 10% Down
Conventional loans backed by Fannie Mae and Freddie Mac allow down payments as low as 3% on a primary residence, so 10% clears the bar easily.1Fannie Mae. What You Need To Know About Down Payments For 2026, the loan amount has to stay at or below the conforming limit of $832,750 in most counties, or up to $1,249,125 in designated high-cost areas.2Federal Housing Finance Agency. FHFA Announces Conforming Loan Limit Values for 2026 At 10% down, your loan-to-value ratio is 90%, which is the figure lenders use to price your rate and your insurance.
FHA loans are the other common option. The minimum down payment is 3.5% for borrowers with credit scores of 580 or higher. Scores between 500 and 579 are capped at a 90% loan-to-value ratio, meaning 10% down is required.3U.S. Department of Housing and Urban Development. Does FHA Require a Minimum Credit Score and How Is It Determined If your credit falls in that range, 10% isn’t a choice; it’s the floor.
When the purchase price pushes the loan above the conforming limit, you move into jumbo territory. Jumbo loans are funded by private lenders who set their own rules. Many accept 10% down, though some require 15% or 20% depending on the loan size and your financial profile. Expect higher credit score requirements (often 700 or above), significant cash reserves after closing, and detailed documentation of assets.
What PMI Will Cost You With 10% Down
On a conventional loan, putting less than 20% down triggers a requirement for private mortgage insurance under the Homeowners Protection Act.4GovInfo. 12 USC 4901 – Definitions PMI protects the lender if you default, and you pay for it. Annual premiums at 10% down typically fall between 0.3% and 1.0% of the loan balance, with credit score the single biggest factor. On a $360,000 loan, that works out to roughly $90 to $300 per month on top of principal, interest, taxes, and insurance.
The law gives you two ways out. You can submit a written request to cancel PMI once your balance reaches 80% of the home’s original value, provided you have a good payment history and the property hasn’t lost value.4GovInfo. 12 USC 4901 – Definitions If you don’t request it, the lender must automatically cancel PMI when the scheduled balance reaches 78% of the original value, as long as you’re current.5National Credit Union Administration. Homeowners Protection Act PMI Cancellation Act Starting at 90% LTV, reaching the 80% request threshold takes roughly seven to ten years on a standard 30-year mortgage. Extra principal payments speed it up.
FHA Mortgage Insurance Works Differently
FHA charges two layers of insurance: an upfront premium of 1.75% of the loan amount (usually rolled into the balance) and an annual premium split across your monthly payments. For a 30-year loan at or below 90% LTV, the annual premium runs about 0.50% of the loan amount.
The rule that matters most for 10% down buyers: on an FHA loan with at least 10% down, the annual premium drops off after 11 years. Put down anything less, and FHA mortgage insurance stays for the entire life of the loan. That cutoff alone is often enough to justify choosing 10% over 3.5% on an FHA mortgage. And unlike conventional PMI, FHA insurance can’t be cancelled by request based on your balance.
The Piggyback Alternative
If PMI bothers you, the 80/10/10 piggyback structure is one way around it. Instead of a single 90% LTV loan, you take out two: a first mortgage for 80% of the home’s value and a second mortgage (usually a home equity loan or line of credit) for 10%. Your 10% cash covers the rest. Because the first mortgage sits at 80% LTV, no PMI is required.
The catch is the second mortgage. It carries a higher interest rate than the primary loan, and you have two payments to manage. The math depends on the rate spread and how long you plan to stay in the home. For buyers who expect to sell or refinance within a few years, the piggyback can beat PMI on total cost. For long-term holders, a single conventional loan with PMI that eventually drops off may come out ahead.
Credit, Income, and Debt-to-Income Requirements
A 10% down payment doesn’t help if the rest of your file doesn’t qualify. Most conventional lenders look for a credit score of at least 620, with the best pricing on both rates and PMI reserved for scores of 740 and above. FHA accepts scores down to 500, with the 10% down requirement kicking in below 580.3U.S. Department of Housing and Urban Development. Does FHA Require a Minimum Credit Score and How Is It Determined
Lenders also compare your total monthly debt obligations against gross monthly income. The federal qualified mortgage rule used to set a hard 43% cap, but the Consumer Financial Protection Bureau replaced that limit with a price-based test in 2021. A loan now qualifies as a “General QM” as long as its annual percentage rate doesn’t exceed the average prime offer rate by more than a specified margin (2.25 percentage points for most first-lien loans).6Consumer Financial Protection Bureau. Qualified Mortgage Definition Under the Truth in Lending Act Regulation Z General QM Loan Definition In practice, most lenders still use DTI as an internal guideline, and approvals get harder in the 43% to 50% range.
Documentation is thorough. Expect to produce at least two years of W-2 or 1099 income statements and 60 days of consecutive bank statements showing the source of your down payment funds. The core application is the Uniform Residential Loan Application (Fannie Mae Form 1003).7Fannie Mae. Uniform Residential Loan Application Misrepresenting information on it can trigger civil liability and federal criminal penalties, so accuracy beats optics.
Seasoning Your Down Payment
Lenders want proof that your 10% has been in your account, not freshly deposited from somewhere they can’t trace. Most require the funds to have sat in an established account for at least 60 days before application. Any large deposit during that window triggers questions, and you’ll need to document exactly where the money came from. The point is to confirm the down payment isn’t borrowed money dressed up as savings.
Using Gift Funds
You don’t necessarily have to come up with the 10% yourself. For a single-unit primary residence, Fannie Mae allows your entire down payment to come from gift funds when the LTV is above 80%.8Fannie Mae. Personal Gifts A relative could hand you the full 10% without you contributing a dollar of your own. For two-to-four-unit properties or second homes at the same LTV, you have to contribute at least 5% from your own funds before gift money fills the gap.
Acceptable donors include relatives by blood, marriage, or adoption, domestic partners, and individuals with a long-standing familial relationship. The donor cannot be the seller, builder, real estate agent, or anyone else with a financial interest in the transaction. Every gift requires a signed letter stating the amount, the donor’s relationship to you, and an explicit statement that no repayment is expected.8Fannie Mae. Personal Gifts The lender will verify the transfer through bank statements or a copy of the donor’s check. FHA follows similar rules but also permits gifts from employers, labor unions, and charitable organizations. Gift funds cannot come from a personal loan or credit card, even if the donor is the one doing the borrowing.
Closing Costs and Seller Concessions
Your down payment isn’t the only cash you need at closing. Closing costs for the appraisal, title search, recording fees, and prepaid taxes and insurance typically run 2% to 5% of the loan amount.9Fannie Mae. Closing Costs Calculator On a $400,000 purchase with 10% down, that’s roughly $7,200 to $18,000 on top of the $40,000 down payment. Buyers who empty their savings on the down payment alone sometimes get caught short here.
Seller concessions are the standard way to soften that hit. On a conventional loan at 90% LTV, the seller can contribute up to 6% of the lesser of the sale price or appraised value toward your closing costs.10Fannie Mae. Interested Party Contributions IPCs On a $400,000 home, that’s up to $24,000, more than enough to cover typical closing costs. Concessions can’t be applied toward the down payment, and anything exceeding actual closing costs gets treated as a price reduction. In a buyer-friendly market, negotiating seller-paid closing costs is one of the most effective ways to reduce the cash you need at the table.
The Appraisal Risk at 90% LTV
During underwriting, the lender orders an appraisal to confirm the home’s value supports the purchase price at 90% LTV. If the appraisal comes in below the agreed price, you face a choice: negotiate the price down, increase your down payment to cover the gap, or walk away (assuming your contract includes an appraisal contingency). This is where 10% down buyers are more exposed than 20% down buyers, because a low appraisal eats directly into already-thin equity. If you’re buying in a market where values are climbing fast or data is thin, build an appraisal contingency into your offer and keep some cash in reserve for a possible shortfall.