Minimum mortgage down payment requirements by loan type range from 0% to 20% of the purchase price. Conventional loans start at 3% for qualifying buyers, FHA loans require 3.5% with a credit score of 580 or higher, and VA and USDA loans allow 0% down. Anything under 20% triggers mortgage insurance or a guarantee fee on most programs, which is the piece buyers most often forget to budget for.
Minimums by Loan Program
Conventional Loans
Conventional loans are backed by Fannie Mae or Freddie Mac. Three programs bring the minimum down to 3%. Fannie Mae’s Conventional 97 requires at least one borrower to be a first-time buyer, meaning someone who hasn’t owned a home in the past three years. Fannie Mae’s HomeReady and Freddie Mac’s Home Possible skip the first-time requirement but cap eligibility at 80% of area median income.1Fannie Mae. HomeReady Mortgage Loan and Borrower Eligibility2Freddie Mac. Home Possible If none of those fit, the standard conventional minimum is 5%.
FHA Loans
FHA loans require 3.5% down with a credit score of 580 or higher. Between 500 and 579, the minimum jumps to 10%. The FHA calculates the requirement on the lower of the appraised value or the purchase price, so negotiating below appraisal doesn’t reduce your down payment.
VA Loans
VA loans require nothing down, provided the purchase price doesn’t exceed the appraised value.3U.S. Department of Veterans Affairs. Purchase Loan The benefit is available to eligible veterans, active-duty service members, and certain surviving spouses. If the price exceeds the appraised value, you cover the difference in cash.
USDA Loans
USDA loans also offer 100% financing. The property must sit in an area the USDA designates rural or semi-rural, and household income generally cannot exceed 115% of area median income.4U.S. Department of Agriculture Rural Development. Single Family Housing Guaranteed Loan Program “Rural” is broader than it sounds; many suburban communities qualify, and the eligibility maps are worth checking.
To put the range in dollars: on a $350,000 home, a 3% conventional down payment is $10,500, an FHA 3.5% payment is $12,250, and VA or USDA financing can mean zero at closing. Which program you qualify for is usually the single biggest factor in how much cash you’ll need.
How Credit Score and Property Type Change the Minimum
Those base numbers assume a single-family primary residence and a solid credit profile. Move away from either and the required percentage climbs.
Credit score has the sharpest effect on FHA loans, where dropping below 580 more than doubles the down payment from 3.5% to 10%. On conventional loans, a lower score doesn’t automatically raise the down payment minimum, but it does push up your mortgage insurance premium and interest rate.
Property type reshapes the picture on conventional loans. Fannie Mae’s eligibility matrix sets these floors:
- Single-family primary residence: 3% to 5%, depending on the program.
- Owner-occupied 2–4 unit property: 5%.5Fannie Mae. Eligibility Matrix
- Investment property, 1 unit: 15%.5Fannie Mae. Eligibility Matrix
- Investment property, 2–4 units: 25%.5Fannie Mae. Eligibility Matrix
The 5% figure for owner-occupied multi-unit properties makes living in one unit while renting the others much more accessible than in the past. Investment properties without owner occupancy stay in high-down-payment territory.
What Putting Less Than 20% Down Actually Costs
A smaller down payment keeps cash in your pocket but adds an ongoing cost that varies more by loan type than most first-time buyers realize.
Conventional Loans: PMI
Private mortgage insurance on conventional loans runs roughly 0.46% to 1.50% of the loan amount per year, driven by credit score, down payment size, and loan terms. On a $300,000 loan, that’s about $115 to $375 a month.
PMI is cancellable. You can request removal in writing once your balance reaches 80% of the home’s original value, assuming you’re current on payments and the property hasn’t declined in value. The lender must cancel it automatically at 78% on the scheduled amortization.6Consumer Financial Protection Bureau. When Can I Remove Private Mortgage Insurance (PMI) From My Loan? Extra principal payments accelerate the timeline.
FHA Loans: MIP
FHA mortgage insurance is structured differently and costs more over the life of the loan. There are two layers: an upfront premium of 1.75% of the base loan amount at closing, and an annual premium built into your monthly payment.7U.S. Department of Housing and Urban Development. Appendix 1.0 – Mortgage Insurance Premiums For a 30-year loan with less than 5% down, the annual premium is 0.85% of the loan amount on loans up to $625,500.
Here’s the catch. If you put down less than 10% on an FHA loan, the annual MIP stays for the life of the loan. It only ends if you refinance into a conventional mortgage. Put down 10% or more, and it drops off after 11 years.7U.S. Department of Housing and Urban Development. Appendix 1.0 – Mortgage Insurance Premiums That difference is one of the strongest arguments for choosing a conventional loan over FHA when your credit qualifies for both.
VA Loans: The Funding Fee
VA loans don’t charge monthly mortgage insurance, but there is a one-time funding fee. For a first-time VA borrower with nothing down, the fee is 2.15% of the loan amount. On a second or subsequent use with no down payment, it rises to 3.3%. A 5% down payment drops it to 1.5%, and 10% or more brings it to 1.25%.8U.S. Department of Veterans Affairs. VA Funding Fee and Loan Closing Costs
Veterans receiving VA disability compensation, those eligible for it but receiving retirement pay instead, and surviving spouses receiving Dependency and Indemnity Compensation are exempt from the funding fee entirely.8U.S. Department of Veterans Affairs. VA Funding Fee and Loan Closing Costs
Where the Down Payment Money Can Come From
Lenders require the source of your down payment to be legitimate, documented, and traceable. Personal savings, checking accounts, and proceeds from selling investments all qualify. Funds should be “seasoned,” meaning they’ve sat in your account for at least 60 days before you apply. Any large deposit inside that window will draw questions from the underwriter and require a paper trail.
Retirement Accounts
You can tap a 401(k), but how you access it matters. A 401(k) loan lets you borrow from your own balance and repay it over time with no income taxes and no early withdrawal penalty.9Internal Revenue Service. Hardships, Early Withdrawals and Loans A hardship withdrawal is taxed as ordinary income and generally hit with a 10% penalty if you’re under 59½. On a $30,000 withdrawal, the difference between those two paths can easily exceed $10,000.
Gift Funds
Money from a family member is acceptable if properly documented. Lenders require a signed gift letter confirming the money is a genuine gift with no expectation of repayment.10Fannie Mae. Personal Gifts The letter should include the donor’s name, relationship to you, the amount, and the property address. Underwriters may also ask for bank statements from the donor showing the transfer.
Cryptocurrency
Crypto can’t be used directly. Funds must be converted to U.S. dollars and deposited into an account at a U.S. or state-regulated financial institution before closing, with documentation showing the money came from your crypto account. Cryptocurrency cannot be used for the earnest money deposit either.11Fannie Mae. Virtual Currency
What You Can’t Use
Undisclosed borrowing is the line to avoid. Using a personal loan, cash advance, or any other borrowed money for the down payment without telling the lender is mortgage fraud. Misrepresenting the source of funds is a federal offense under 18 U.S.C. § 1014, carrying fines up to $1,000,000 and up to 30 years in prison.12Office of the Law Revision Counsel. 18 USC 1014 – Loan and Credit Applications Generally
Down Payment Assistance
More than 2,600 homebuyer assistance programs operate across the country through state and local housing finance agencies, municipalities, and nonprofits. About 74% specifically target down payment or closing cost help, and roughly 38% are open to repeat buyers, not just first-timers.
Assistance takes a few forms: outright grants that don’t need to be repaid, forgivable loans that disappear after you stay in the home for a set number of years, and deferred 0% loans that come due only when you sell, refinance, or move out. Some programs offer a below-market first mortgage instead of cash assistance.
At the federal level, the HOME Investment Partnerships Program provides homeownership help to families earning no more than 80% of area median income, with local governments deciding how to structure the assistance.13HUD Exchange. HOME Homeownership State housing finance agencies run their own programs on top of federal ones, often with income limits, minimum credit scores around 640, and required homebuyer education courses. Many loan officers know the local landscape and can layer these programs onto your primary mortgage.
The Down Payment Isn’t Your Only Upfront Cost
Closing costs run an additional 2% to 5% of the loan amount and cover lender fees, title insurance, the appraisal, and prepaid property taxes.14Fannie Mae. Closing Costs Calculator On a $350,000 loan, that’s $7,000 to $17,500 on top of the down payment. Both are listed as separate line items on your Loan Estimate and Closing Disclosure, and you need liquid funds for each.
Seller concessions can reduce the total cash you bring to closing, but they can’t be applied to the down payment itself. Each loan program caps the seller’s contribution toward closing costs:
- FHA: up to 6% of the sale price. Anything above reduces the mortgage amount dollar-for-dollar.15Federal Register. Federal Housing Administration (FHA) Risk Management Initiatives
- VA: up to 4% of the home’s reasonable value.8U.S. Department of Veterans Affairs. VA Funding Fee and Loan Closing Costs
- Conventional: 3% with less than 10% down, 6% with 10% to 25% down, and 9% with more than 25% down. Investment properties are capped at 2% regardless.
Choosing Your Number
The math is simple: multiply the purchase price by the required percentage. A 3.5% FHA down payment on a $400,000 home is $14,000; a 5% conventional down payment on the same home is $20,000.
Deciding what to actually put down is harder. A larger down payment lowers your monthly payment, may lower your interest rate, and shrinks or eliminates mortgage insurance. But draining your savings to reach 20% leaves you exposed after closing. Keeping at least three to six months of housing expenses in reserve is a reasonable floor. If hitting 20% empties your emergency fund, a smaller down payment with mortgage insurance is often the better trade.
At closing, the funds go to the escrow or title company handling the transaction, not to the seller, by wire transfer or cashier’s check. Personal checks aren’t accepted at these amounts. Send the wire one to two business days before closing so the money arrives on time, and verify the wiring instructions by phone on a number you’ve confirmed independently before you send anything.