How Much Do You Really Need to Put Down? Minimum Down Payments by Loan Type
Many buyers assume they need to save 20% before they can buy a home. For many loan programs, the published minimum is lower than that, and for some eligible borrowers it can be zero. But the minimum is only part of the picture. The loan type, your credit, the property and the lender all shape what you'll actually need, and a smaller down payment usually comes with trade-offs.
This guide puts the main loan types side by side, explains what drives the minimum, and covers the cash you'll need beyond the down payment. The figures below are program minimums as generally published. Lenders may require more, and every loan is subject to qualification and to program rules that can change.
Why 20% Down Isn't the Rule
The 20% figure comes mostly from conventional lending. At 20% down, a conventional loan generally doesn't require private mortgage insurance. It's a common benchmark, not a requirement to buy a home. Many buyers put down less, and several loan programs are designed for smaller down payments.
Putting more down can still have benefits, such as a smaller loan balance, a lower monthly payment and, on a conventional loan, no mortgage insurance. Whether that's worth the extra time to save depends on your savings, your timeline and your other financial goals.
Minimum Down Payments Side by Side
Here's how the main loan types generally compare. Each program has more rules than fit here, so the linked guides go deeper on eligibility and costs.
Conventional loans
Conventional loans aren't insured or guaranteed by a government agency. Most follow guidelines set by Fannie Mae and Freddie Mac. Program minimums as generally published start at 3% down for certain fixed-rate loans and programs, some of which are tied to first-time buyer status or income limits. Many other conventional loans have a published minimum of 5%. Second homes, investment properties and multi-unit homes typically require more.
With less than 20% down, a conventional loan generally requires private mortgage insurance (PMI). Borrower-paid PMI can usually be canceled once you build enough equity, under federal rules and your loan's terms. For more on how these loans work, see this guide to conventional loans.
FHA loans
FHA loans are insured by the Federal Housing Administration. Under published FHA guidelines, the minimum down payment is generally 3.5% for borrowers with a credit score of 580 or higher, and 10% for scores from 500 to 579. Many lenders set higher credit score requirements of their own. FHA loans are not limited to first-time buyers.
FHA loans carry mortgage insurance premiums: an upfront premium, which is often added to the loan amount, and an annual premium paid as part of the monthly payment. With less than 10% down, the annual premium generally lasts for the life of the loan. The complete guide to FHA loans covers the details.
VA loans
VA loans are guaranteed by the U.S. Department of Veterans Affairs and are available to eligible service members, veterans and some surviving spouses. For eligible borrowers with full entitlement, the VA generally doesn't require a down payment, as long as the price doesn't exceed the appraised value. A down payment may be needed with reduced entitlement on a larger loan, or if the lender requires one.
VA loans don't have monthly mortgage insurance. Most borrowers pay a one-time VA funding fee, which can often be financed into the loan. Some borrowers are exempt, such as many who receive VA disability compensation, and a down payment can lower the fee. See the VA loans guide for eligibility and entitlement.
USDA loans
USDA guaranteed loans are backed by the U.S. Department of Agriculture for homes in eligible rural and some suburban areas. Under the program's published rules, eligible borrowers generally aren't required to make a down payment. Household income limits apply, and the property must be in an eligible area, which you can check on the USDA's eligibility site.
USDA loans have an upfront guarantee fee and an annual fee, which work much like mortgage insurance. USDA home loans explained walks through property and income eligibility.
Jumbo loans
Jumbo loans are larger than the conforming loan limit for the area, so they fall outside Fannie Mae and Freddie Mac guidelines. There's no single published minimum. Each lender sets its own, and jumbo minimums are often higher than the minimums for conforming loans. Jumbo lenders also often look for stronger credit and larger cash reserves.
At a glance
Program minimums as generally published. Lenders may require more; all loans are subject to qualification and to rules that can change.
- Conventional: from 3% for certain programs, often 5% for others; PMI generally required below 20% down, and it can usually be canceled later
- FHA: 3.5% with a credit score of 580 or higher, 10% with scores from 500 to 579; upfront and annual mortgage insurance premiums
- VA: generally no down payment for eligible borrowers with full entitlement; funding fee unless exempt; no monthly mortgage insurance
- USDA: generally no down payment for eligible borrowers and properties; income and area limits; upfront and annual guarantee fees
- Jumbo: set by each lender, often higher than conforming loan minimums; reserves often required
What Drives Your Minimum
Two buyers using the same loan type can face different minimums. Factors that often play a part include:
- Loan type and program. Each program publishes its own minimum and eligibility rules.
- Credit score. Some programs tie the minimum to your score, and a higher down payment can sometimes offset a thinner credit profile.
- Occupancy. A home you'll live in as your primary residence generally needs less down than a second home or an investment property.
- Property type. Multi-unit homes, condos and manufactured homes can come with different requirements.
- Loan amount. Loans above the conforming limit for the area move into jumbo territory, where lenders typically ask for more.
- Your overall file. Income, debts, savings and employment history all factor into what a lender approves.
- Lender overlays. Lenders can add their own requirements on top of program rules, so minimums can vary from one lender to the next.
The Mortgage Insurance Trade-Off
A smaller down payment usually comes with mortgage insurance or a similar fee. This coverage protects the lender if a loan goes into default, not the borrower. It's the main reason lenders and programs can accept less money down.
How it works depends on the loan:
- Conventional: private mortgage insurance that can usually be canceled once you reach enough equity
- FHA: upfront and annual premiums, with the annual premium often lasting for the life of the loan when less than 10% is put down
- VA: a one-time funding fee instead of monthly mortgage insurance, unless exempt
- USDA: an upfront guarantee fee and an annual fee
Putting less down also means borrowing more, which can raise your monthly payment and the total interest you pay over time. You also start with less equity, which leaves a smaller cushion if home values dip and you need to sell.
On the other side, saving for a larger down payment takes time, and keeping more cash on hand can help with repairs and emergencies after you move in. There's no answer that fits everyone. One practical way to compare is to ask a licensed loan officer for Loan Estimates at two or three different down payment amounts and look at the monthly payment, the mortgage insurance and the cash needed at closing side by side.
The lowest down payment you qualify for isn't always the best fit. Compare the full cost, not just the cash you need up front.
Down Payment Isn't the Only Cash You'll Need
The minimum down payment is one line in a bigger budget. Plan for these separately.
Closing costs
Closing costs are separate from the down payment. They can include lender fees, the appraisal, title and settlement charges, recording fees, and prepaid items such as homeowners insurance, property taxes and interest. Amounts vary by state, county, loan type and price. Your Loan Estimate lists them, and seller or lender credits may cover some of them, within the limits each program allows.
Earnest money
The earnest money deposit you make with an offer is usually credited toward your down payment or closing costs at closing. It isn't an extra cost, but it does come out of your savings earlier in the process.
Reserves
Reserves are the savings you have left after closing, often measured in months of housing payments. Some loans require them, especially jumbo loans and loans on multi-unit or investment properties. Even when they aren't required, lenders may consider them, and keeping a cushion can help when something breaks in the first year.
Where the money can come from
Lenders need to verify where your down payment and closing funds come from. Savings and checking accounts are common sources. Many programs also allow gift funds from eligible donors with the right paperwork, and some state and local programs offer down payment assistance with their own rules. Large or unusual deposits often need to be explained, so it helps to talk with your loan officer before moving money around.
How to Find Your Real Number
- Talk with a licensed loan officer early. Getting pre-approved shows which programs you may qualify for and what each would require.
- Check program eligibility. VA, USDA and some conventional programs have specific eligibility rules for borrowers or properties.
- Ask for scenarios. Request Loan Estimates at different down payment amounts and loan types so you can compare payments, mortgage insurance and cash to close.
- Ask how mortgage insurance ends. Find out whether it can be canceled and when, or whether it lasts for the life of the loan.
- Budget the whole picture. Add closing costs, moving costs and the reserves you want to keep, not just the down payment.
Frequently Asked Questions
Can I buy a home with no money down?
Some eligible borrowers can. VA and USDA loans generally don't require a down payment for those who meet program and property rules. You'll still typically need money for closing costs unless credits cover them, and lenders may have their own requirements.
Is it better to put down more?
It depends. More down can mean a smaller loan, a lower payment and, on a conventional loan, less or no mortgage insurance. Less down can mean buying sooner and keeping more cash on hand. Comparing Loan Estimates can help you weigh the trade-offs.
Does my down payment affect my interest rate?
It can. Lenders often price loans based on factors that include the down payment, credit and loan type. Pricing varies by lender and borrower, so ask a licensed loan officer to show you how different amounts change your quote.
Can a gift cover my down payment?
Many loan programs allow gift funds from eligible donors, usually with a signed gift letter and proof of the transfer. Rules on who can give and how much can be gifted vary by program and lender.
Do first-time buyers get a lower minimum?
Sometimes. Certain conventional programs with the lowest published minimums are tied to first-time buyer status or income limits. FHA, VA and USDA minimums aren't limited to first-time buyers. Definitions of first-time buyer vary by program.
The Bottom Line
You may not need as much down as you think, but the real number depends on the loan type, your credit, the property and the lender. A smaller down payment usually brings mortgage insurance or fees and a larger loan, and closing costs and reserves come on top of whatever you put down. Start with a licensed loan officer, compare a few scenarios, and choose the amount that fits your budget after closing, not just the minimum.
This article is general information, not lending, legal or financial advice. Down payment minimums and other program rules are described as generally published, can change, and vary by lender, program, property and borrower. Lenders may require more. All loans are subject to credit approval and qualification. Talk with a licensed loan officer about your situation. Advice4Homeownership is a publisher, not a lender.
