Down Payment Guide: How Much Do You Need?

A down payment is the upfront cash you pay toward the purchase price of a home. The remainder is covered by your mortgage loan. While a 20% down payment has traditionally been considered standard, many loan programs allow significantly less—and some require no down payment at all.

Down Payment Requirements by Loan Type

VA Loans — 0% Down

Available to eligible veterans, active-duty service members, and surviving spouses. VA loans require no down payment and no private mortgage insurance. Backed by the U.S. Department of Veterans Affairs.

USDA Loans — 0% Down

Designed for eligible rural and suburban homebuyers who meet income limits. USDA loans are backed by the U.S. Department of Agriculture and require no down payment, though a guarantee fee applies.

Conventional 97 — 3% Down

Backed by Fannie Mae and Freddie Mac, these conventional loans allow as little as 3% down for qualifying borrowers, including first-time homebuyers. Private mortgage insurance (PMI) is required with less than 20% down.

FHA Loans — 3.5% Down

Insured by the Federal Housing Administration, FHA loans require as little as 3.5% down for borrowers with credit scores of 580 or above. Borrowers with scores between 500 and 579 may qualify with 10% down. Mortgage insurance premiums (MIP) apply.

Understanding PMI and MIP

When you put less than 20% down on a conventional loan, lenders typically require Private Mortgage Insurance (PMI). PMI protects the lender—not you—in case you default on the loan. On conventional loans, PMI can be removed once you reach 20% equity in the home.

FHA loans have their own version called a Mortgage Insurance Premium (MIP), which includes both an upfront premium paid at closing and an annual premium included in your monthly payment. For most FHA loans, MIP is required for the life of the loan unless you refinance into a different loan type.

While putting 20% down avoids mortgage insurance costs, it is not the only path to homeownership. Many buyers choose low down payment options and benefit from starting to build equity sooner rather than waiting years to save a larger amount.

Down Payment Assistance Programs

DPA Programs Overview

Down Payment Assistance (DPA) programs are offered by state and local housing agencies, nonprofits, and some lenders to help eligible homebuyers cover down payment and closing costs. These programs may provide:

Grants that do not need to be repaid
Forgivable second mortgages that are forgiven after a set number of years
Deferred-payment loans with no interest due until you sell, refinance, or pay off the home
Matched savings programs for first-time buyers

Eligibility varies by program and may depend on income, location, and first-time buyer status. Ask your loan officer about programs available in your area.

Choosing the Right Down Payment Amount

Consider your monthly budget—a higher down payment lowers your monthly mortgage payment
Keep enough cash in reserve for emergencies, moving costs, and home maintenance
Factor in PMI costs if putting down less than 20% on a conventional loan
Explore DPA programs to supplement your savings

Down Payment Guide