skip to Main Content

How Much Do I Need for a Down Payment?

Couple looking at computer

How much is required for a down payment on a house?

One of the first hurdles that potential homeowners must overcome is saving up a down payment. It can take years, depending on the home prices in your area and how much you want to put down. Down payments are usually described as a percentage of the purchase price. A conventional mortgage requires a 20% down payment to avoid mortgage insurance but allows as little as 3% down.  If you are an eligible veteran or qualify for a USDA loan you can put $0 down.  There are also many down payment assistance options that can help if you’re short on funds.

Conventional Loan

You can get a conventional mortgage with as little as 3% down, but you will pay private mortgage insurance (PMI). This additional monthly expense provides insurance to the lender in case you default on your loan. Once you reach 20% equity in your property, the PMI requirement goes away.  Without PMI lenders would not be willing to give loans greater than 80% of the purchase price.

FHA Loan

Using this government-insured mortgage loan, you can buy a house with as little as 3.5% down and with lower credit than is required by some other types of mortgages.  An FHA loan requires an upfront mortgage insurance premium equal to 1.75% of the loan amount to be paid at closing along with an additional 0.85% paid monthly.  This mortgage insurance will never go away unless you refinance out of an FHA loan.

VA Loan

Veterans, active duty military, National Guard, and some surviving spouses that meet certain service-related criteria are eligible for a VA loan, which does not require a down payment or mortgage insurance. These loans are backed by the Department of Veterans Affairs and almost always the best mortgage option for those that are eligible.  You can check your eligibility here –> VA Eligibility


If you are buying a property in a designated rural area, you may be able to use a USDA loan to purchase your home without a down payment. These types of mortgages are only available in certain areas.  Keep in mind that the more you are able to put as a down payment, the lower your monthly payments will be. Just make sure that you are keeping enough available for emergencies and to cover the costs of maintaining and repairing your home after you move in.  To check if your area is eligible use this tool from the USDA –> USDA Eligibility Tool


Down Payment Assistance – Affordable Mortgages

Down payment assistance and special incentives are often available for households making less than the Area Median Income.  Look up your area income with the tool provided and if you make less than the Area Median Income you may be eligible for some of these programs.  We have a lot of options available and they change frequently so please inquire for details on what you may be eligible for.  AMI can be checked with Fannie Mae’s tool here –> Fannie Mae Income Lookup


Second Homes and Investment Properties

If you are buying a second home or investment property, you will have to use a conventional loan.  A second home can be purchased with as little as 10% down, and an investment property with as little as 15%.  However, there are some significant adjustments to the interest rate if people put at least 20% down on a second home and at least 25% down on an investment property.  The difference between 10% and 20% on a second home, and 15% and 25% on a investment property are by no means small.


Back To Top