Minimum Down Payment For A House - How Much Do You Need?

Certified Mortgage Advisor
NMLS 1701021
November 22, 2018

How much money you actually have to put down on a house?

So I hear numbers all over the place from clients. I hear some people saying I have to put 20% down. Some people say 10%, some people say 5%, and then I have the other side. That's thinking they're gonna get money back from closing on their house. So it's all over the place.

Let's narrow it down into the down payment that you'll actually have to bring to the closing table to close on a house. So we can divide this into four different types of loans. And these are gonna be the main loans that you're gonna end up seeing. So from the beginning, we have a conventional loan, we have an FHA loan, we have a USDA loan, and a VA loan.

Conventional Loan

So the one that you're most familiar with is probably the conventional loan. So conventional loan is usually for borrowers who have pretty clean loan files. There's not going on in terms of difficulty with employment or credit, everything is a very clean, great credit score. Great employment history, low debt, income ratio. Those are usually going to be our conventional loans.

Down for Conventional is 3-5%

Now a conventional loan will require 3% down as the minimum. Now there are a couple of stipulations there. Mainly because most conventional loans are actually 5% down, but there are some guidelines that will allow you to go down to 3% as a minimum down payment.

3% first time home buyer

Also, one of those stipulations is if you're a first-time homebuyer. So if you're a first-time homebuyer, you can qualify for the 3% down. This is fantastic because that's not 5%, you're saving 2% that you don't have to bring as a down payment. Something along with that too is let's say you're not a first-time homebuyer.

Home Ready loan or a Home Possible loan by Fannie Mae or Freddie Mac is also 3%

If you qualify for a Home Ready loan or a Home Possible loan by Fannie Mae or Freddie Mac. You can do the 3% as well, as long as you meet some income guidelines. So there is an income limit. If you earn too much, then you can't qualify for the 3% down, but most of the time, most people fit into the 3% down as a minimum for conventional loans. So number one, conventional 3% down.

FHA Loan

Number two is the FHA loan. So FHA loans are loans that are meant for most people. So there might have been some spots in employment or some things with the credit history that might have been a little bit lower and that's okay. FHA is a lot more forgiving and lenient. You don't have to be all pretty. I polished as you do with the conventional loan, you can have a little bit more flexibility with your loan in the FHA program.

3.5% down for FHA

Now, the FHA program still has fantastic low down payments. So you're talking about three and a half percent down with an FHA loan. So only 0.5% more than going with a conventional loan. So FHA is a great option. For most host buyers looking to move into a loan. FHA is gonna be a great option for you, just 3.5% down.


So USDA loans are meant for clients and buyers who want to purchase homes in more rural areas. So, the property that you're looking at has to qualify USDA. Now with USDA loans as well, most of the time, you're going to need a credit score of about 640 and higher.

0% down for USDA

There are some tighter restrictions on USDA buyers and the properties themselves since these are insured loans. With USDA loans, however, you could actually do 0% down, which is incredible. I did a loan for a couple about a month ago.

We did a USDA loan and they brought absolutely zero to the closing table. So no down payment, no closing costs because we got the seller to pay down some of those. So they brought zero to the table, which is fantastic. If you're looking for a more rural home, you have to make sure that you qualify. For USDA as a buyer, the property you're looking at qualifies for USDA as well. So we covered three so far, conventional 3% down FHA, three and a half percent down. USDA 0% down.

VA Loan

Then we move on to VA. So VA is another government program. FHA is government, U S as government. And VA is government as well. And VA does the same thing. You're allowed to do 0% down with the VA.

Again, this is an insured loan backed by the VA. So it's a fantastic option. If you are a veteran, then you can put 0% down if you'd like, if you choose to do more than that with the VA loan, no problem at all, because VA loans get you just fantastic rates and something to note in there as well is.

VA loans have an upfront mortgage insurance fee. But that can be waived depending on your disability through the service. So something to keep in mind is down payments are really low across the board for loans in, just with the natural programs that they have, conventional FHA, USDA, VA all have great low down payments anywhere from 3.5% percent to 0%.

Don't limit yourself with the four main loans, check your county!

Now with that, there are also a lot of other programs that will help you with down payments. So we have other down payment assistance programs that you might find through the county that you're in. There are also other programs.

For example, we carry a program that does FHA loans, where again, if you remember, it's a 3.5% down payment normally, but this program will actually gift you 2% in equity when you close. So you're only putting down one and a half percent of the purchase price of the property. The lender will gift you 2% and then you're able to close on that home.

So there are a lot of other programs that allow you to do some down payment assistance to help you out with that down payment if needed.

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