How Much Is a Down Payment on a House?
Updated July 9, 2026 · SmartRates Editorial Team
⚡ In short
Down payment requirements vary by loan program. Conventional loans allow as little as 3% down for qualifying first-time buyers; FHA loans allow 3.5% down with a qualifying credit score; VA loans, for eligible service members and veterans, and USDA loans, for eligible rural properties, allow 0% down. A 20% down payment on a conventional loan avoids the private mortgage insurance (PMI) requirement.
📌 Key facts
- Conventional (Fannie Mae/Freddie Mac): as low as 3% down for eligible first-time buyers
- FHA: 3.5% down with a 580+ credit score
- VA: 0% down for eligible veterans and service members, with no PMI requirement
- USDA: 0% down for eligible rural/suburban properties, subject to income limits
🏛️ Official sources
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Down payment minimums by loan type
Conventional loan programs following Fannie Mae and Freddie Mac guidelines allow down payments as low as 3% for eligible first-time buyers. FHA loans, insured by HUD, allow 3.5% down with a qualifying credit score of 580 or higher. VA loans allow 0% down for eligible veterans and service members, and USDA loans allow 0% down for eligible properties in designated rural and suburban areas, subject to household income limits.
PMI on conventional loans below 20% down
A conventional loan with a down payment under 20% of the purchase price requires private mortgage insurance (PMI), which protects the lender in the event of default. PMI is generally removable once the loan balance reaches 78–80% of the home's original value, depending on federal and lender-specific rules.
How down payment funds are verified
Lenders generally require documentation of the source and, in some cases, the seasoning (how long funds have been held) of down payment money. Many loan programs allow down payment funds to be gifted from a relative, subject to a documented gift letter meeting the specific program's requirements.
Down payment assistance programs
State and local housing finance agencies administer down payment assistance programs, which vary by location and eligibility criteria. HUD maintains a directory of local homebuying resources, including HUD-approved housing counseling agencies. These programs commonly take the form of a grant, a low- or no-interest second loan, or a forgivable loan tied to a minimum period of continued residency in the home.
How PMI cost relates to down payment size
PMI cost is not a single flat rate — it's generally priced based on the size of the down payment (or equivalently, the loan-to-value ratio) and the borrower's credit profile, meaning a 5% down payment typically carries a higher PMI cost than a 15% down payment on an otherwise identical loan. This creates a graduated relationship between down payment size and PMI cost across the entire range below 20%, not just a single threshold effect.
Closing costs are separate from the down payment
The down payment and closing costs are two distinct cash requirements at closing — closing costs cover items such as loan origination fees, title insurance, appraisal fees, and prepaid property tax and insurance escrow, and are commonly estimated at a percentage of the purchase price, separate from and in addition to the down payment amount itself.
Seller and lender credits toward closing costs
In some transactions, a seller can agree to pay a portion of the buyer's closing costs, known as a seller credit, subject to limits set by the loan program based on the down payment percentage. Some lenders also offer a lender credit — a reduction in closing costs in exchange for a slightly higher interest rate — as an alternative way to reduce the cash needed at closing without affecting the down payment amount itself.
How down payment requirements are disclosed
Federal disclosure rules require lenders to provide a Loan Estimate within three business days of a mortgage application, itemizing the down payment, estimated closing costs, and loan terms in a standardized format, so that different loan offers can be compared side by side using the same disclosure structure.
Down payment sourcing for investment and second-home purchases
Down payment minimums for an investment property or a second home are generally higher than for a primary residence, since loan programs and lenders typically treat non-primary-residence purchases as carrying more risk. The 0%-down VA and USDA programs, along with the lowest conventional and FHA minimums, are generally restricted to a borrower's primary residence rather than being available for investment or vacation-home purchases.
Frequently Asked Questions
Is 20% down required to buy a house?+
No. 20% is not a minimum requirement for most loan programs — it specifically avoids the PMI requirement on a conventional loan, and several programs allow down payments as low as 0%–3.5%.
Can down payment funds be a gift from a family member?+
Many loan programs allow gifted down payment funds from a relative, subject to documentation requirements — commonly a signed gift letter — set by the lender and loan program.
Is a down payment required on a VA or USDA loan?+
Both VA loans (for eligible veterans and service members) and USDA loans (for eligible rural/suburban properties) allow 0% down, subject to each program's eligibility requirements.
Does a smaller down payment always mean a higher PMI cost?+
Generally yes — PMI is commonly priced on a graduated scale based on the loan-to-value ratio and credit profile, so a smaller down payment typically corresponds to a higher PMI cost than a larger one below the 20% threshold.
Are closing costs included in the down payment amount?+
No. Closing costs — covering items like origination fees, title insurance, and escrow deposits — are a separate cash requirement at closing, in addition to the down payment.
Is the down payment minimum higher for a second home or investment property?+
Generally yes — lenders typically require a larger down payment for a non-primary-residence purchase, and the lowest-down-payment programs (VA, USDA, and the lowest FHA and conventional tiers) are generally limited to a primary residence.
Can down payment assistance funds be combined with a gift from a family member?+
In many cases yes, subject to the specific down payment assistance program's rules and the primary loan program's guidelines on combining multiple funding sources for the same down payment.