The minimum down payment depends on the loan type. FHA requires 3.5 percent for borrowers with a 580 credit score or higher, per HUD guidelines. Fannie Mae and Freddie Mac conventional programs start at 3 percent. VA and USDA loans require no down payment for qualifying borrowers. Which rule applies depends on credit score, income, military status, and property location.
Conventional Loans: 3 to 20 Percent, Depending on Program and Credit
Conventional loans are the most common mortgage type in the United States. According to the National Association of Realtors 2025 Profile of Home Buyers and Sellers, more than half of recent buyers used conventional financing.
The floor is 3 percent down under two specific programs:
Fannie Mae HomeReady: 3 percent down for first-time and repeat buyers with income at or below 80 percent of area median income.
Freddie Mac Home Possible: 3 percent down with comparable income criteria.
Outside those programs, most conventional loans require 5 percent down for a primary residence. Investment properties typically start at 15 to 25 percent.
Putting down less than 20 percent triggers private mortgage insurance (PMI) -- a monthly cost that protects the lender, not you. PMI rates generally run 0.5 to 1.5 percent of the loan amount annually, according to the Urban Institute. On a $350,000 loan, that is $1,750 to $5,250 per year until you reach 20 percent equity.
Tip
Run the math before deciding whether to wait for 20 percent: calculate how many months of PMI you would pay if you close now at 5 or 10 percent down versus how long saving to 20 percent actually takes. PMI is a real cost, but so is the lost time in the market.
The conventional conforming loan limit for a single-family property is $806,500 in most U.S. counties in 2026, according to the Federal Housing Finance Agency. High-cost areas reach $1,209,750. Loans above these limits are jumbo loans with lender-set down payment requirements, typically 10 to 20 percent.
FHA Loans: 3.5 Percent Minimum, Credit Score Drives Eligibility
FHA loans are insured by the Federal Housing Administration (HUD), allowing lenders to offer financing to borrowers who do not meet conventional standards. The program is widely used by first-time buyers and those with limited credit history.
Current FHA down payment minimums, per HUD guidelines:
- 3.5 percent for credit scores of 580 or higher
- 10 percent for credit scores between 500 and 579
- Not eligible for scores below 500
The FHA loan limit for a single-unit property is $524,225 in most U.S. counties in 2026, according to HUD's annual limit announcements. High-cost areas reach $1,209,750.
FHA loans carry two mortgage insurance charges: an upfront premium (UFMIP) of 1.75 percent at closing, and an annual premium (MIP) of 0.15 to 0.75 percent depending on term and down payment size. On loans with less than 10 percent down originated after June 2013, MIP runs for the life of the loan -- it does not cancel at 20 percent equity like conventional PMI does.
Warning
FHA MIP does not cancel on sub-10-percent-down loans originated after June 2013. You pay it for the life of the loan. If you plan to stay long-term, factor the lifetime MIP cost against a conventional loan's PMI, which does eventually drop off.
The 3.5 percent down payment can come from savings, a family gift, or a government or nonprofit assistance program. FHA does not require any portion to be from your own funds if the source is documented. For a full overview of the purchase process, see How to Buy Your First Home.
VA Loans: No Down Payment Required for Eligible Borrowers
VA loans are guaranteed by the U.S. Department of Veterans Affairs for eligible active-duty service members (generally 90 consecutive days), veterans meeting service-length requirements, qualifying National Guard and Reserve members, and surviving spouses of veterans who died in service or from a service-connected disability.
VA loans require no down payment and no mortgage insurance. The VA charges a one-time funding fee at closing: 2.15 percent of the loan amount for first-time VA users with no down payment, dropping to 1.25 percent with 10 percent down, per VA fee schedules current as of 2026. The fee is waived for veterans receiving VA disability compensation and eligible surviving spouses. Most lenders apply a minimum credit score of 580 to 620. VA loans are for primary residences only and require a VA-approved appraisal.
The PMI exemption is a meaningful cost advantage. On a $500,000 purchase with 5 percent down, comparable conventional PMI might add $200 to $350 per month -- a cost VA borrowers avoid for the life of the loan.
USDA Loans: No Down Payment for Rural and Suburban Properties
USDA loans are guaranteed by the U.S. Department of Agriculture and require no down payment for qualifying borrowers. The program covers eligible rural and suburban communities -- not exclusively remote farmland.
Two requirements determine eligibility:
Property location: The property must be in a USDA-designated area, verified at the USDA's eligibility map at eligibility.sc.egov.usda.gov. Many suburban areas qualify; the map was updated after the 2020 Census, so some previously eligible areas no longer qualify.
Borrower income: Household income cannot exceed 115 percent of area median income (AMI). The USDA publishes a free eligibility tool by county and household size.
USDA loans carry an upfront guarantee fee of 1 percent and an annual fee of 0.35 percent -- lower than FHA's MIP in most scenarios. Most lenders require a 640 credit score for automated underwriting. Primary residences only.
Low Down Payment Conventional Options: A Closer Look
Beyond HomeReady and Home Possible, three paths help buyers minimize upfront cash on conventional loans:
Piggyback loans (80-10-10): A first mortgage at 80 percent of the purchase price, a second mortgage covering 10 percent, and a 10 percent cash down payment. This structure avoids PMI entirely because the first mortgage stays at 80 percent LTV. The second loan carries a higher rate, so the math works best when you have the cash for 10 percent and want to avoid PMI permanently. This product is less widely offered than it was before 2008.
Down payment assistance programs (DAPs): Most states run one or more programs through their housing finance agencies -- some are grants, others are deferred second mortgages forgiven after a holding period. The National Council of State Housing Agencies maintains a state-by-state directory. Eligibility typically requires income limits and first-time buyer status (federally defined as not owning a primary residence in the past three years).
Community seconds: Fannie Mae and Freddie Mac allow subordinate financing from government agencies, nonprofits, or employers to cover the down payment on their 3 percent programs, within program limits.
To see how down payment size affects long-term cost relative to renting, Rent vs. Buy: How to Run the Numbers for Your Market covers the full calculation.
PMI: The Real Cost of Going Below 20 Percent on Conventional
PMI is purchased by your lender and paid by you. It protects the lender if you default. It provides no direct benefit to you.
PMI is required on conventional loans when the loan-to-value ratio exceeds 80 percent. According to the Urban Institute, conventional PMI rates in 2025 ranged from roughly 0.46 to 1.5 percent annually, driven by your LTV ratio, credit score, and loan term. On a $400,000 loan with 5 percent down and a 700 credit score, PMI might run 0.7 percent annually -- about $233 per month.
PMI cancels automatically at 78 percent LTV per the federal Homeowners Protection Act. You can request cancellation in writing at 80 percent LTV with a good payment history and no subordinate liens. Extra principal payments or a new appraisal reflecting appreciation can accelerate that date, though lender policies on appraisal-based cancellation vary.
Key takeaway
PMI adds to your payment and builds no equity. The faster you reach 20 percent equity -- through principal paydown, appreciation, or a larger down payment -- the sooner it drops off. On a conventional loan, eliminating PMI is a real financial event, not a technicality.
Loan Type Comparison at a Glance
| Loan Type | Minimum Down Payment | Credit Score Minimum | Key Eligibility Notes | Mortgage Insurance? |
|---|---|---|---|---|
| Conventional (standard) | 5% | 620 (lender overlay) | Primary, second home, investment; no income limits on standard programs | PMI if LTV > 80% |
| Conventional HomeReady (Fannie Mae) | 3% | 620 | First-time or repeat; income at or below 80% AMI; primary residence | PMI if LTV > 80%; reduced rates available |
| Conventional Home Possible (Freddie Mac) | 3% | 620 | First-time or repeat; income at or below 80% AMI; primary residence | PMI if LTV > 80%; reduced rates available |
| FHA | 3.5% (580+ score) / 10% (500-579 score) | 500 (with 10% down); 580 (with 3.5% down) | Primary residence only; loan limits by county; condo approval required | Upfront MIP 1.75% + annual MIP 0.15-0.75%; life-of-loan if <10% down |
| VA | 0% | None (lenders typically 580-620) | Must meet VA service requirements; primary residence only; entitlement applies | No MIP; funding fee 1.25-2.15% (waived for disability recipients) |
| USDA Guaranteed | 0% | None (lenders typically 640 for automated underwriting) | Property in eligible rural/suburban area; household income at or below 115% AMI | Upfront 1% + annual 0.35%; life of loan |
| Jumbo (conventional, above conforming limit) | 10-20% (lender-set) | 680-720 (lender-set) | No federal agency guarantee; lender-specific requirements | Lender-set; often required below 20% |
Sources: HUD, Fannie Mae Selling Guide, Freddie Mac Single-Family Seller/Servicer Guide, VA Lenders Handbook, USDA Rural Development Guaranteed Loan program materials, FHFA conforming loan limit announcements.
How Much Do You Actually Need to Close?
The down payment is one of three savings buckets required to close. Most first-time buyers plan for the first and underestimate the other two.
Down payment: The percentage figures above, applied to your purchase price.
Closing costs: Closing costs typically run 2 to 5 percent of the loan amount, according to Freddie Mac. On a $350,000 purchase, that is $7,000 to $17,500 in lender fees, title charges, prepaid interest, and escrow setup -- due at or before closing. Some costs can be negotiated into seller concessions, but you cannot count on that in a competitive market. For a line-by-line breakdown, see Closing Costs Explained: What Buyers Actually Pay.
Cash reserves: Most conventional lenders want two to three months of total housing payment (PITI plus any HOA dues) remaining in savings after closing. Depleting savings entirely to cover the down payment and closing costs can trigger a denial at final underwriting review, per CFPB home buyer guidance.
A concrete example: a $350,000 purchase with 5 percent down ($17,500) and 3 percent closing costs ($10,500) requires $28,000 to close -- plus reserves. At $2,200 monthly PITI, two months of reserves add $4,400. Total cash needed: roughly $32,000 to $33,000 before you make an offer.
For the ownership-versus-renting financial comparison, see Rent vs. Buy: How to Run the Numbers for Your Market. For how rate structure interacts with down payment and long-term cost, Fixed-Rate vs. ARM Mortgage: Which Is Right for You? covers the 2026 tradeoffs.
Frequently asked questions
What is the minimum down payment for an FHA loan in 2026?
The FHA minimum down payment is 3.5 percent if your credit score is 580 or higher, according to HUD guidelines. If your score falls between 500 and 579, FHA requires 10 percent down. Scores below 500 are not eligible for FHA-insured financing under current program rules.
Can I buy a house with no down payment?
Two federal programs eliminate the down payment requirement entirely: VA loans for eligible veterans, active-duty service members, and surviving spouses, and USDA loans for properties in designated rural or suburban areas. Both still require meeting income and credit criteria. Not every buyer qualifies for either program.
What is the minimum down payment for a conventional loan?
Fannie Mae and Freddie Mac both back 3 percent down programs for first-time buyers: Fannie Mae's HomeReady and Freddie Mac's Home Possible. Standard conventional loans not under those programs typically start at 5 percent. Putting down less than 20 percent on a conventional loan triggers private mortgage insurance.
Does a larger down payment lower my mortgage rate?
Not automatically, but it often helps. Lenders price risk, and a lower loan-to-value ratio reduces their exposure. Conventional loans with 20 percent or more down typically avoid PMI entirely and may attract marginally better pricing. The rate itself depends on your credit profile, lender, and market conditions at the time of closing.
How much do I actually need in savings before buying a house?
Your savings need to cover more than just the down payment. Closing costs typically run 2 to 5 percent of the loan amount, according to Freddie Mac. On top of that, most lenders want to see at least two to three months of mortgage payments in reserve after closing. Budget all three line items, not just the down payment figure.