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Down Payment Guidelines

Learn how much you will need to pay as a down payment on your home purchase.
Learn about the requirements for primary residences, investment properties, conventional, FHA, VA, and USDA loans.

Down Payment Information

Learn all about down payment guidelines, what programs offer the lowest down payment requirements, and if any assistance or grants are available to you.  If you would like to speak with a home loan representative about your mortgage questions, please contact us now at 1-800-731-3560.  You can also email us through the contact form and we will respond promptly.

Down Payment Guidelines:

Below are the guidelines and requirements specific to various loan types.  You can learn what the minimum down payment requirements are and other guidelines for specific mortgage types.  Learn both the minimum amount needed to buy a home, as well as how much to avoid monthly mortgage insurance.

Primary Residence – 3% Minimum Down Payment Requirement
First time home buyers, both individuals and co-applicants may qualify for a conventional loan that only requires a 3% down payment.  FHA also only requires a down payment of 3.5%.  This money can be sourced from personal savings or assets, borrowed from family or friends, or gifted.   For home buyers who can afford to do so, and have the credit to qualify, a conventional loan for your primary residence may be your best bet.

Investment Properties – 15% Minimum Down Payment Requirement
Mortgage insurance is not available for investment properties, so a 20% down payment is required with any lender or bank.  Oftentimes, if you place 15% down resulting in a 85% loan-to-value ratio, you will be issued a lower interest rate.  It is important to keep in mind that most home loans for investment properties do not allow for the funds to be gifted, but from your own savings or assets.

Conventional Mortgage:  3% Down Payment Minimum Requirement
There are several conventional loan programs that only require a 3% down payment.  Conventional loans have stricter qualification guidelines, being geared towards those with good or excellent credit.

FHA Mortgage: 3.5% Down Payment Minimum Requirement
The FHA has a minimum down payment requirement of 3.5%.  This does not necessarily mean that all applicants will qualify for 3.5%, but that is usually what is allowed.  In most cases, first time buyers with good credit and work history will qualify for this minimum down payment option.  The great thing about FHA loans for first time home buyers purchasing a primary residence is that the money can be borrowed or a gift.  You do not have the source the funds from your own savings.

VA Mortgage:  0% Down Payment Minimum Requirement
The Veterans Administration offers 100% financing to many vets.  Similar to the FHA minimum, this does not automatically mean a veteran can obtain a home purchase loan with no money down.  A veteran must have qualifying credit, and the ability to prove they have the capacity to pay the mortgage payments.

USDA Mortgage: 0% Minimum Requirement
Aside from VA loans, USDA loans are the only mortgages that do not require any money for the down payment on a home purchase.  The United States Department of Agriculture offers 100% financing to qualifying borrowers of rural and agricultural properties.

GNND Mortgage: $100 Requirement with FHA Loan
A special home buying program offered to certain professionals employed by the government may apply for the good neighbour next door mortgage.  This includes teachers, firefighters, police officers, and emergency medical technicians.  Applicants who are awarded the opportunity to buy through GNND may apply for the $100 down payment FHA loan.

Down Payment Questions:

Home buyers, especially first timer buyers, often have a multitude of questions related to down payments.  This ranges from what the minimum down payment requirements are to what sources they can use to fund the down payment.

The majority of questions related to down payments is regarding what the minimum down payment requirements are.  This largely depends on the individual, what you qualify for, and if you are a first time home buyer.  The guidelines also vary based upon how you intend to use the home after it is purchased.  If you want to buy a home that will be used as your primary residence you will be allowed to place a substantially lower amount down than if you are in the market for an investment property.

Below are some of the most frequently asked questions:

What loan program offers the lowest down payment for first time home buyers?
Technically, USDA loans and VA loans, since both offer no money down programs for those who qualify.  You must be a veteran to qualify for a VA loan, and in order to qualify for a USDA loan, you must be buying a rural property.  For the majority of Americans who are not veterans or buying a rural property, a conventional or FHA loan will provide the lowest down payment option.

Can a home seller pay for your down payment?
No, sellers are no longer to pay or provide any assistance with the down payment costs.  This all changed with new laws that were enacted nationwide in 2008.

Can a seller pay for closing costs?
Generally, yes.  Most mortgages allow for a seller to pay for the closing costs.  The amount that is allowed depends on the type of loan and LTV ratio.  It varies between 3%-9%.  We encourage you to learn more about this topic if you would like to find out how much a seller can pay towards your closing costs.

Can I take cash out to use for a down payment?
Yes, you can cash out refinance and use the funds to use as a down payment for purchasing a new home.  We recommend reading this article about cash out refinancing for the purpose of using the funds for a down payment on a new home.

The home I am buying is undervalued, do I still need to pay a down payment?
Yes, even if you are buying a home for less than it is worth, you will still need to pay a down payment.  So if you are buying a home for $200,000, which is technically worth $300,000, you still have to put a down payment down.  What you may consider, is looking at a refinance after 6 months or 12 months since you may be able to eliminate your mortgage insurance if your LTV is less than 80%.  Another potential option is for you to consider cash out refinancing after the purchase is completed.  Please note:  there is a 6 month seasoning requirement before being eligible to take cash out.

Do down payment assistance programs or grants still exist?
There are numerous down payment assistance grants available, which those that exist can be viewed by location, topic, or profession.  However, most down payment assistance programs were made illegal in 2008 when the Federal Government forbade seller offered down payment assistance.  You can search online for government grants at a local, state, or federal level.

What percentage of a house is a down payment?
You can put down as much money as you want to when buying a home.  Most loans will require a down payment of at least 3.5% (though the FHA), however, you can put down as much money as you would like to.  If you are able to, you should consider putting 20% down.  This will eliminate mortgage insurance payments, and also entitle you to a better mortgage rate (in most cases).

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