Down Payments: The Complete Guide

The down payment is the biggest cash hurdle in buying a home — and the most misunderstood. Minimums are lower than you think, sources are broader than you think, and '20% or bust' is usually bad advice.

Minimum down payment by program

• VA: 0% for eligible borrowers.
• USDA: 0% in eligible areas/income ranges.
• Conventional: 3% (first-time buyers / specific programs); 5% standard.
• FHA: 3.5% at 580+ credit; 10% at 500–579.
• Jumbo: usually 20% (some 10% with elite credit).

Convert any percentage to dollars for your price in the down payment calculator.

What more down actually buys you

• A smaller loan → lower payment (≈$63/month per $10,000 at 6.5%).
• At 20%: no PMI on conventional loans — the single biggest threshold. (PMI calculator)
• Better rate pricing in steps (loan-level price adjustments ease at 25%, 30%+ equity).
• A stronger offer in competitive bidding and cushion against value dips.

What it costs you: liquidity. A buyer who drains savings to reach 20% but cannot fund repairs or three months of expenses is more fragile than one with 10% down and reserves. Lenders know this — reserves are part of approval.

Where the money can come from

• Savings — must be 'seasoned' (typically 60 days of statements) or sourced with a paper trail.
• Gifts — allowed by all major programs from family (and some others) with a signed gift letter stating no repayment is expected. FHA allows a wider donor list.
• Assistance programs — state housing finance agencies, city/county programs, employer assistance, and nonprofit grants: thousands exist, many forgivable after a few years of residence. Income and price limits apply; a homebuyer education course is often required.
• Sale of assets — vehicles, investments: document with bills of sale and deposit records.
• Retirement accounts — 401(k) loans (risky if you separate from the employer) or IRA first-home provisions ($10,000 penalty-free for first-time buyers). Get advice before touching these.

The saving plan

Automate transfers the day after payday into a separate high-yield savings account named for the goal. Cut the target into a date with the down payment calculator — including closing costs from the closing cost calculator so the goal is the true cash-to-close. Every $100/month of spending redirected moves a typical timeline in by months, not weeks, so pair saving with the biggest lever available: choosing a lower-price target market or a 0–3.5% program. Then confirm the resulting payment fits your life in the affordability calculator.