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How Much of a Down Payment Do You Need to Qualify for a Mortgage?

You don’t always need 20% of the purchase price. Some home loans have very small down payment requirements.

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If you’ve been trying to buy a house, saving for a down payment can feel impossible. Home prices keep rising, but your income is struggling to keep up. However, there are ways to buy a house with no -- or very little -- money down

Read on to learn more about the different types of mortgage programs and how much cash you’ll need to have set aside in savings to qualify.

How is a down payment calculated?

A down payment is the amount of money you can contribute to a home purchase upfront. You borrow the remainder from a mortgage lender in the form of a home loan. A down payment is typically expressed as a percentage of the home price. If you plan to put down $30,000 on a home that costs $300,000, for example, you’re making a down payment of 10%. 

How big does your down payment need to be?

The size of your down payment depends on the loan type you plan to use for the purchase. While homebuyers with good credit who take out a loan backed by the Federal Housing Administration can contribute just 3.5% of the purchase price, someone hoping to buy a rental property as an investment will need to make a much larger down payment. 

Down payment amounts vary widely across the country -- from more than 28% of the purchase price in Washington State to just over 9% of the purchase price in Louisiana, according to data from

Do you need to put 20% down on a home?

You may have heard that you need 20% of the purchase price in order to become a homeowner. This isn’t the case. Instead, 20% is simply an ideal figure in the lender’s eye because it means you’re putting more money into the deal. It also means you’ll be able to take out a less sizable home loan and avoid paying private mortgage insurance premiums, which can add hundreds of dollars to your housing costs over time. 

What are the benefits of a larger down payment amount?

Being able to make a smaller down payment means you’ll be able to buy a home sooner and hold on to more of your savings. But there are some advantages to making a larger down payment:

Potential for better terms: Lenders tend to offer the most competitive rates to the lowest-risk borrowers. By contributing more of your own money, they’ll feel better about letting you borrow the cash.

Lower monthly mortgage payments: A bigger down payment means a smaller principal balance, which helps you save money on your monthly budget. For example, CNET’s mortgage calculator shows that if you put down 20% on a $300,000 home with a 7% interest rate, your monthly payment will be $2,162. Cut that down payment in half ($35,000), and your payments jump to $2,395.

Lower lifetime costs: Those smaller monthly payments add up to a big difference over the course of a 15- or 30-year mortgage, and you’ll save a sizable chunk of money in interest.

What are the minimum down payment requirements?

Down payment requirements vary based on the type of loan you’re looking for and your credit score. Consider these common down payment percentages:

Loan typeMinimum down payment requirement
FHA3.5% for credit scores of 580 and above; 10% for credit scores between 500 and 579
VANo down payment required
USDANo down payment required
JumboVaries by lender, but typically at least 10%
Second homeVaries by lender, but typically at least 10%
Investment propertyTypically 15%

What are the income requirements for making a down payment on a home?

According to data from the National Association of Realtors, the median household income of homebuyers was $107,000 last year.  However, there are no set income requirements for mortgages. 

Still, what you earn does lay the foundation for determining what you can spend. When a lender is evaluating your application, they’ll look at your income and how much you’re already spending to pay back other debts, such as student loans and minimum payments on credit cards. This is known as your debt-to-income ratio -- how much money you must pay every month compared to how much you earn each month. In most cases, lenders prefer to see a DTI of 36% or less, but some loan programs allow up to 50% DTI.

This is another area where a larger down payment makes a big impact: If you pay more upfront, you’ll be borrowing less money, which means you’ll be keeping your DTI lower. 

How to calculate your DTI

To figure out your DTI, add all your monthly debt payments, including your monthly mortgage payment, and divide it by your total gross monthly earnings. For example, let’s say you earn $10,000 a month before taxes, and you have the following debt obligations:

  • Student loan payment: $200
  • Car payment: $500
  • Monthly mortgage payment: $2,300

All those debts add up to $3,000, which means your DTI is 30%. 

DTI requirements for different mortgages

Loan typeDTI
Conventional loan36% in most cases, but 45% with a higher credit score and/or bigger down payment
FHA loan50%
VA loan41%
USDA loan41%

What factors determine if you’re approved for a mortgage?

Your DTI isn’t the only aspect your lender will evaluate. Your credit score plays a critical role in determining if you’ll be approved for a mortgage and your interest rate. 

For conventional loans backed by Fannie Mae or Freddie Mac, you’ll need a minimum credit score of 620, while FHA loans will accept credit scores as low as 500. VA and USDA loans don’t have set minimum credit score requirements, but that doesn’t mean you’ll get approved automatically: Lenders can set their own standards.

Your credit score will also determine the rate you can secure: The higher your credit score, the lower your rate. Individual lenders usually offer the lowest mortgage rates to borrowers with credit scores of 740 and above.

What kind of down payment assistance is there?

Don’t be discouraged if you can’t come up with the money for a down payment. There are numerous options for down payment assistance, especially for first-time and low-income buyers who can meet the limits and requirements set in place by the local or state housing authority. In many cases, these options can also be used to cover your closing costs.

Grants: This is the ideal form of assistance, as a grant is outright free money with no obligation to pay the money back.

Forgivable loans: As the name suggests, these loans will eventually be wiped away, provided you live in the home for a certain amount of time. If you wind up moving before that period is over, though, you’ll have to pay a portion of the money back.

Deferred loans: These are typically 0% interest loans that will be due at the end of your mortgage or if you sell or refinance your mortgage.

Low-interest loans: Some down payment assistance loans charge additional interest, and you’ll pay the loan back at the same time as your primary mortgage payment. These are helpful because you don’t have to come up with all the cash for a one-time payment, but they’ll affect your monthly budget.

Where to apply for down payment assistance

The best place to look for down payment assistance is with your state or local housing authority. Start by reviewing a directory of all state housing authorities from the Department of Housing and Urban Development

Some banks and credit unions also offer down payment assistance programs. For example, Bank of America offers two types of grants -- between $7,500 and $10,000 -- that can be used to cover closing costs, down payment expenses or to buy down an interest rate.

If you’re not sure of what you might be able to qualify for, check out, which includes a comprehensive directory of options available by area.

What mortgages can you use with down payment assistance?

You can couple down payment assistance with most mortgages, including conventional loans and FHA loans. It’s important to understand that the assistance is separate from the loan. For example, you can apply for an FHA loan while looking for supplemental down payment assistance to help cover the 3.5% down payment requirement. 

The bottom line

There isn’t a set answer to how much you need for a down payment. The requirements for a first-time buyer with a moderate income will look quite different from someone looking to buy a vacation home. Regardless of your unique situation, look at your savings to figure out how much you can afford for a down payment. Then scrutinize your finances to figure out how much of your home loan you can pay back each month.


If you have very good to excellent credit, with a FICO score of at least 740, you may be able to qualify for a conventional loan that requires a down payment of 3% of the purchase price. But your down payment isn’t the only piece of the homebuying puzzle: You also need to budget for closing costs, which can add thousands of dollars to your upfront expenses.

There are a number of local- and state-sponsored programs designed to help low- and moderate-income families buy homes by offering assistance for a down payment or closing costs. In today’s unaffordable housing market, these programs can be the difference between renting and owning. 

No. A 20% down payment on a house will eliminate the need for paying private mortgage insurance. If you’re comfortable paying PMI, you can make a significantly smaller down payment to become a homeowner. In fact, according to the National Association of Realtors, first-time homebuyers typically put down just 8% of the purchase price last year.

When applying for a mortgage, your lender will ask you for proof of income. The most common income is from employment -- wages from your regular job, bonus and commission earnings as well as any self-employed income you generate as a freelancer or independent contractor. However, there are other types of income that you can show to your lender to help you prove you have enough money to cover your payments:

  • Interest income from savings accounts, CDs, stocks and other investments
  • Alimony or child support payments
  • Schedule K-1 (Form 1065), which includes money generated from businesses, such as partnerships and corporations, of which you’re an owner
  • Social Security payments
  • Income from a trust account
  • Mortgage credit certificates: if you qualify for a mortgage credit, lenders can treat this as income to lower your DTI
David McMillin writes about credit cards, mortgages, banking, taxes and travel. Based in Chicago, he writes with one objective in mind: Help readers figure out how to save more and stress less. He is also a musician, which means he has spent a lot of time worrying about money. He applies the lessons he's learned from that financial balancing act to offer practical advice for personal spending decisions.
Alix is a former CNET Money staff writer. She also previously reported on retirement and investing for and was a staff writer at Time magazine. Her work has also appeared in various publications, such as Fortune, InStyle and Travel + Leisure, and she also worked in social media and digital production at NBC Nightly News with Lester Holt and NY1. She graduated from the Craig Newmark Graduate School of Journalism at CUNY and Villanova University. When not checking Twitter, Alix likes to hike, play tennis and watch her neighbors' dogs. Now based out of Los Angeles, Alix doesn't miss the New York City subway one bit.
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