Twenty percent down is the number most people hear, and none of the loans below requires it. On a $325,000 home it would mean $65,000. The real minimum depends on three things: the loan program, your credit score, and whether the home has one unit or two to four.
Minimum down payment by loan program
| Loan | Minimum down | Who uses it |
|---|---|---|
| VA | $0 | Eligible veterans, service members and surviving spouses |
| USDA | $0 | Single-family homes in eligible rural areas, with household income under the county limit |
| FHA 100% financing | $0 from you | A 96.5% FHA first mortgage plus a down payment assistance second that covers the 3.5%, from a 580 score |
| Conventional | 3% | Single-family homes through first-time buyer programs, 620 score and up |
| FHA | 3.5% | 580 score and up, on a single-family home or 2 to 4 units |
| FHA, lower scores | 10% | Scores from 500 to 579 |
| Conventional, 2 to 4 units | 5% | You live in one of the units |
FHA calls its required down payment the minimum required investment. HUD measures it against the lower of the price or the appraised value, so a low appraisal shrinks the required 3.5% too.
What each minimum costs on a $325,000 home
Here's one $325,000 single-family home under every option, with principal and interest at a 5.75% rate on a 30-year fixed.
| Loan | Down payment | First mortgage | Principal and interest |
|---|---|---|---|
| VA, first use | $0 | $331,987.50 | $1,937.39 |
| USDA | $0 | $328,250.00 | $1,915.58 |
| FHA 100% financing | $0 | $319,113.44 | $1,862.26 |
| Conventional, 3% down | $9,750 | $315,250.00 | $1,839.71 |
| FHA, 3.5% down | $11,375 | $319,113.44 | $1,862.26 |
| FHA, 10% down (500 to 579) | $32,500 | $297,618.75 | $1,736.82 |
The VA loan includes the 2.15% funding fee of $6,987.50, and veterans receiving VA disability compensation don't pay it. The USDA loan includes the 1% guarantee fee of $3,250. Both FHA 3.5% rows carry a $313,625 base loan plus the 1.75% upfront mortgage insurance premium of $5,488.44. With FHA 100% financing, the $11,375 comes from the assistance second, and this example assumes a deferred second with no monthly payment.
Mortgage insurance on a small down payment
A smaller down payment usually comes with mortgage insurance, and each program prices it differently. Conventional loans under 20% down carry private mortgage insurance (PMI), priced on your credit score and dropped later once you build equity. On a 30-year loan, FHA charges an annual premium of 0.55% at 3.5% down and 0.50% at 5% down or more, the same at every score. USDA charges 0.35% a year. VA has none.
Ten percent down on FHA has one extra payoff: the annual premium ends after 11 years instead of lasting the life of the loan. The PMI page and the FHA mortgage insurance page show the monthly cost at each down payment.
Duplexes, triplexes and fourplexes
When you live in one unit, FHA still asks for only 3.5% on 2 to 4 units, Conventional asks for 5%, and VA asks for $0. USDA doesn't finance them. On a $425,000 duplex, FHA's minimum is $14,875 and Conventional's is $21,250, and 75% of the other unit's rent counts as income toward qualifying. The FHA duplex page has the full math.
If you're short of the minimum
- Score between 500 and 579: Raising it to 580 cuts FHA's minimum from 10% to 3.5%. On this home, that's $32,500 down to $11,375, a drop of $21,125. Paying down a high card balance is often the fastest way up.
- No savings for the 3.5%: FHA 100% financing covers it with an assistance second, and Florida Housing Finance Corporation runs its own programs through participating lenders.
- Family who wants to help: A gift from a relative can pay the entire down payment on FHA and on a Conventional single-family home. A relative selling you their own home can give a gift of equity instead of cash.
- Savings that only cover the down payment: Ask the seller for a credit toward closing costs. The seller can't pay your down payment, but on FHA they can pay up to 6% of the price toward closing costs and prepaids, which leaves your savings for the down payment.
The cash to close calculator adds the down payment, closing costs, any seller credit and any gift into one number for the price you type in. To find out which minimum you qualify for today, call AAA Capital Funding at 888-601-8344 and we'll price VA, USDA, FHA and Conventional on the same home.