What Is Down Payment?

Your down payment is the portion of the home’s purchase price you pay upfront in cash at closing. The more you put down, the less you borrow and the lower your monthly payment.

On a $350,000 home, a 3% conventional down payment is $10,500, an FHA 3.5% down payment is $12,250, and a 20% down payment is $70,000. Putting down less than 20% on a conventional loan triggers private mortgage insurance (PMI), which can add $75–$250 per month. VA and USDA loans allow 0% down for eligible borrowers, making homeownership accessible without years of saving.

Key Facts

• Conventional minimum: 3% for first-time buyers, 5% for repeat buyers with some programs
• FHA minimum: 3.5% with a 580+ credit score
• VA and USDA: 0% down payment for eligible borrowers
• PMI avoidance: 20% down eliminates private mortgage insurance on conventional loans
• Accepted sources: Savings, gift funds, down-payment assistance programs, and some retirement account withdrawals
• Average first-time buyer down payment: Approximately 6%–8% nationally

Frequently Asked Questions

Is 20% down required?

No. While 20% eliminates PMI on conventional loans, most buyers put down far less. First-time buyers average around 6%–8%, and programs like FHA (3.5%), VA (0%), and USDA (0%) make lower down payments accessible.

Can I use gift money for my down payment?

Yes. FHA, VA, conventional, and USDA loans all allow gift funds from family members. You will need a signed gift letter confirming the money is a gift with no expectation of repayment, plus documentation showing the donor’s ability to give.

Does a bigger down payment get me a better rate?

Generally, yes. A larger down payment lowers your LTV, which reduces lender risk and often results in a lower interest rate and smaller — or no — mortgage insurance premiums.