Down Payment Options in 2019

What is the Minimum Down Payment Requirement to Buy a Home?

What is the lowest down payment you can make to buy a house? It depends on the type of mortgage you’re getting. Here’s a quick list, then I’ll follow up with details for each type of loan below.

Lowest Down Payment For A House By Type Of Loan:

  • VA – Veteran Housing Benefit – No Down Payment Required
  • USDA Guaranteed – No Down Payment
  • Conventional – Fannie & Freddie 3% Down
  • Conventional – Fannie & Freddie 5% Down
  • FHA Insured – 3.5% Down Payment
  • First/Second Piggyback – 89.99% CLTV
  • Jumbo Financing – 20% Down Payment
  • Jumbo Bank Buster Loan – DU Approve
  • Portfolio Loans – Buy sooner after hardship
  • Working With Professionals

Minimum down payment is the number one issue for first-time homebuyers.  The biggest hurdle for most first-time homebuyers is coming up with the down payment and closing costs.  It seems like a mountain too high to climb sometimes.

Your closing costs can be paid by other parties, so we’re going to set that aside for now.

Minimizing your down payment is most often the goal of first-time buyers. My experience is that there is a lot of confusion about what the minimum down payment is for each loan program.

My goal here is to create a single resource to help you to compare all of your down payment options.

The easiest way to explore these limits is to sort by loan type.

Minimum Down Payment for a VA Loan – Veteran Housing Benefit – No Down Payment

VA loans allow 100% financing up to the conforming loan limit.  If you are buying in a High-Cost County, like in Southern California, the VA limit will extend to the high balance loan limit for your County.

For purchases prices above the conforming loan limit, the Veteran is only required to pay 25% of the difference above this conforming loan limit, and your purchase price.

In high-cost counties, coming in with the 25% difference is significantly less than any Jumbo loan down payment requirement.

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If you are eligible for a VA-guaranteed loan, there is no better option for buying a home.

Occupancy Transaction Type Max Loan to Value / Min Down
Owner Occupied Purchase 100% LTV – Zero Down Payment
Rental Property N/A N/A

Minimum Down Payment for a USDA Guaranteed Loan – No Down Payment

USDA is another 100% financing loan for families buying in USDA eligible areas.

USDA guaranteed loans do not have loan limits like typical loan programs.  Instead, USDA uses income limits and three different income calculations to determine your maximum purchase price.

You can research income, and property eligibility with the USDA Lookup Tool.

Occupancy Transaction Type Max Loan to Value / Min Down
Owner Occupied Purchase 100% LTV – Zero Down Payment
Rental Property N/A N/A

Minimum Down Payment for a Conventional Loan – Fannie & Freddie 3% Down

Most people do not know that Conventional financing downpayment requirements start at only 3% of the purchase price.

  • If you’re using a Fannie Mae loan, this program is called HomeReady.
  • If you’re using a Freddie Mac loan, this program is called HomePossible.

Important features to these programs include discounted mortgage insurance, and a cap on loan level price adjustments (LLPA).  A cap on LLPAs will keep closing costs and interest rates under control.

Both of these special programs have different qualifying guidelines and income limits to use the 3% down payment option.

Make sure you discuss both of these options with your loan officer if you are interested in going this direction.

Occupancy Transaction Type Maximum Loan to Value
Owner Occupied Purchase 97% LTV – 3% Down Payment
Rental Property N/A N/A

Minimum Down Payment for a Conventional Loan – Fannie & Freddie 5% Down

I am surprised at how many visitors to this site believe that conventional home loans require 20% down payment.

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If you can meet the 3% down payment guidelines, that’s great!  If you cannot meet location or income requirements, conventional financing only requires a 5% down payment up to high cost County loan limits.

Occupancy Transaction Type Max Loan to Value / Min Down
Owner Occupied Purchase 95% LTV – 5% Down Payment
Rental Property Purchase 85% LTV – 15% Down Payment

Minimum Down Payment for an FHA Insured Loan – 3.5% Down Payment

FHA-insured loans are an amazing opportunity for anyone purchasing an owner-occupied home that requires a more flexible qualifying and a lower down payment.

The most important restriction you need to know about FHA-insured loans is that they can only be used to purchase a home you will live in as your primary residence.

Occupancy Transaction Type Max Loan to Value / Min Down
Owner Occupied Purchase 100% LTV – Zero Down Payment
Rental Property N/A N/A

Minimum Down Payment for a First/Second Piggyback Loan – 89.99% CLTV

A first and second piggyback loan is becoming a more popular option as home values rise around the Country.

The most common reason a piggyback loan is used is to avoid mortgage insurance or Jumbo financing.

The maximum first mortgage would normally be the maximum conforming loan limit or 80% loan to value, whichever is greatest.

Piggyback second loans are most commonly used with a Conventional first mortgage.

Occupancy Transaction Type Max Loan to Value / Min Down
Owner Occupied Purchase 80% LTV 1st TD / up to 9.99% HELOC – 89.99% CLTV
Rental Property N/A N/A

Minimum Down Payment for a Jumbo Loan – 20% Down Payment

As a general rule, Jumbo financing will require a 20% down payment or more, depending on your credit scores and the amount you are trying to borrow.

These numbers represent a loan amount up to a million dollars, with a minimum 720 FICO.

Occupancy Transaction Type Max Loan to Value / Min Down
Owner Occupied Purchase 80% Loan to Value / 20% Min Down
Rental Property Purchase 60% Loan to Value / 40% Min Down

Minimum Down Payment for a Jumbo Bank Buster Loan – DU Approve

Mortgage Brokers Celebrate a New Wholesale Jumbo Mortgage Loan available in December, 2018. 

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This new wholesale jumbo mortgage loan was designed to compete directly with big bank interest rates, except with the speed and underwriting flexibility you get from an independent mortgage broker.

Minimum Down Payment for a Portfolio Loans – Buy sooner after hardship

Portfolio loans bridge the gap between your preparedness to buy a home and the waiting period requirements after a significant financial hardship like bankruptcy, foreclosure, short sale, or deed in lieu of foreclosure.

These loans tend to be 5 to 7 year ARM loans, fixed for 5 or 7 years, and adjustable after the fixed period.

The ideal use of one of these programs is when you are eligible for a traditional, more stable loan within 3 to 5 years max.

For portfolio loans, the time from the financial hardship directly affects the minimum down payment.  See below:

Occupancy Hardship Event Max Loan to Value / Min Down
Owner Occupied Less than 12 months (1 day ok) 80% Loan to Value / 20% Min Down
Owner Occupied Greater than 12 less than 24 months 85% Loan to Value / 15% Min Down
Owner Occupied Greater than 24 months 90% Loan to Value / 10% Min Down

Frequently Asked Questions About Minimum Down Payment Requirements To Buy A Home

What is the minimum down payment for an investment property?

Most lenders require a minimum downpayment of 15% – 20% to get conventional financing for an investment property. Some private lenders may be willing to work with you if the deal is right for them.

What is a down payment?

A down payment is an amount of money that you have to pay in order to buy a house. Down payments are required for many types of loans because they help to ensure that the buyer has something they will lose if they just walk away from the house and stop making payments. 

What is the lowest down payment available on a conventional loan?

The lowest down payment available for a conventional loan is 3% through the HomeReady and HomePossible programs. See the Minimum Downpayment for a Conventional Loan – Fannie & Freddie 3% Down section above for more details on how to get into the programs that allow these low down payments.

If your income level is too high to qualify for the HomeReady or HomePossible programs, the minimum down payment level for a conventional loan where you will live in that home after purchase is 5%. See the Minimum Downpayment for a Conventional Loan – Fannie & Freddie 5% Down section above for more details on this option.

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How is down payment percentage calculated?

Down payment percentage is calculated as a percentage of the total purchase price.

So if you were wanting to buy a home that cost $300,000 and were going to use a conventional loan that required 5% down payment, you would need $15,000 as a down payment ($300,000 * .05 = $15,000)

What is the required down payment for a second home?

Mortgages to buy a second home (vacation home, cabin, etc.) usually require a 10% to 20% minimum down payment. If the second home is being purchased as an investment property (that you will rent out, airbnb, etc.) you can plan on paying at least 15% to 20% down payment on that investment property.

What is the minimum down payment requirement to buy a rental property?

A rental property is considered by mortgage lenders to be an investment property, so you will likely need to make a down payment of at least 15% to 20% on that rental property.

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Have Questions About Qualifying for a Mortgage?

We can help! You can Ask Your Question here, and we will connect you with a Mortgage Expert in your area that can help, or you can find a Mortgage Expert Near You below this article.

About the Author

Scott Schang

A 20+ year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues and making sense of complicated real estate and mortgage topics on this website since 2007

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