Happy Home Insider

How much money do I need for a down payment on a house?

Everyone loves the idea of becoming a homeowner, but the truth is, it can be one of the most rigorous, at times even invasive processes one can experience.

For a conventional mortgage, the majority of lenders will require a down payment of at least five percent; simply multiply the total price of the home by .05 and that is the amount that will be required of you for a down payment. Conventional loans with a down payment of less than twenty percent require you to purchase private mortgage insurance (PMI). The monthly premium for PMI depends upon a number of variables such as the borrower’s credit, the size of the down payment, and the total amount of the loan.

A Federal Housing Administration (FHA) mortgage is a government-backed mortgage that only requires a 3.5% down payment. You can make a larger down payment with an FHA loan as well, in fact, the FHA charges less if you make a down payment of five percent or more. One of the primary differences between the FHA, government-backed loans, and private loans, is that FHA doesn’t charge more to insure people with poor credit scores.


Companies such as Fannie Mae and Freddie Mac are largely responsible for insuring that individuals with low to moderate incomes are able to purchase homes with down payments as low as three percent; in order to achieve this, they incentivize lenders to give mortgages to these customers. Special programs like these often times come with specific terms, conditions, and restrictions. Some have income caps and while others don’t, they may require that you buy in an area with a lower socio-economic average than the status quo. To find out if you’re eligible for one of these programs, simply ask a lender and they’ll be able to advise you on your viability as a candidate for these low down payment mortgages.

If you are a veteran or active service member, you may be eligible for a 0 money down mortgage through the Department of Veteran Affairs. VA loans are available to most members of the armed forces or veterans. With this loan, you borrow from a regular lender, but the VA guarantees the loan. While there is no mortgage insurance required with this type of loan, there is a guarantee fee.

When preparing your finances to purchase a home, the best course of action is to get together with a number of different lenders and figure out which is the best option for you. It’s perfectly normal to feel slightly overwhelmed by the process, but in the long run, it will best serve you to be thorough and explore all options in order to be sure you select the right path for you.

Jordan Jacobs

Jordan has worked as a mortgage lender and real estate agent. He is a self-described "housing professional" with over 20 years of experience in the industry. After retiring at the early age of 50, he shifted his focus to sharing his personal wisdom with others.

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