A first time home buyer down payment does not always have to be 20%. Depending on the loan program, qualified buyers may be able to purchase with 0% down, 3% down, 3.5% down, or another low down payment option.
The right down payment depends on your loan type, credit profile, income, property location, military eligibility, first-time buyer status, and available cash.
Many buyers delay homeownership because they believe they need a large down payment before applying. In reality, there are several programs designed to help eligible first-time buyers buy with less cash upfront.
Important note: This article is for informational purposes only and is not a commitment to lend. Loan approval, down payment requirements, rates, APR, credits, fees, mortgage insurance, and terms depend on credit, income, property eligibility, occupancy, underwriting, investor guidelines, and lender requirements.
Key Takeaways A down payment for first time home buyers may be as low as 0%, 3%, or 3.5%, depending on the loan program and eligibility. The minimum down payment for a house for a first-time buyer is not one fixed number; VA, USDA, FHA, and conventional programs all have different rules. Recent NAR data reported that the median down payment for first-time buyers was 10%, but many loan programs may allow qualified buyers to purchase with less. First-time buyers should compare down payment, closing costs, mortgage insurance, monthly payment, assistance options, and cash left after closing. What Is a First Time Home Buyer Down Payment? A first time home buyer down payment is the upfront amount a buyer contributes toward the purchase price of a home. The mortgage covers the rest of the eligible purchase price, subject to loan approval and program guidelines.
For example, if a buyer purchases a home with a 3% down payment, they are financing most of the purchase price through the mortgage.
The down payment affects:
Loan amount Monthly payment Mortgage insurance Cash needed at closing Interest cost over time Loan program eligibility Offer strength in competitive markets A larger down payment may reduce the loan amount and monthly payment.
A smaller down payment may help buyers enter the market sooner and preserve more cash for closing costs, repairs, moving expenses, or emergency savings.
The best down payment is not always the largest down payment. It is the amount that supports both approval and long-term affordability
First Time Home Buyer Minimum Down Payment The first time home buyer minimum down payment depends on the loan program. Some qualified buyers may be eligible for no down payment through VA or USDA, while others may qualify for 3% down conventional options or 3.5% down FHA financing.
Here is a practical comparison:
Loan Option
Minimum Down Payment Feature
Best For
Important Notes
VA Loan Often 0% down Eligible Veterans, service members, and surviving spouses VA funding fee may apply unless exempt USDA Loan May allow 0% down Eligible buyers in approved rural/suburban areas Income and property rules apply Conventional 3% Down As low as 3% down Qualified first-time or eligible buyers PMI may apply HomeReady As low as 3% down Eligible low- to moderate-income borrowers Income and program rules may apply Home Possible As low as 3% down Eligible very low- to moderate-income borrowers Homebuyer education may apply FHA Loan As low as 3.5% down Buyers needing flexible credit guidelines FHA mortgage insurance required Down Payment Assistance Varies Eligible buyers by state/local rules May be grant, loan, or deferred assistance
Fannie Mae says HomeReady requires a down payment as low as 3% for eligible borrowers, and Freddie Mac says Home Possible offers a down payment requirement as low as 3%.
The CFPB explains that FHA loans may allow down payments as low as 3.5% and may allow lower credit scores than many conventional loans, while also requiring mortgage insurance.
A first-time buyer does not automatically need 20% down, but they do need to qualify for the loan program they choose.
Average Down Payment on a House for First Time Buyer The average down payment on a house for first time buyer can vary by market, home price, income, loan type, and buyer profile. Recent NAR data reported that the median down payment for first-time buyers was 10%, while repeat buyers had a higher median down payment.
That number is useful, but it can be misleading if buyers assume they must match it.
A median or average down payment is not the same as a minimum required down payment.
A buyer may put down 10% because they have savings, received family help, sold assets, or want a lower payment.
Another buyer may qualify with 3%, 3.5%, or even 0% down through an eligible program.
Why Average and Minimum Are Different Term
What It Means
Minimum down payment The lowest amount a loan program may allow if the buyer qualifies Average or median down payment What buyers actually paid in a specific data set Cash to close Total funds needed at closing, including down payment, closing costs, and prepaids Reserves Money left after closing that may support approval and financial stability
First-time buyers should not plan based only on the average down payment. They should compare the minimum requirement, total cash to close, and monthly payment.
Down Payment for First Time Home Buyers by Loan Type The down payment for first time home buyers varies by loan type. FHA may be useful for flexible credit, conventional 3% down programs may fit qualified buyers, VA may allow eligible military borrowers to buy with no down payment, and USDA may allow no money down in eligible areas.
FHA Loans An FHA loan may allow qualified buyers to purchase with a low down payment.
FHA can be useful for first-time buyers who need more flexible credit guidelines.
FHA buyers should review:
Minimum required investment Upfront mortgage insurance Monthly mortgage insurance County loan limits Property condition rules Total monthly payment The CFPB notes that FHA loans may allow down payments as low as 3.5% and require mortgage insurance.
-> Read more: How to Apply for FHA Loan (Step-by-Step Guide )
Conventional 3% Down Loans Some conventional loan options may allow qualified buyers to purchase with as little as 3% down.
These may work well for buyers with stronger credit who want a conventional mortgage path.
Common options include:
HomeReady may allow eligible borrowers to use a 3% down payment, while Home Possible is also designed for very low- to moderate-income borrowers with a down payment requirement as low as 3%.
VA Loans A VA loan may allow eligible military borrowers to buy with no down payment.
VA purchase loans can help eligible borrowers buy, build, or improve a home, especially if they do not want to make a down payment.
VA may fit eligible:
Veterans Active-duty service members National Guard members Reserve members Certain surviving spouses Buyers should also review the VA funding fee, unless exempt, along with closing costs and total monthly payment.
-> Read more: How to Get a VA Home Loan: Step-by-Step Guide for Veterans
USDA Loans A USDA loan may allow eligible buyers to purchase with no money down in approved rural or suburban areas.
USDA states that its Single Family Housing programs may allow qualifying buyers to purchase or build with no money down in eligible rural areas.
USDA may fit buyers who:
Are buying a primary residence Meet household income limits Choose a USDA-eligible property Have acceptable credit and repayment ability Want to reduce upfront down payment needs -> Read more: USDA First-Time Home Buyer Loan Qualifications | Who Can Qualify
Each loan type has a different down payment structure, so first-time buyers should compare programs before assuming one option is best.
First Time Homeowner Down Payment vs. Closing Costs A first time homeowner down payment is only one part of the money needed to buy a home. Buyers may also need closing costs, prepaid taxes, homeowners insurance, escrow reserves, inspection fees, appraisal fees, and moving funds.
This is one of the biggest surprises for first-time buyers.
A buyer may qualify for a low down payment loan but still need cash to close.
Common upfront costs may include:
Earnest money deposit Home inspection Appraisal Title and escrow fees Closing costs Prepaid property taxes Homeowners insurance Escrow reserve setup HOA transfer or setup fees Moving expenses Emergency savings after closing Fannie Mae explains that down payment and closing costs are due to the lender at closing before move-in, and assistance may help buyers find funding for those expenses.
Do not ask only, “How much is my down payment?” Ask, “How much cash do I need to close safely?”
You can use the Loan Factory mortgage calculator to estimate how purchase price, down payment, taxes, insurance, and loan term may affect your monthly payment.
→ Read more: What are the closing costs on a mortgage?
Can First-Time Buyers Get Down Payment Assistance? Yes, some first-time buyers may qualify for down payment assistance through state housing agencies, local government programs, nonprofits, employers, or community programs. Assistance may help with down payment, closing costs, or both, depending on program rules.
Down payment assistance may be structured as:
Grant Forgivable second loan Deferred-payment second loan Low-interest second mortgage Closing cost assistance Matched savings program Fannie Mae notes that in many cases, funds for part or all of a down payment and closing costs may come from a variety of sources, helping more borrowers pursue homeownership.
Assistance programs may consider:
First-time buyer status Household income Property location Home price Occupancy Credit profile Homebuyer education Repayment terms Down payment assistance can reduce the upfront barrier, but buyers should understand whether the help is a grant, loan, deferred payment, or forgivable option.
Minimum Down Payment for House First-Time Buyer: How Much Should You Save? The minimum down payment for house first-time buyer depends on the loan program, but buyers should save for more than the minimum whenever possible. A strong savings plan should include down payment, closing costs, prepaids, reserves, inspections, and post-closing expenses.
A simple savings target should include:
Savings Category
Why It Matters
Down payment Required borrower contribution for many loan programs Closing costs Lender, title, escrow, and third-party fees Prepaids Taxes, insurance, and escrow setup Inspection and appraisal Common purchase-related costs Moving expenses Moving, utilities, deposits, and setup costs Emergency reserves Financial cushion after closing
Example: $350,000 Purchase Price Down Payment %
Down Payment Amount
0% $0 3% $10,500 3.5% $12,250 5% $17,500 10% $35,000 20% $70,000
This example is for illustration only and does not include closing costs, prepaids, mortgage insurance, taxes, insurance, or program-specific fees.
The minimum down payment helps you understand eligibility. Your full cash-to-close estimate helps you understand readiness.
Should First-Time Buyers Put Down More Than the Minimum? First-time buyers may choose to put down more than the minimum if they want a lower loan amount, lower monthly payment, reduced mortgage insurance, or stronger offer. However, using too much cash upfront may leave buyers with limited reserves after closing.
A larger down payment may help:
Lower the loan amount Reduce monthly payment Reduce or avoid PMI on some conventional loans Improve equity position Strengthen the buyer’s offer Potentially improve pricing in some scenarios A smaller down payment may help:
Preserve emergency savings Cover repairs or moving costs Keep investment or retirement funds intact Buy sooner Use assistance or low down payment programs The right down payment is a balance. Putting every dollar into the home can create risk if you do not have savings left after closing.
Loan Factory Experience Note: In real first-time buyer reviews, many borrowers focus on the lowest down payment possible. But the stronger planning question is: “How much cash will I still have after closing?” A buyer with reserves may be in a stronger financial position than a buyer who used all savings to increase the down payment.
Case Study: Comparing First-Time Buyer Down Payment Options A first-time buyer may have several down payment options depending on loan program eligibility. Comparing down payment, cash to close, monthly payment, mortgage insurance, and reserves can help identify the best fit.
Hypothetical Buyer Scenario A first-time buyer wants to purchase a $400,000 primary residence.
Loan Option
Estimated Down Payment
What the Buyer Should Review
VA Loan $0 if eligible COE, VA funding fee, occupancy, appraisal USDA Loan $0 if eligible Property location, income limits, guarantee fee Conventional 3% Down $12,000 PMI, credit profile, monthly payment FHA 3.5% Down $14,000 FHA mortgage insurance, flexible credit review 5% Down Conventional $20,000 PMI, pricing, stronger equity position 10% Down $40,000 Lower loan amount but more cash used upfront
The buyer should not choose based only on the down payment.
They should compare:
Monthly payment Estimated cash to close Mortgage insurance Interest rate and APR Property eligibility Seller credit options Down payment assistance Cash reserves after closing Loan Factory Experience Note: In purchase scenarios across different U.S. markets, we often see first-time buyers improve their homebuying plan by comparing multiple structures side by side. A 3% down conventional loan may work well for one buyer, while FHA may be better for another. An eligible VA or USDA buyer may be able to preserve more cash upfront, but still needs to review closing costs and payment comfort.
→ Read more: first time home buyer programs with no money down
How to Choose the Best First Time Home Buyer Down Payment Option To choose the best first time home buyer down payment option, compare eligibility, cash to close, monthly payment, mortgage insurance, interest rate, APR, property rules, assistance programs, and reserves after closing.
1. Start With Loan Program Eligibility Ask:
Am I eligible for VA? Is the home USDA-eligible? Do I qualify for FHA? Do I qualify for Conventional 3% down? Do I meet HomeReady or Home Possible requirements? Is down payment assistance available? 2. Compare Monthly Payment Review:
Principal and interest Property taxes Homeowners insurance Mortgage insurance HOA dues Guarantee fees, if applicable 3. Compare Cash to Close Look at:
Down payment Closing costs Prepaids Escrow reserves Inspection and appraisal Seller credits Lender credits Gift funds Assistance options 4. Review Mortgage Insurance Some low down payment loans may include mortgage insurance or guarantee fees.
Compare:
FHA mortgage insurance Conventional PMI USDA guarantee fees VA funding fee PMI cancellation possibilities Long-term cost 5. Think Beyond Closing Day Ask:
Will I still have emergency savings? Can I afford repairs and maintenance? Is the payment comfortable? Am I stretching too far? Would a different down payment improve my long-term budget? The best down payment strategy is not just about qualifying. It is about becoming a homeowner without putting your finances under unnecessary pressure.
Common Mistakes First-Time Buyers Make With Down Payments The biggest mistake first-time buyers make with down payments is assuming they need 20% down or choosing the lowest down payment without reviewing the full cost. Buyers should compare cash to close, mortgage insurance, monthly payment, and reserves after closing.
Mistake 1: Thinking 20% Down Is Always Required Many first-time buyers delay purchasing because they believe 20% down is mandatory.
It is not required for every loan.
Mistake 2: Ignoring Closing Costs A low down payment does not remove closing costs.
Buyers should review full cash to close early.
Mistake 3: Forgetting Mortgage Insurance FHA and conventional low down payment loans may include mortgage insurance.
This can affect the monthly payment.
Mistake 4: Using All Savings for the Down Payment Putting too much cash down can leave buyers without reserves.
That can be risky after closing.
Mistake 5: Not Getting Pre-Approved First A pre-approval helps buyers understand real options before shopping.
A first-time buyer does not need to guess. A side-by-side loan comparison can show which down payment strategy makes the most sense.
→ Read more: does pre approval affect credit?
Why Choose Loan Factory for First Time Home Buyer Down Payment Options Loan Factory helps homebuyers compare mortgage options from 240+ wholesale lenders using technology designed to make the home loan process clearer, faster, and more transparent.
If you are planning your first time home buyer down payment, Loan Factory can help review available options based on your credit, income, property location, first-time buyer status, and homebuying goals.
What Loan Factory Offers First-Time Buyers Compare options from 240+ wholesale lenders Review FHA, VA, USDA, Conventional, Jumbo, and specialty loan options through lender partners Explore low down payment and no down payment options Compare estimated payment, APR, fees, and cash-to-close side by side Use TERA technology for faster loan comparison Work with local loan advisors Review seller credits, gift funds, and assistance options Get guidance before making an offer Ready to find the right down payment option for your first home?
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Author Box Written by: Loan Factory Mortgage Education Team
Loan Factory is a technology-powered mortgage platform helping homebuyers compare mortgage options from 240+ wholesale lenders. Our mortgage education content is designed to help first-time buyers understand down payment options, affordability, qualification factors, and the mortgage process before applying.
Compliance Disclaimer This article is for informational and educational purposes only and is not a commitment to lend. Loan programs, down payment options, grants, lender credits, rates, APR, fees, mortgage insurance, guarantee fees, and approval are subject to credit approval, underwriting, investor guidelines, property eligibility, income limits, occupancy requirements, assets, appraisal, and program availability. Not all applicants will qualify. Terms may change without notice.
Loan Factory is not affiliated with or acting on behalf of any government agency. FHA, VA, USDA, Conventional, Jumbo, and other loan programs are offered through participating lender partners, subject to eligibility and underwriting approval.
FAQ: First Time Home Buyer Down Payment 
