How much down payment do I need to buy a house?

The minimum down payment depends on your loan type. Conventional loans require as little as 3%, FHA loans need 3.5% (with 580+ credit), while VA and USDA loans offer 0% down payment options for eligible borrowers. The median down payment for first-time buyers is 10% according to NAR data.

Can I buy a house with no down payment?

Yes, you can buy a house with zero down payment through VA loans (for veterans and active military) or USDA loans (for eligible rural and suburban properties). Some state and local down payment assistance programs also cover the full down payment through grants or forgivable loans.

What is PMI and how do I avoid it?

Private Mortgage Insurance (PMI) is required on conventional loans with less than 20% down payment. You can avoid PMI by putting 20% down, using a VA loan (no PMI ever), choosing lender-paid PMI (with a higher rate), or using a piggyback loan structure. PMI can be removed once you reach 20% equity.

What are down payment assistance programs?

Down payment assistance (DPA) programs provide grants, forgivable loans, or deferred loans to help buyers cover down payment and closing costs. In Arizona, programs are offered by the Arizona Department of Housing, local governments, and nonprofits. Most require first-time buyer status, income limits, and homebuyer education.

Can I use gift money for a down payment?

Yes, most loan programs allow gift funds for down payments. FHA loans allow 100% of the down payment to come from gifts. Conventional loans may require a minimum borrower contribution depending on the down payment amount. You'll need a gift letter stating the money doesn't need to be repaid.

What is the 20% down payment rule?

The 20% down payment rule is a guideline suggesting buyers put 20% down to avoid PMI on conventional loans. However, it's not a requirement—you can buy with as little as 0-3.5% down depending on your loan type. According to NAR, the median first-time buyer down payment is actually 10%.

How much should I save for a down payment?

Your savings target depends on your loan type and goals. For a $300,000 home: 3% down = $9,000, 3.5% down (FHA) = $10,500, 10% down = $30,000, 20% down = $60,000. Also budget 2-5% for closing costs. Many buyers find 10-15% down offers a good balance between monthly payment and upfront cost.

Does a larger down payment mean a lower interest rate?

Generally yes. A larger down payment reduces the lender's risk, which can result in better interest rates and terms. Borrowers with 20%+ down typically qualify for the best conventional rates. However, the rate difference between 10% and 20% down may be smaller than you'd expect—compare total costs carefully.

What are seasoned funds for a down payment?

Seasoned funds are money that has been in your bank account for 60-90 days before your loan application. Lenders require seasoning to verify the legitimacy of your down payment funds and ensure you're not borrowing money for your down payment without disclosure.

Is it better to put more money down or invest it?

This depends on your financial situation, risk tolerance, and investment returns vs. mortgage rates. A larger down payment guarantees savings through lower monthly payments and potentially avoiding PMI. However, if investment returns exceed your mortgage rate, investing the difference may build more wealth long-term. Consider your emergency fund and other financial goals.

Down Payment Guide

Build YourFoundation

The down payment myth says you need 20%. The reality? You might need as little as 0%.

VA & USDA Loans

Conventional Min

10%

Median 1st-Time

Compare Loan Types (602) 753-9600

20% Down = No PMI

10% Down = Lower PMI

3.5% FHA Minimum

0% VA/USDA

Your foundation, your choice

10%

Median first-time buyer down payment

Source: NAR 2025 Profile

2,000+

DPA programs across the U.S.

Authority sources:NAR Research Freddie Mac CFPB Loan Options

Reality Check

The 20% Myth Debunked

The belief that you need 20% down to buy a home persists—but it hasn't been true for decades. Here's what today's buyers are actually paying.

10%

Median first-time buyer down payment

NAR 2025

21%

First-time buyers (lowest since 1981)

NAR 2025

Median age of first-time buyers

NAR 2025

2,000+

DPA programs across the U.S.

NHC

The Waiting Game Costs More

While you save for that 20% down payment, home prices typically rise 3-5% annually. On a $400,000 home, that's $12,000-$20,000 more per year you'll need—plus lost equity-building time.

Consider: Buying with 5% down today may cost less than waiting to save 20% while prices increase.

Loan Comparison

Down Payment by Loan Type

Each loan program has different requirements. Click on a loan type to see the full details.

Requirements from CFPB Loan Options Guide and official program guidelines.

Assistance Programs

Free MoneyFor Your Down Payment

Arizona homebuyers can tap a range of down payment assistance programs. Here's how they work.

Grants

Free money that never needs to be repaid

$5,000 - $25,000

State housing agency grants

Employer assistance programs

Non-profit homebuyer grants

Forgivable Loans

Loans forgiven after 5-15 years if you stay in the home

Up to 5% of price

FHA Community Loans

State DPA programs

Municipal assistance programs

Deferred Loans

No payments until you sell, refinance, or move

Up to $50,000

CalHFA ZIP programs

City/county deferred loans

Employer-assisted programs

Matched Savings

Individual Development Accounts (IDAs) that match your savings

2:1 or 3:1 match

IDA programs

First-time buyer savings programs

Credit union matching

Find DPA Programs in Your State

Most programs require first-time buyer status, income limits, and homebuyer education

Gift Funds

Using Gift Money for Your Down Payment

Family members can help with your down payment through gift funds. Here's what you need to know:

FHA Loans

100% of down payment can come from gifts

Conventional Loans

May require 5% from your own funds (varies by down payment amount)

Gift Letter Required

Must state funds are a gift, not a loan to be repaid

Seasoned Funds

The 60-90 Day Seasoning Rule

Lenders want to see that your down payment funds have been in your account—not just deposited yesterday.

What "Seasoned" Means

Funds are considered "seasoned" when they've been in your bank account for 60-90 days. This proves the money is legitimately yours, not a hidden loan.

Large deposits will require explanation

Cash deposits are harder to document

Paper trails (transfers, paychecks) are easy

Read our complete seasoned funds guide

Video Learning

Watch & Learn

Educational videos from official sources—not sales pitches.

Now Playing

How Much Should You Put Down on a House?

Official Freddie Mac guide explaining down payment options and their impact on your mortgage.

Freddie Mac3 min

Video Playlist

4 educational videos

Educational content from official sources

Common Questions

Frequently Asked Questions

Everything you need to know about down payments.

Ready to Start Building?

Get pre-approved and find out exactly how much down payment you'll need—plus discover assistance programs you may qualify for.

Get Pre-Approved (602) 753-9600

Related Resources

Continue your mortgage education journey

Build YourFoundation

The 20% Myth Debunked

The Waiting Game Costs More

Down Payment by Loan Type

Conventional Loan

FHA Loan

VA Loan

USDA Loan

Free MoneyFor Your Down Payment

Grants

Forgivable Loans

Deferred Loans

Matched Savings

Using Gift Money for Your Down Payment

FHA Loans

Conventional Loans

Gift Letter Required

The 60-90 Day Seasoning Rule

What "Seasoned" Means

Watch & Learn

How Much Should You Put Down on a House?

Video Playlist

How Much Should You Put Down on a House?

Down Payment Assistance Programs Explained

First-Time Homebuyer Grants & Programs

PMI Explained: When You Need It & How to Remove It

Frequently Asked Questions

Ready to Start Building?

Related Resources

First-Time Buyer Programs

PMI Explained

Closing Costs Guide