Mortgage Down Payment Guide
How much you actually need to put down — by loan type, with PMI tradeoffs and Texas assistance programs
In this guide:
Down Payment Minimums by Loan Type
Every loan program has its own down payment rules. Here are the headline minimums for the most common options.
Conventional Loans: 3-5%
Conventional loans backed by Fannie Mae and Freddie Mac allow as little as 3% down for qualified first-time buyers and 5% for repeat buyers. Below 20% down, private mortgage insurance (PMI) is required, but it drops off automatically once you reach 22% equity in the home.
FHA Loans: 3.5%
FHA loans require just 3.5% down for buyers with credit scores of 580 or higher. They're more forgiving on credit and DTI than conventional loans, but they carry a mortgage insurance premium (MIP) that typically stays for the life of the loan unless you put 10% or more down.
VA Loans: 0%
For eligible active-duty service members, veterans, and surviving spouses, VA loans offer 100% financing with no down payment, no monthly mortgage insurance, and competitive rates. There's a one-time funding fee that can be financed into the loan.
USDA Loans: 0%
USDA Rural Development loans also offer 100% financing for properties in eligible areas, with income limits based on household size and county. Much of rural and small-town Texas qualifies.
Jumbo Loans: 10-20%
Jumbo loans (above the conforming loan limit) generally require 10-20% down, sometimes more depending on the lender and loan size. Strong credit and reserves are typically required.
The 20% Down Payment Myth
The idea that you must put 20% down to buy a house is one of the most expensive misconceptions in real estate. It keeps would-be buyers renting for years longer than necessary while home prices and rents continue to climb.
Here's where the myth comes from: 20% is the threshold for avoiding private mortgage insurance on a conventional loan. That's it. It's not a legal requirement, it's not a lender requirement, and it has nothing to do with whether you can qualify.
For many buyers, putting down 5-10% and starting to build equity makes more financial sense than waiting another two or three years to save 20%. PMI is a real cost, but it's often less expensive than the rent and lost appreciation you'd pay during the wait.
Today's Mortgage Rates
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Conventional
FHA
VA
USDA
Jumbo
📊 Source: St. Louis Federal Reserve
PMI: What It Is and How to Think About It
Private mortgage insurance protects the lender if you default on your loan. It's required on conventional loans when you put down less than 20%, and it typically costs between 0.3% and 1.5% of the loan amount per year, paid monthly. The exact cost depends on your credit score, loan-to-value, and loan size.
The good news: PMI on a conventional loan is not permanent. It drops off automatically when your loan-to-value reaches 78% of the original purchase price, and you can request manual cancellation once you hit 80%. On a typical 30-year mortgage, that often happens within 8-12 years without making extra payments — and much sooner if home values appreciate.
FHA mortgage insurance (MIP) works differently: it usually stays for the life of the loan unless you put 10% or more down. Many borrowers who start with FHA refinance into a conventional loan once they have 20% equity to drop the MIP.
What Buyers Actually Put Down
Survey data from the National Association of Realtors and other industry sources consistently shows that first-time homebuyers put down somewhere between 7% and 13% on average — nowhere near 20%. Repeat buyers put down more, often 15-20%, mainly because they have equity from a previous home to roll into the new one.
In other words, the 20% standard isn't even the norm among people who could in theory put it down. Most successful homebuyers in the U.S. are buying with single-digit or low-double-digit down payments and using PMI, FHA, VA, or USDA programs to do it.
Down Payment Assistance in Texas
Texas runs several down payment assistance (DPA) programs through the Texas State Affordable Housing Corporation (TSAHC) and the Texas Department of Housing and Community Affairs (TDHCA). These programs typically provide grants or forgivable second liens that cover some or all of the down payment and closing costs.
Eligibility usually depends on income, the purchase price of the home, your credit score, and sometimes whether you're a first-time buyer or work in a qualifying profession (teachers, first responders, nurses, etc.). Some programs are restricted to specific counties or census tracts.
Local cities and counties often run their own DPA programs as well. The fastest way to find out what you qualify for is to ask a Texas mortgage broker who works with these programs regularly — they can match you to options in minutes.
Frequently Asked Questions
Do you need 20% down to buy a house?
No. The 20% figure is one of the most persistent myths in real estate. Conventional loans allow as little as 3% down for qualified first-time buyers, FHA loans require just 3.5%, and VA and USDA loans offer 0% down for eligible buyers. The 20% threshold is only relevant because it lets you avoid private mortgage insurance on a conventional loan.
What is the minimum down payment for a house?
It depends on the loan program. Conventional loans start at 3% for qualified buyers, FHA at 3.5%, VA and USDA at 0% for eligible borrowers, and jumbo loans typically require 10-20%. Investment property and second-home loans usually require 10-25% down.
Is 10% down enough to buy a house?
Yes, 10% is more than enough to qualify for most loan programs. With 10% down on a conventional loan, you'll pay PMI until you reach 20% equity, but you'll have a smaller monthly payment than putting 3-5% down and you'll likely get a slightly better rate. For most buyers, 10% is a sensible middle ground.
Can I buy a house with no money down?
Yes, if you qualify for a VA loan (active-duty service members, veterans, eligible surviving spouses) or a USDA loan (eligible rural and suburban areas with income limits). Both programs offer 100% financing with no down payment. You may still need funds for closing costs unless those are covered by seller concessions or a lender credit.
What is the average down payment for first-time homebuyers?
First-time buyers typically put down somewhere between 7% and 13%, well below the 20% myth. Repeat buyers tend to put down more — often 15-20% — because they have equity from a previous home to roll into the new purchase. The right number for you depends on your savings, your monthly budget, and your long-term plans.
Do gift funds count as down payment?
Yes. All major loan programs allow gift funds from family members for the down payment, though the rules vary slightly by program. You'll need a signed gift letter stating the funds are not a loan, and the lender will need to source and document the transfer. On conventional loans for primary residences, the entire down payment can come from a gift.
What is PMI and when does it go away?
PMI (private mortgage insurance) is required on conventional loans when you put down less than 20%. It protects the lender, not you. On a conventional loan, PMI automatically drops off when your loan-to-value reaches 78% of the original purchase price, and you can request removal at 80%. FHA loans have a similar premium called MIP that often stays for the life of the loan.
Should I put down more than the minimum?
It depends on your situation. A larger down payment means a smaller monthly payment, less interest paid over time, no PMI (at 20%+), and often a slightly better rate. But it also ties up cash you might need for closing costs, an emergency fund, repairs, or investing elsewhere. Many buyers do best putting down 5-10% and keeping reserves liquid.
Find Out What You Can Afford to Put Down
A Raider Mortgage advisor can walk you through the right loan program and any down payment assistance you may qualify for in Texas.