Down Payments
6 min read
Low Down Payment Mortgage Options Compared
Mike Starr
Founder, MortgageWizardTools · M.S. Organizational Management
Last reviewed: August 2026
You do not need 20% down to buy a home. Several loan programs allow 3% to 5% down, and some require nothing at all. Each has tradeoffs in cost, mortgage insurance, and eligibility.
Conventional 3% Down
- •Minimum: 3% for first-time buyers, 5% for repeat
- •Credit: 620+
- •PMI: Required until 20% equity, removable
- •Best for: Buyers with good credit who want to avoid FHA's permanent mortgage insurance
FHA 3.5% Down
- •Minimum: 3.5% with credit 580+, 10% with 500-579
- •Mortgage insurance: 1.75% upfront + annual MIP (often for the life of the loan)
- •Best for: Buyers with lower credit scores or limited savings
VA 0% Down
- •Minimum: 0%
- •Eligibility: Veterans, active duty, surviving spouses
- •Mortgage insurance: None (funding fee instead)
- •Best for: Anyone with VA eligibility — usually the best option
USDA 0% Down
- •Minimum: 0%
- •Eligibility: Rural and suburban areas, income limits apply
- •Mortgage insurance: Guarantee fee (lower than FHA MIP)
- •Best for: Low-to-moderate income buyers in eligible areas
Comparing Total Cost
On a $400,000 home:
| Program | Down Payment | Monthly MI | Notes |
|---|---|---|---|
| Conventional 5% | $20,000 | ~$230 (until 80% LTV) | PMI removable |
| FHA 3.5% | $14,000 | ~$280 (life of loan) | MIP permanent with <10% down |
| VA 0% | $0 | $0 (funding fee) | Best for eligible veterans |
| USDA 0% | $0 | ~$170 (guarantee fee) | Rural/suburban only |
Key Takeaways
- •Conventional 3% is great for buyers with 620+ credit
- •FHA works for lower credit but has permanent mortgage insurance
- •VA is the best option for those who qualify — 0% down, no PMI
- •USDA offers 0% down in eligible areas with income limits
- •Compare the monthly mortgage insurance, not just the down payment