How to lower your down payment
Quick insights
- You can lower your down payment by selecting a mortgage that allows a smaller upfront amount. FHA loans require at least 3.5% down, while a VA loan may require 0% down.
- Sometimes, family gifts or local assistance programs can lower a required down payment by covering a portion.
- It’s a good idea to keep some savings aside for emergencies or home repairs instead of putting everything into the down payment.
The down payment required to buy a home can vary based on several circumstances. Putting more money toward your down payment can help reduce costs, such as your monthly payment, total interest paid and, in some cases, private mortgage insurance. However, some first-time homebuyers have the income to support mortgage payments but haven’t built up significant savings yet.
Let’s review what different amounts mean for a mortgage and how you might buy a home with a lower down payment.
Down payment amounts: How much should you put down?
Many homebuyers assume a 20% down payment is required to purchase a home. While that benchmark is a common thought for a reason, it’s not the only down payment option. Also, putting 20% may not be the right option for every borrower. Mortgage programs can allow for a range of down payment amounts, but approval is subject to the lender’s criteria.
Here’s a closer look at those options and what the down payment means in such a large purchase.
20% down payment
A 20% down payment is often considered a standard because of traditional qualification criteria and the financial impacts. Some of the potential advantages include:
- No private mortgage insurance (PMI) on conventional mortgages
- Lower monthly mortgage payments
- Less interest paid over the life of the loan
- Stronger equity position at closing
Things to consider:
- Saving 20% can take time, especially in high-cost markets.
- Using most of your savings for a down payment may leave little room for emergencies or home maintenance.
10% down payment
A 10% down payment can strike a balance between reducing upfront costs and building equity early on. Here are why some homebuyers may choose this option:
- Lower upfront cash requirement than 20%
- To keep more savings available after closing day
- A meaningful equity stake at purchase
Tradeoffs to keep in mind:
- Private mortgage insurance (PMI) is usually required on conventional loans.
- Monthly payments are typically higher than with a 20% down payment.
- Total interest costs may be higher over time due to a larger loan balance.
Putting 10% down may appeal to homebuyers who want to purchase soon and keep a certain amount in their savings.
3% to 5% down payment
Conventional and government-backed loans can allow down payments as low as 3% to 5%. This makes homeownership more accessible for first-time homebuyers and those with a certain income or savings. For example, this option is often attractive for homebuyers early in their careers or those prioritizing liquidity over minimizing long-term interest.
Some key benefits of such a low down payment:
- Faster path to buying a home
- Less cash needed upfront
- Preserves savings for moving costs, repairs or emergencies
Important considerations:
- PMI or mortgage insurance is generally required.
- Higher loan balances mean higher interest costs over time.
- Monthly payments may be higher than with larger down payments.
0% down payment
Some loan programs allow qualified potential buyers to purchase a home with no down payment at all. For instance, eligible veterans and servicemembers may qualify for a 0% down payment with a VA loan. Also, homebuyers in qualifying rural or suburban areas may qualify with a USDA loan. Chase does not offer USDA loans at this time.
Pros:
- No upfront down payment required
- Keep savings intact
Cons:
- Higher loan balance from day one
- Mortgage insurance or funding fees may apply
- Less initial equity in the home
Zero-down options can be powerful tools for eligible borrowers, but they often come with stricter requirements.
How to decide what’s right for you
The “right” down payment isn’t just about hitting a percentage. It’s about balancing the financial aspects of buying a home: equity, affordability and financial stability. In some cases, putting less than 20% down can make sense if it allows you to buy a home sooner, maintain savings or avoid becoming house-poor.
Different down payment amounts affect your monthly payment, loan costs and long-term goals.
A mortgage lender can help you review your options and compare them. Buying a house isn’t a small purchase, so information could be your greatest asset.
Loans to lower your down payment
Many conventional loans are set up with the suggestion that you pay a 20% down payment of the home's purchase price. If you have the money available, a sizable down payment can offer a variety of perks.
Still, it's common for first-time homebuyers and those with limited savings to need other options for buying a home. Lenders are aware of that need and offer several mortgage options that require little or no down payment. Consider these options for lowering your down payment requirement and buy the home you've been dreaming of.
1. FHA loans
FHA loans are loans insured by the Federal Housing Administration and provided by traditional lenders. These loans require a 3.5% down payment which can come entirely from gift funds. FHA loans also have other benefits that attract first-time homebuyers, such as no income limits and flexible credit guidelines. FHA loans require an up-front mortgage insurance premium (UFMIP) which may be financed, or paid at closing and monthly insurance premiums will apply.
2. VA loans
U.S. Department of Veterans Affairs (VA) guaranteed loan offers low- or no-down-payment options, and there’s no monthly mortgage insurance requirement. However, a funding fee may apply. Veterans, Servicemembers, and members of the National Guard or Reserve and eligible surviving spouses may be eligible for a loan guaranteed by the VA. A Certificate of Eligibility (COE) from the VA is required to document eligibility. Qualifying for a VA loan may be easier thanks to flexible credit history guidelines and the ability to use gift funds, which can be a good option for first-time homebuyers.
3. HomeReady® and Home Possible® loans
Backed by Fannie Mae and Freddie Mac, and provided by traditional home mortgage lenders, a HomeReady® mortgageOpens overlay, or a Home Possible®Opens overlay, mortgage requires a 3% down payment. To qualify for these loans, borrowers may seek the help of co-borrowers who live outside the home. Homeowner education may be required, and income limits apply. If you put down less than 20% on a conventional loan, Private Mortgage Insurance (PMI) may be required.Â
4. Conventional 97 loan
The conventional 97 loan provided by Fannie Mae and Freddie Mac requires 3% down and may be a less expensive option than an FHA loan. The entire down payment can come from gifted funds as long as the gifter is related by blood, marriage, legal guardianship, domestic partnership or engagement.
Named for the 97% remaining mortgage balance, a conventional 97 loan is available to borrowers with a credit score as low as 620. Requirements for a conventional 97 home loan include:
- Only fixed-rate mortgages are eligible.
- The property must be a one-unit single-family home, condominium or Planned Urban Development (PUD).
- At least one buyer has not owned a home in 3 years.
- The property must be the owner's primary residence.
- The loan amount in 2026 must be $806,500 or below.
- Homeowner education may be required.
Chase does not offer conventional 97 loans.
Down payment assistance
If you’re eligible for a loan, but can't afford the down payment, you may be able to qualify for down payment assistance. Grants, loans and assistance programs are available across the country to help first-time homebuyers afford a down payment and closing costs for a home loan. If you meet certain eligibility requirements, you may qualify for these types of assistance:
- Grants. Available in many areas to cover the costs of your down payment or closing costs. Unlike a loan, grants provide money to eligible buyers that doesn’t have to be paid back.
- Forgivable loans. Also known as second mortgage down payment assistance programs, these are low or no interest loans that you may not have to pay back if you live in the home for a certain period of time.
- Deferred payment loans. Low or no-interest loans that offer a fixed rate to cover down payment and closing costs. Payments are usually not due unless you sell or refinance the home.
How to choose the right mortgage for your needs
With so many attractive mortgage loan options available it can be difficult to decide which type of mortgage you should apply for. Carefully considering your needs and seeking professional advice can help you make the right choice. The following steps can help you choose the best mortgage for your needs.
- Determine how much house you can comfortably afford. The fact that you can qualify for a certain type of loan doesn't mean it's the loan you should get. Determine how much you can afford based on your current income, expenses and expected interest rate
- Get a firm understanding of how mortgage rates affect your immediate and long-term financial situation. Knowing the facts about different loan types and mortgage terms and rates can help you make an informed choice about your future.
- Talk to a professional. Discussing your personal financial situation with a Home Lending Advisor can help you get a clear picture of your options and how your loan choice may affect your future.
Your down payment is just one factor in your ability to buy a home. While the amount you pay upfront impacts your payments and the final cost of your home, it's not the only consideration when applying for a home loan.
Lenders provide a variety of options to help homeowners with their down payment so they can buy a home. Speak with a Home Lending Advisor today for more information on affordable lending options and available assistance programs.
