How Much Down Payment Do I Need for a Home?

Down Payment by Loan Type

VA loans and USDA loans offer 0% down for qualified borrowers. FHA loans require 3.5% down with a 580+ credit score. Conventional loans can go as low as 3% down for first-time buyers. On a $300,000 home that means $0, $10,500, or $9,000 respectively. The loan type you choose has a huge impact on how much cash you need upfront.

Total Cash Needed Beyond Down Payment

Beyond the down payment, you need closing costs (2-5% of the purchase price), earnest money deposit (1-3%), prepaid items (property taxes, homeowners insurance), and reserves (2-3 months of mortgage payments). For a $300,000 home, total cash at closing could be $15,000-$30,000 depending on loan type and terms.

Down Payment Assistance Programs

Texas offers several down payment assistance programs through TSAHC, TDHCA, and local housing authorities. These programs provide grants or forgivable loans that cover part or all of your down payment and closing costs. Many are available to first-time buyers and some do not require repayment.

Myths About 20% Down

The 20% down myth is the most persistent misconception in home buying. Most first-time buyers put 3-5% down. In fact, the median down payment for first-time buyers is 6-7%. You do not need 20% down unless you are buying a specific type of property or want to avoid private mortgage insurance (PMI).

How to Save

Start by setting a savings goal based on your target home price and loan type. Automate your savings, reduce discretionary spending, and consider a side gig. Many buyers also use gift funds from family for their down payment, which is allowed on most loan programs.