Down Payment
What is the minimum down payment required to purchase a home? Find the answer here.
One of the biggest questions first-time home buyers ask is: "How much do I need to save for a down payment?" The answer depends on the type of loan you choose. Some programs require as little as 0% down — others reward a larger down payment with lower rates and no mortgage insurance.
Team Souther works with buyers in Colorado, California, and Arizona to find the loan program that fits your savings, credit, and goals. Here's a breakdown of the most common options.
Minimum Down Payment by Loan Type
Conventional Loan
3%Putting down less than 20% requires Private Mortgage Insurance (PMI), which adds to your monthly payment until you reach 20% equity.
Ideal: 20% down to avoid PMI
FHA Loan
3.5%FHA loans are popular with first-time buyers. A credit score of 580+ qualifies for the 3.5% minimum. Scores between 500–579 require 10% down.
Ideal: 10% down to avoid PMI
VA Loan
0%Available to eligible veterans, active-duty service members, and surviving spouses. No down payment and no PMI — one of the best loan options available.
USDA Loan
0%For eligible rural and suburban properties. No down payment required, but the home and buyer must meet USDA income and location guidelines.
Frequently Asked Questions
Does a larger down payment lower my monthly payment?
Yes. A larger down payment reduces your loan amount, which lowers your monthly principal and interest. It can also help you avoid PMI and qualify for a better interest rate.
What is PMI and how do I avoid it?
Private Mortgage Insurance (PMI) is required on conventional loans when your down payment is less than 20%. It protects the lender — not you — and typically costs 0.5%–1.5% of the loan amount per year. You can avoid it by putting 20% down, or by using a VA or USDA loan.
Can I use gift money for my down payment?
Often yes. Many loan programs allow gift funds from family members. The donor will need to provide a gift letter confirming the money is not a loan. Ask Team Souther about the specific rules for your loan type.
Are there down payment assistance programs?
Yes — Colorado, California, and Arizona all offer down payment assistance programs for qualifying buyers. These can come as grants, forgivable loans, or deferred-payment loans. Team Souther can help you find programs you may qualify for.
Is the down payment the only upfront cost?
No. You'll also need to budget for closing costs, which typically run 2%–5% of the loan amount. These cover appraisal, title, lender fees, and more. Some programs allow closing costs to be rolled into the loan or covered by the seller.
Ready to Find Out What You Qualify For?
Team Souther will walk you through your options and help you find the right loan program — even if you're just starting to save.