FHA Down Payment

Most buyers plan to make some form of down payment—unless they qualify for special programs like VA loans, which offer eligible servicemembers, veterans, and surviving spouses the ability to purchase with zero money down. It’s a smart idea to begin saving for your down payment at least a year in advance.

There are also USDA loans, another zero-down option designed for eligible buyers in rural areas who meet specific income limits.

Compared to these programs, FHA loans remain popular because of their low 3.5% minimum down payment, making homeownership more accessible for buyers who prefer to keep upfront costs lower.

Do You Really Need 20% Down?

Many buyers believe they must put 20% down to purchase a home. That’s only true if you want to avoid mortgage insurance on a conventional loan. Conventional programs do offer lower down payment options, but the 20% benchmark often makes some buyers think homeownership is out of reach.

FHA, on the other hand, allows qualified borrowers with credit scores of 580 or higher to put just 3.5% down. Buyers with lower credit scores may need to contribute 10%, but even that can feel overwhelming—fortunately, there are resources to help.

Local Down Payment Assistance Programs

Many states, counties, and cities offer down payment assistance grants that can significantly reduce your upfront costs. These programs vary by location, so it’s wise to research what’s available in your area.

While the FHA itself does not provide down payment assistance—and sellers cannot cover your down payment—local grants can fill that gap. Sellers can, however, contribute up to 6% of the home’s price toward your closing costs through what’s known as a seller concession, pending agreement from all parties and approval from your lender.

Down Payment Gifts From Friends and Family

FHA also allows buyers to use gift funds from family members, close friends, or even employers. The only restriction: the gift cannot come from anyone with a financial interest in the transaction. For example, if your seller is also a family member, they cannot provide your down payment—though they may still offer the allowable seller concession.

Down payment funds cannot come from credit cards, payday loans, or any unsecured borrowing. Lenders must verify that all funds comply with FHA guidelines, as outlined in HUD 4000.1.

If you’re receiving a gift, expect to provide a gift letter signed by the donor confirming that the funds are truly a gift with no expectation of repayment.