How much do I need for a down payment?

How much you need for a down payment on a new home purchase depends mainly on the type of loan you choose, and how the property is going to be used.

Read on to learn more about the minimum down payment requirements associated with the different types of home loans.

FHA Loans

FHA loans are backed by the Federal Housing Administration. FHA loan options are good for people who do not have enough saved for a large down payment or have less than ideal credit scores.

The minimum down payment requirement for an FHA loan is 3.5% of the purchase price.

FHA loans require a UFMIP (Up Front Mortgage Insurance Premium) of 1.75% of the purchase price as well as a monthly MIP (Mortgage Insurance Premium). The UFMIP and MIP is insurance which protects the lender in case the borrower defaults on the loan. MIP varies depending on how much you put down.

FHA loans can be used on homes that will be used as your primary residence. However, multi-unit properties are eligible and you are permitted to rent out unused units.

VA Loans

VA loans are guaranteed by the United States Department of Veterans Affairs and are available to Veterans of the United States Armed Forces, military members currently serving, reservists, and select surviving spouses.

The minimum down payment for a VA loan is 0%, and is available on homes that will be used as your primary residence.

The VA does have a funding fee, which is a one-time payment whose purpose is to sustain the VA loan program for future military homeowners. The fee can fall between 1.4% - 3.6% of the purchase price depending on the amount of your down payment and whether you've used your military benefits for a home loan before. You may be exempt from the funding fee if you receive or are eligible to receive compensation for a service-connected disability, are the surviving spouse of a Veteran who died in service or from a service-connected disability, or you're on active duty and have received a Purple Heart.

Conventional Loans

Conventional loans are not backed by a government agency and follow the lending rules set by Fannie Mae (Federal National Mortgage Association), and Freddie Mac (Federal Home Loan Mortgage Corporation).

3% is the minimum down payment on a Conventional loan, but that down payment is only available for first time buyers for a home that will be used as your primary residence, with a loan limit that must be at or below the conventional loan limit for the county.

5% is the minimum down payment on primary residence with a fixed rate mortgage.

10% is the minimum down payment on a primary residence with an adjustable rate mortgage (ARM), or on a second home with a fixed rate mortgage.

15% is the minimum down payment on an investment property or a second home with a fixed rate mortgage.

20% is the minimum down payment on a second home with an adjustable rate mortgage (ARM).

25% is the minimum down payment on an investment property with an adjustable rate mortgage (ARM).