How much down
payment do you need?
The most common myth in homebuying is that you need 20% down. In reality, most buyers put down far less. The amount you need depends on your loan type, your credit profile, and the programs you qualify for. Here is a clear breakdown of down payment requirements — and what each amount actually means for your monthly payment and total cost.
Down payment by
loan program.
Conventional
Fannie Mae HomeReady and Freddie Mac Home Possible allow 3% down for qualified buyers. Standard conventional loans typically require 5% down. Putting 20% down eliminates private mortgage insurance (PMI).
620+ (best rates at 740+)
FHA
FHA loans require 3.5% down with a credit score of 580+. If your score is between 500–579, you can still qualify with 10% down. Mortgage insurance is required for the life of the loan with less than 10% down.
580+ (3.5% down) / 500+ (10% down)
VA
VA loans require zero down payment for eligible veterans, active-duty service members, and surviving spouses. No private mortgage insurance. A funding fee (1.25–3.3%) applies but can be rolled into the loan.
No VA minimum (lenders typically want 620+)
USDA
USDA loans offer zero down for homes in eligible rural and suburban areas. Parts of metro Atlanta qualify — mainly outer suburbs in Henry, Douglas, and Paulding counties. Income limits apply.
640+ preferred
Georgia Dream
Georgia Dream provides up to $10,000 in down payment assistance as a second mortgage, compatible with FHA, VA, USDA, and conventional loans. For many buyers, this covers the entire down payment.
640+ typically required
Local Grants
Some Atlanta-area lenders, employers, and municipalities offer their own down payment grants or forgivable loans. These change frequently — I keep track of what is currently available in the market.
Varies by program
What it looks like
at real price points.
| Home Price | 3% Down | 3.5% Down (FHA) | 5% Down | 20% Down |
|---|---|---|---|---|
| $250,000 | $7,500 | $8,750 | $12,500 | $50,000 |
| $300,000 | $9,000 | $10,500 | $15,000 | $60,000 |
| $350,000 | $10,500 | $12,250 | $17,500 | $70,000 |
| $400,000 | $12,000 | $14,000 | $20,000 | $80,000 |
| $500,000 | $15,000 | $17,500 | $25,000 | $100,000 |
| $600,000 | $18,000 | $21,000 | $30,000 | $120,000 |
How down payment affects
your total cost.
Monthly Payment
A larger down payment reduces your loan amount, which lowers your monthly principal and interest. On a $400K home, going from 5% down to 20% down saves roughly $300–400/month.
Private Mortgage Insurance
With less than 20% down on a conventional loan, you pay PMI — typically $100–300/month depending on your credit and loan amount. PMI drops off once you reach 20% equity.
Equity & Risk
A larger down payment means you start with more equity and owe less than the home is worth. This gives you a cushion if values dip and more flexibility if you need to sell unexpectedly.
What buyers ask about
down payments.
Is it better to put more down or keep cash in reserve?
Both have merit. A larger down payment lowers your monthly cost and eliminates PMI, but draining all your savings leaves no emergency fund. A common strategy: put down enough to get a comfortable monthly payment while keeping 3–6 months of expenses in reserve. I help you find that balance.
Can the seller pay my down payment?
No — seller concessions can be used for closing costs, prepaid items, and sometimes repairs, but not directly for your down payment. However, down payment assistance programs like Georgia Dream can cover part or all of your down payment alongside a seller-concessions negotiation.
Do I need to show the down payment in my bank account?
Yes. Lenders will verify that you have the funds available, typically through 2–3 months of bank statements. Gift funds from family are allowed with proper documentation. I help my buyers understand these requirements before they apply so there are no surprises.
What if I put down less than 20%?
You will pay PMI on a conventional loan, which adds $100–300/month depending on your loan amount and credit score. FHA loans have mortgage insurance regardless of down payment (with less than 10% down). The trade-off is getting into a home sooner with less cash upfront.
Can I use a gift for my down payment?
Yes. All major loan programs allow gift funds from immediate family members (and in some cases, other relatives or close associates). The gift requires a formal gift letter and documentation showing the transfer of funds. I make sure the paperwork is clean so the lender has no issues.
The right down payment
depends on your situation.
I work with lenders who will run the numbers on every loan type — conventional, FHA, VA, USDA — and show you exactly what you need at your price point, including any assistance programs you qualify for. Let's figure out your best path.
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