How Much Down Payment for a House? Minimums by Loan
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How much down payment for a house do you actually need? Less than most people think. VA and USDA loans require 0% down, FHA requires 3.5% with a 580 credit score, and conventional loans start at 3% for qualifying buyers. Twenty percent is only the level where conventional loans stop requiring private mortgage insurance (PMI). On a $300,000 Texas home, the minimum ranges from $0 to $10,500 depending on the loan.
Herring Bank is a direct mortgage lender serving Texas, Oklahoma and Colorado. This guide compares down payment minimums by loan type, shows real numbers for $250,000, $300,000 and $400,000 homes, and explains where the money can come from.
Key Takeaways
- Minimum down payments: VA 0%, USDA 0%, FHA 3.5% (10% with a score of 500-579), conventional 3% for first-time buyers or HomeReady/Home Possible, 5% otherwise.
- You don't need 20% down. NAR's 2025 Profile of Home Buyers and Sellers put the median first-time buyer down payment at 10%.
- Below 20% down, conventional loans carry PMI, which you can ask to cancel at 80% of the original value and which ends automatically at 78%. FHA's annual MIP lasts the life of the loan with less than 10% down.
- Gifts from family can cover the entire down payment on an FHA loan or a one-unit conventional primary home, with a signed gift letter.
- Texas buyers can layer down payment assistance from TDHCA or TSAHC worth up to 5% of the loan amount.
Minimum down payment by loan type
| Loan type | Minimum down payment | Key conditions | Mortgage insurance or fee |
|---|---|---|---|
| VA | 0% | Eligible service members, veterans and some surviving spouses; price can’t exceed appraised value for $0 down | No monthly mortgage insurance. One-time funding fee of 2.15% first use with less than 5% down, unless exempt |
| USDA guaranteed | 0% | Eligible rural area, household income limits, primary residence | 1.00% upfront guarantee fee and 0.35% annual fee for FY 2027 |
| FHA | 3.5% (credit score 580+) 10% (score 500-579) |
Primary residence, county FHA loan limit (2026 floor $541,287 for one unit) | 1.75% upfront MIP plus annual MIP (0.55% for most 30-year loans with less than 5% down) |
| Conventional 97 / HomeReady / Home Possible | 3% | Standard 97%: at least one first-time buyer, fixed rate, not a high-balance loan. HomeReady and Home Possible: income at or below 80% of area median income | PMI until 78%-80% loan-to-value |
| Conventional (standard) | 5% | Loan up to $832,750 in most counties in 2026 | PMI below 20% down |
| Jumbo | Set by lender; 20% at Herring | Loans above the conforming limit; higher credit and reserve requirements | Varies by lender |
Herring Bank offers conventional, FHA, VA, USDA and jumbo loans. Herring jumbo loans require at least 20% down.
Do you need 20% down? PMI and MIP trade-offs
No. Twenty percent down matters for one reason: on a conventional loan, it’s the point where PMI is no longer required. Plenty of buyers put down less and come out ahead because they buy sooner and keep cash for repairs and reserves. The trade-off is a higher payment while mortgage insurance is in place.
Conventional PMI
Under the Homeowners Protection Act, as the CFPB explains it, you can ask your servicer to cancel PMI when your balance is scheduled to reach 80% of the home’s original value, and the servicer must end it automatically when the balance is scheduled to reach 78%, provided you’re current. PMI cost depends heavily on your credit score and down payment. It’s often less than FHA’s mortgage insurance for borrowers with strong credit.
FHA MIP
FHA charges 1.75% of the base loan amount upfront, usually financed, plus an annual premium paid monthly. For a 30-year loan of $726,200 or less with more than 95% loan-to-value (3.5% down), the annual MIP is 0.55% and lasts for the life of the loan. With at least 10% down, annual MIP ends after 11 years (HUD Handbook 4000.1, Appendix 1.0). Most FHA borrowers who want to drop MIP refinance into a conventional loan once they reach about 20% equity. Our page on FHA mortgage insurance in Texas goes deeper.
VA funding fee and USDA guarantee fee
VA has no monthly mortgage insurance. Instead it charges a one-time VA funding fee: 2.15% for first use with less than 5% down, 1.5% with 5% down and 1.25% with 10% down. After first use, the 0%-down fee is 3.3%. Veterans who receive VA disability compensation are exempt. USDA charges a 1.00% upfront fee and a 0.35% annual fee for fiscal year 2027, which began October 1, 2026.
Down payment examples for $250K, $300K and $400K Texas homes
| Home price | VA / USDA (0%) | Conventional (3%) | FHA (3.5%) | Conventional (5%) | 10% down | 20% down |
|---|---|---|---|---|---|---|
| $250,000 | $0 | $7,500 | $8,750 | $12,500 | $25,000 | $50,000 |
| $300,000 | $0 | $9,000 | $10,500 | $15,000 | $30,000 | $60,000 |
| $400,000 | $0 | $12,000 | $14,000 | $20,000 | $40,000 | $80,000 |
Those figures are the down payment only. Closing costs, prepaid taxes and insurance, earnest money and the option fee come on top. See typical closing costs in Texas for a line-by-line estimate.
Monthly payment by down payment on a $300,000 Texas home
The table below holds the price, rate and Texas costs constant so you can see what the down payment changes. It uses an example 6.5% 30-year fixed rate, property taxes at an assumed 2.0% combined rate ($500 a month) and $250 a month for homeowners insurance. Conventional PMI figures are illustrative estimates for a borrower with good credit. None of this is a rate quote.
| Loan and down payment | Cash down | Loan amount | Principal and interest | Mortgage insurance | Total monthly payment |
|---|---|---|---|---|---|
| VA, 0% (2.15% funding fee financed) | $0 | $306,450 | $1,937 | $0 | $2,687 |
| USDA, 0% (1% fee financed) | $0 | $303,000 | $1,915 | $88 | $2,754 |
| FHA, 3.5% (1.75% UFMIP financed) | $10,500 | $294,566 | $1,862 | $133 | $2,745 |
| Conventional, 3% | $9,000 | $291,000 | $1,839 | about $165 | about $2,754 |
| Conventional, 5% | $15,000 | $285,000 | $1,801 | about $140 | about $2,691 |
| Conventional, 10% | $30,000 | $270,000 | $1,707 | about $85 | about $2,542 |
| Conventional, 20% | $60,000 | $240,000 | $1,517 | $0 | $2,267 |
Going from 3% to 20% down saves roughly $490 a month in this example, but it takes $51,000 more cash. Whether that’s worth it depends on what else that cash could do, including the emergency fund you need as a new homeowner. For the payment on a higher price point, see how much the mortgage is on a $400K house in Texas.
Zero-down options: VA, USDA and down payment assistance
If you’re asking how to buy a house with no money down, these are the realistic paths.
VA loans
Eligible veterans, service members and some surviving spouses can buy with no down payment as long as the price isn’t higher than the appraised value, and there’s no PMI. The funding fee can be financed. Herring’s Texas VA home loans page covers eligibility and documents, and our guide on how to get a VA loan in Texas walks through the process.
USDA loans
USDA’s guaranteed program finances 100% of the price for homes in eligible rural areas, with household income limits. Many small towns and edges of Texas metros qualify. The 1% upfront fee can be financed.
Down payment assistance in Texas
Texas has two statewide programs. Both require you to use a participating lender and complete a homebuyer education course.
- TDHCA (My First Texas Home and My Choice Texas Home): assistance of 2% to 5% of the total loan amount as a 0% interest second lien, either a 30-year deferred loan repaid when you sell or refinance, or a 3-year deferred loan that is forgiven if you stay current and keep the home as your primary residence. My First Texas Home is for first-time buyers (veterans and targeted areas are exempt) and requires a 620 minimum credit score.
- TSAHC (Homes for Texas Heroes and Home Sweet Texas): up to 5% of the loan amount as a grant, a three-year forgivable second lien or a deferred repayable second lien. TSAHC lists a 620 minimum score on government loans and 640 on conventional loans.
Assistance usually comes with a slightly higher first-mortgage rate than an unassisted loan, so compare both. Our Texas first-time home buyer programs guide covers income limits and city programs.
Where down payment money can come from
- Savings and checking. Expect to show two months of statements. Large deposits that aren’t payroll need a paper trail, so move money early and keep the receipts.
- Gift funds. FHA allows gifts from family to cover the full 3.5%. For conventional loans, Fannie Mae lets gifts cover the entire down payment on a one-unit primary residence; second homes and 2-4 unit homes need 5% from your own funds first. Acceptable donors include relatives, a fiancé or domestic partner, and someone with a long-standing family-like relationship. The donor signs a gift letter stating the amount, the relationship and that no repayment is expected.
- Retirement accounts. A 401(k) loan or withdrawal can work. Fannie Mae does not require a loan secured by your 401(k) to be counted in DTI if the loan documents show the account as collateral, while a withdrawal can trigger taxes and penalties. Talk with a tax adviser first.
- Sale of your current home. Net proceeds are a common source for move-up buyers. If you close on the sale and purchase the same day, the lender documents it with the settlement statement.
- Down payment assistance. State and city programs, covered above.
- Not allowed: unsecured loans or cash advances for the down payment, and cash you can’t document.
Down payment vs. earnest money vs. closing costs
| What it is | When you pay it | Typical Texas amount | |
|---|---|---|---|
| Earnest money | Good-faith deposit held by the title company | Within 3 days of the contract’s effective date (TREC Form 20-19) | Negotiated; credited to your down payment or closing costs at closing |
| Option fee | Payment for the right to terminate during the option period | Within 3 days of the effective date | Negotiated; credited to the price if you close, kept by the seller if you terminate |
| Down payment | Your equity share of the price | At closing | 0% to 20%+ depending on the loan |
| Closing costs and prepaids | Lender, title, survey, recording, escrow deposits for taxes and insurance | At closing | Varies; sellers can contribute within program limits |
VA limits seller concessions to 4% of the home’s reasonable value but does not limit seller credits for normal closing costs.
How your down payment changes rate, PMI and monthly payment
- Loan-to-value drives price. On conventional loans, both the PMI rate and Fannie Mae and Freddie Mac loan-level price adjustments are set in loan-to-value bands, so a bigger down payment generally means a lower PMI premium and better pricing.
- FHA pricing is flatter. FHA’s annual MIP is the same 0.55% for most 30-year loans with less than 5% down regardless of credit score, which is why FHA often wins for buyers with lower scores and small down payments.
- More down shortens mortgage insurance. FHA MIP ends after 11 years with 10% down instead of lasting the life of the loan. Conventional PMI reaches the 78% cutoff sooner.
- Don’t drain reserves. Some programs require cash left after closing, and Texas homes come with real first-year costs such as insurance deductibles and repairs.
For a side-by-side view of the two most common low-down-payment programs, read FHA vs. conventional loans for Texas homebuyers, or compare Herring’s conventional home loans with FHA loans in Texas.
Herring Bank NMLS #415783 | Member FDIC | Equal Housing Lender. This article is for educational purposes only and does not constitute financial, legal or tax advice. It is not a commitment to lend. Loan programs, rates and eligibility requirements are subject to change without notice. Payment examples use assumed rates, taxes, insurance and mortgage insurance and are not a quote.
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This article is for educational purposes only and does not constitute financial, legal, or tax advice. It is not a commitment to lend. Loan programs, rates, and eligibility requirements are subject to change without notice. Consult a qualified professional before making financial decisions.
