What is the minimum down payment for a first-time homebuyer?

It depends on the loan type. Conventional loans typically allow 3-5% down for first-time buyers, FHA loans allow 3.5% down, and VA and USDA loans allow 0% down for eligible borrowers. A lower down payment means a larger loan and, on conventional loans under 20% down, PMI.

Should I get pre-approved before I start house hunting?

Yes. Pre-approval tells you what a lender will actually lend, makes your offer credible to sellers, and surfaces problems (credit issues, documentation gaps) while you still have time to fix them. Get quotes from at least three lenders — rates and fees vary more than most buyers expect.

What are down-payment assistance programs?

Many states, counties, and cities offer grants or low-interest second loans to first-time buyers, often for households under local income limits. Some grants never need repayment; others are forgiven after you live in the home for a set number of years. Your state housing finance agency is the best place to start.

How much cash do I need beyond the down payment?

Budget 2-5% of the purchase price for closing costs, plus moving costs and an emergency fund you do not touch. Draining every dollar of savings for the down payment is the most common first-timer mistake — the house will need things in year one.

First-Time Homebuyer Guide: Loans, Assistance, and the Road to Closing

Buying your first home is a stack of unfamiliar decisions made under time pressure: which loan, how much down, what the monthly payment really includes, and whether the house you love is one you can actually afford. This guide walks through each decision in order, so you can move from browsing listings to closing day without expensive surprises.

Picking the Loan: FHA vs VA vs USDA vs Conventional

The loan type shapes your down payment, your monthly cost, and how strict the approval is. Here is how the four main options compare:

Conventional: 3-5% down for many first-time buyers, up to 20% to avoid PMI. Best rates go to higher credit scores. No upfront mortgage insurance premium, and PMI can be removed at 20% equity.
FHA: 3.5% down with a credit score of 580 or higher (10% down below 580). More forgiving on credit and debt, but you pay an upfront premium plus monthly mortgage insurance that usually lasts for the life of the loan.
VA: 0% down for eligible veterans and active-duty service members, no PMI, and typically the lowest rates available. A one-time funding fee applies unless you are exempt.
USDA: 0% down for eligible buyers in qualifying rural and suburban areas, subject to income limits. A guarantee fee replaces PMI.

There is no universally best loan — only the best fit for your credit, savings, and location. A lender can run your numbers across two or three types in one sitting; ask them to.

Down-Payment Assistance: Money You May Be Leaving on the Table

Almost every state runs a housing finance agency with first-time buyer programs, and many counties and cities add their own. Assistance usually comes as a grant (never repaid) or a deferred second loan (repaid when you sell, refinance, or after a set number of years). Most programs have income limits and require a homebuyer education course, which is usually a few hours online.

Check your state housing finance agency first, then ask your lender which programs they work with — not all lenders participate in all programs, and the ones that do can often stack a grant with a low-down-payment loan.

The Timeline: Pre-Approval to Closing

Pre-approval (week 1): Lender verifies income, assets, debts, and credit, and issues a letter stating what you can borrow. Shop at least three lenders here.
House hunt and offer: With pre-approval in hand, your offer carries weight. Include an inspection contingency unless you have a very good reason not to.
Underwriting (weeks 2-5): The lender verifies everything again, orders the appraisal, and may ask for more documents. Respond fast — delays here delay closing.
Closing disclosure (at least 3 business days before closing): Review every line against your Loan Estimate. Question anything that moved.
Closing day: Sign, pay closing costs and prepaid items, get the keys.

A typical purchase closes 30-45 days after an accepted offer. Anything that changes your finances mid-process — a new car loan, a job change, a large unexplained deposit — can stall or kill it.

The Mistakes First-Timers Make Most

Draining savings for the down payment. Keep an emergency fund intact after closing. Roofs leak and furnaces fail on their own schedule.
Skipping the inspection to win a bidding war. An inspection costs a few hundred dollars; an undisclosed foundation problem costs tens of thousands.
Borrowing the maximum approval. Approval is what a lender thinks you can pay, not what leaves you comfortable. Run the payment against your real budget first.
Comparing only the interest rate. Compare APR and total closing costs across lenders — the lowest rate is not always the cheapest loan.

Worked Example: A $400,000 First Home

Say you buy a $400,000 home with 10% down ($40,000) and borrow $360,000 at 6.5% for 30 years. Plug those numbers into the Mortgage Calculator and you get principal and interest of about $2,275 per month. Because the down payment is under 20%, add PMI — at 0.75% of the loan per year, roughly $225 per month. Property taxes at 1.1% of the price add about $367 per month, and homeowners insurance about $150. All in, the monthly payment is roughly $3,017.

Now check that against the 28% rule with the Home Affordability Calculator: a $3,017 housing payment fits a gross monthly income of about $10,775, or roughly $129,300 a year. If your household earns less than that, this house is a stretch even if a lender approves you — and that is exactly the gap first-time buyers miss when they shop by approval amount instead of by payment.

For comparison, an FHA loan on the same home needs only 3.5% down ($14,000), but the loan grows to $386,000 and principal and interest rise to about $2,440 per month — plus FHA mortgage insurance that typically lasts the life of the loan. Lower cash up front, higher cost every month after. Run both versions through the Down Payment Calculator before you decide which trade-off fits your savings.

Try These Calculators

Down Payment Calculator Home Affordability Calculator Mortgage Calculator