One of the biggest myths in home buying is that you need 20% down to purchase a home. The truth? Whether you're buying in Frisco, Plano, McKinney, or anywhere in the DFW Metroplex, today's mortgage options let you buy with as little as 3% down—and in some cases, even less. Let's explore your options.
Down Payment Options by Loan Type
FHA Loans: 3.5% Down
FHA loans are government-backed and designed for buyers with lower credit scores or limited savings. With a credit score of 580+, you can put down just 3.5%.
Example: On a $400,000 home, your minimum down payment would be $14,000.
Conventional Loans: 3% - 20% Down
Conventional loans offer flexibility. First-time buyers may qualify for 3% down programs, while 5%, 10%, and 20% options are also available.
Pro tip: Putting 20% down eliminates private mortgage insurance (PMI), potentially saving hundreds per month.
VA Loans: 0% Down
For eligible veterans and active-duty service members, VA loans offer 100% financing with no down payment required and no PMI.
Eligibility: Veterans, active-duty members, and some surviving spouses may qualify.
USDA Loans: 0% Down
For properties in eligible rural and suburban areas, USDA loans offer no down payment options for qualifying buyers.
Note: Some areas in the outer DFW suburbs may qualify for USDA financing.
Where Can Your Down Payment Come From?
Your down payment doesn't have to come entirely from your own savings. Here are acceptable sources:
- Personal savings:
Money from your checking, savings, or investment accounts.
- Gift funds:
Gifts from family members are allowed for most loan types. FHA loans allow 100% of your down payment to be a gift.
- Down payment assistance programs:
Many state and local programs offer grants or low-interest loans for down payment assistance, especially for first-time buyers.
- Retirement accounts:
Some 401(k) plans allow loans or hardship withdrawals for home purchases. Consult a financial advisor before tapping retirement funds.
đź’ˇ The Real Cost of a Lower Down Payment
While lower down payments make homeownership more accessible, they come with trade-offs. You'll have a larger loan balance, higher monthly payments, and typically need to pay mortgage insurance. However, for many buyers, the opportunity to build equity sooner outweighs these costs—especially in appreciating markets like DFW.
Down Payment Comparison: $400,000 Home
| Down Payment % | Amount | Loan Amount | PMI Required? |
|---|---|---|---|
| 3% | $12,000 | $388,000 | Yes |
| 3.5% (FHA) | $14,000 | $386,000 | Yes (MIP) |
| 10% | $40,000 | $360,000 | Yes |
| 20% | $80,000 | $320,000 | No |
Texas-Specific Down Payment Assistance
Texas offers several programs to help first-time and qualifying homebuyers with down payments and closing costs. While program availability and terms change, options have historically included:
- • Texas State Affordable Housing Corporation (TSAHC) programs
- • Texas Department of Housing and Community Affairs (TDHCA) programs
- • City and county-specific assistance programs
- • Employer-assisted housing programs
Ask your loan officer about current programs you may qualify for.
Need Help Planning Your Down Payment?
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