Down payment and reserves explained
You don’t always need 20% down. Learn typical minimums by loan type, what reserves are, and smart ways to structure your funds with gifts and assistance.
Typical minimums by loan type
- Conventional As low as 3% down for some first-time buyers. 5% is common.
- FHA 3.5% down with flexible credit rules.
- VA Often 0% down for eligible service members and veterans.
- USDA Often 0% down in eligible areas with income limits.
Minimums vary by lender and your profile. Ask a local lender to confirm your exact options.
What reserves are and why they matter
Reserves are funds left over after closing. Lenders measure them in months of the total payment. 1–3 months is common for stronger files. More complex files can require more.
Gift funds and assistance
- Gifts Allowed on many loans with a signed gift letter and paper trail.
- Down payment assistance Grants or second loans may help with cash to close. Some programs add income or location rules.
- Seller credits Can reduce closing costs within program limits.
How much should I actually bring
Plan for the down payment plus closing costs and a small cushion. See hidden costs buyers should expect to build a full picture.