Yes, you can put 3.5% down on a house, primarily through an FHA loan, which requires a minimum 3.5% down payment for borrowers with a credit score of 580 or higher, allowing many to achieve homeownership sooner without a large upfront cost, though it does involve mortgage insurance. Other options for low down payments, like 3%, exist with conventional loans (e.g., Freddie Mac's HomeOne program for first-time buyers), or even 0% with VA/USDA loans for eligible buyers.
There are a few factors home buyers should consider when deciding how much to put down on a home: The minimum down payment requirement for your loan type—for example, a conventional loan will require at least 3% whereas a Federal Housing Administration (FHA) loan requires a minimum down payment of 3.5%.
Basic Eligibility Criteria
Minimum credit score: To qualify for an FHA loan, borrowers typically need a minimum credit score of 580 to make a down payment of 3.5%. Borrowers with credit scores between 500 and 579 may still be eligible if they make a larger down payment.
The minimum FHA loan down payment is either 3.5 percent or 10 percent of the home's purchase price, depending on your credit score. Say you're buying a $400,000 house and using an FHA loan to fund the purchase. If you have a credit score of 620, you can put just 3.5 percent down, which amounts to $14,000.
You may have heard that a down payment should be 20% of a home's purchase price, and while it does have advantages, it's not necessary. A Federal Housing Administration (FHA) mortgage has a minimum down payment of only 3.5%. It's available to all qualified buyers, regardless of income level.
To afford a $300k house, you generally need an income between $70,000 and $90,000 annually, depending on your down payment, credit, and existing debts, with a common guideline being your total housing costs (mortgage, taxes, insurance) should be under 28-36% of your gross monthly income. A larger down payment (like 20%) and lower other debts (student loans, car payments) allow you to qualify with a lower income, potentially around $75k-$85k, while less down payment or more debt might push the required income towards $100k or more.
The best time to buy a house is a balance between market conditions and personal readiness, with late summer/early fall often ideal for lower prices and less competition, while winter offers the lowest prices but limited homes, and spring/early summer has the most inventory but highest prices and competition. Ultimately, the best time is when you're financially prepared with a good credit score, down payment, stable income, and emergency fund, as personal readiness trumps seasonal trends.
You're disqualified as a first-time homebuyer if you've owned a home in the last three years, have a low credit score (usually <620), a high debt-to-income (DTI) ratio (over ~43%), unstable employment (less than 2 years steady), insufficient income, or if the property itself has major issues, while income limits for some programs can also disqualify high earners, with specific definitions varying by loan type (like FHA vs. Conventional).
FHA loan disqualifications often stem from a poor credit history (especially recent bankruptcies/foreclosures or delinquent federal debt), a high debt-to-income (DTI) ratio (over 43-50%), or insufficient funds for down payment/closing costs, plus issues like having an existing FHA loan without proper justification or the property not meeting FHA standards. Resolving delinquent federal debts (student loans, taxes) is crucial, and a score below 500 generally disqualifies you, though most lenders prefer 580+.
For a $400,000 house, your down payment can range from $0 to $80,000, depending on the loan type and your financial situation, with 3.5% ($14,000) for FHA loans, 3% ($12,000) for conventional loans for some first-timers, or 20% ($80,000) to avoid Private Mortgage Insurance (PMI) on conventional loans, while VA and USDA loans can offer 0% down for eligible buyers.
Red flags when buying a house include structural issues (foundation cracks, sloping floors), water problems (stains, musty smells, basement flooding signs, poor drainage), sloppy renovations (fresh paint covering damage, crooked finishes, DIY work), bad maintenance (old roof, deferred upkeep), and listing/market oddities (long time on market, multiple price drops, little info). Always get a professional inspection to uncover hidden issues with major systems like electrical, plumbing, HVAC, and roofing before buying.
To comfortably afford a 400k mortgage, you'll likely need an annual income between $100,000 to $125,000, depending on your specific financial situation and the terms of your mortgage.
However, most lenders still require your score to be at least 600 for an insured mortgage, even with a co-signer. How long does it take to raise my score enough to buy a home? Raising your credit score enough to buy a home (typically up to at least 600–680) can take anywhere from about 3 to 12 months.
The most you can borrow is usually capped at four-and-a-half times your annual income, but this isn't guaranteed. Use our Mortgage repayment calculator to get an idea of how much you could borrow based on your salary.
Lower credit score requirement
While many conventional loans require a score of 620 or higher, FHA loans may be available to borrowers with scores as low as 500, though a score of 580 or higher is needed to qualify for the minimum 3.5% down payment.
That depends on what type of mortgage loan you're using. If you use a VA or USDA loan, you won't need a down payment. With a conventional loan, you'll need at least $6,000 down (3%). For an FHA loan, it's $7,000 (3.5%) to $20,000 (10%), depending on your credit score.