You can buy a house with a surprisingly low deposit, with options as low as 0% down (VA, USDA loans) or 3-3.5% (conventional, FHA loans) for eligible buyers, though 20% avoids Private Mortgage Insurance (PMI) and is ideal; minimums vary by loan type, credit score, and property, but 3.5% (FHA with 580+ credit) or 3% (conventional) are common low-end starting points.
The amount you need for a deposit usually depends on the property price and your budget. For a home purchase, you normally need to put down at least 5% or 10% of the total amount.
This deposit is not made until the seller accepts the buyer's offer on the property. The earnest money is often held in a third-party escrow account until the transaction closes. Although commonly used in real estate, earnest money is optional.
Deposit savings
The bigger your deposit, the smaller your loan will be and the less interest you'll have to pay. Ideally, you should save as much as possible before buying a home. The minimum required deposit is 10%, but aim for 20% if possible.
With a £10,000 deposit, this means that you could be looking to purchase a property that's worth up to £200,000. That said, there are a few schemes that could help you buy a property with a smaller LTV deposit below 5%, which we'll look at in more detail later on.
VA loans. If you're a military service member, veteran or surviving spouse, you might qualify for a VA loan guaranteed by the U.S. Department of Veterans Affairs (VA). Unlike a conventional loan, VA loans don't typically require a down payment, and they don't charge mortgage insurance.
Credit scores directly influence security deposit requirements, with higher scores often resulting in lower deposits. Property location and market conditions play a significant role in determining appropriate deposit amounts.
The "3-3-3 rule" in real estate isn't a single guideline but refers to different strategies: for buyers, it's about financial readiness (3 months savings, 3 months reserves, 3 property comparisons) or a financial affordability check (30% income, 30% down, 3x income); for agents, it's a marketing habit (call 3, note 3, share 3) or prospecting (talking to everyone within 3 feet). There's also a developer rule (1/3 land, 1/3 build, 1/3 profit), though it's considered outdated by some.
You generally need a credit score of at least 620 to qualify for a conventional mortgage, though every lender is different. FHA loans, which are backed by the federal government, may be an option for individuals with credit scores as low as 500.
Your deposit should be at least 5% or 10% of the price of the home you'd like to buy. The bigger your deposit, the less you might need to borrow. Larger deposits can also give you access to a wider range of mortgage deals or lower interest rates to save you money in the long term.
Aim to save for 10%-to-20% of the home's purchase price, which would be $40,000-to-$80,000 for a $400,000 home. Making a larger down payment can lead to better mortgage terms and lower monthly payments.
With $10,000 down, you could potentially afford a home in the $285,000 to $330,000 range, depending heavily on your income, credit, debts, and loan type, with FHA loans requiring 3.5% ($10k on $285k) and conventional loans often needing 3% ($10k on ~$333k) or more, plus you must account for property taxes, insurance, and PMI (Private Mortgage Insurance).
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.
You can buy a $300,000 house with $60,000 down with any mortgage loan, but most buyers opt for a Putting $60,000 down on a $300,000 house—that's a 20% down payment—can help you avoid PMI, lower your monthly mortgage payment, and lock in a lower interest rate. Many borrowers choose a conventional loan for this reason.
How to buy a house with no money down
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.
Yes, you can get a loan or assistance for a down payment, but borrowing directly for it (like a personal loan) is often discouraged by lenders as it increases debt; better options include government/non-profit grants, gifts from family, 401(k) loans, home equity, or using low down payment mortgage options like VA, USDA, FHA, or conventional loans with less than 20% down.
For a $200,000 home, you'll likely need a fair to good credit score: 740+: Best rates and terms. 680-739: Good rates, still very good affordability.