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Agency minimums vs. lender overlays — read this first.
Every figure below starts with the agency’s own rule (HUD for FHA, the VA, USDA Rural Development, or Fannie Mae / Freddie Mac for conventional). On top of those, each lender adds overlays — its own stricter cutoffs, like requiring a 620 credit score where the agency allows 580. And automated underwriting judges every file on its full picture: income stability, reserves, and payment history can move the needle either way. Treat the ranges below as realistic starting points, never as guaranteed approvals.
Every figure below starts with the agency’s own rule (HUD for FHA, the VA, USDA Rural Development, or Fannie Mae / Freddie Mac for conventional). On top of those, each lender adds overlays — its own stricter cutoffs, like requiring a 620 credit score where the agency allows 580. And automated underwriting judges every file on its full picture: income stability, reserves, and payment history can move the needle either way. Treat the ranges below as realistic starting points, never as guaranteed approvals.
| Feature | CONVENTIONALFlexible & widely available | FHAGreat for first-time buyers | USDAZero down in eligible areas | VABuilt for those who serve |
|---|---|---|---|---|
| Who it’s best for | Buyers with stronger credit and stable, documentable income. First-timers aren’t excluded — 3%-down conventional options exist for qualified buyers — but pricing rewards higher scores. | First-time buyers, or anyone rebuilding credit. The most forgiving major program on credit history, in exchange for mortgage insurance. | Buyers purchasing in eligible rural or suburban areas whose household income is low-to-moderate for the county. No first-time-buyer requirement. | Active-duty service members, veterans with qualifying service, and eligible surviving spouses. Kris is a veteran himself — this is home turf. |
| Minimum down payment | As low as 3% through HomeReady / Home Possible for qualified buyers. 5–20% is the common range; investment properties typically need 15–25%. | 3.5% with 580+ credit; 10% with 500–579 (HUD minimums). The entire down payment may come from gift funds with documentation. | 0%. No down payment required — the full purchase price can be financed, and even the 1% upfront fee can be rolled into the loan. | 0%. VA requires no down payment, and veterans with full entitlement face no loan limit in most counties. |
| Credit score guidelines | No agency-set minimum — but this is where overlays bite hardest. Most lenders require 620+; the best rates and PMI pricing go to 740+. | 580+ unlocks 3.5% down; 500–579 requires 10% down (HUD floor). In practice, many lenders overlay a 580–620 minimum. | No USDA-set minimum. Most lenders want 640+ for automated approval; below that, manual underwriting is possible with strong documentation. | No VA-set minimum — the VA itself doesn’t draw a line. Most lenders overlay 620+; some go lower with compensating factors. |
| Debt-to-income (DTI) | Often up to 45–50% with strong compensating factors (reserves, residual income), decided by automated underwriting — not a hard cap. | 43% back-end is the standard benchmark; up to 50% with compensating factors, and automated approvals can stretch further. Manual files are tighter. | 29% housing / 41% total are the published guidelines. Automated underwriting grants exceptions for strong credit, reserves, or clean rent history. | 41% is the benchmark, but VA uniquely weighs residual income — dollars left after all obligations, scaled to family size and region. Strong residual income can carry a higher DTI. |
| Mortgage insurance & fees | Private Mortgage Insurance (PMI) when putting less than 20% down. No upfront fee. You can request cancellation at 20% equity; it drops automatically at 78% of the original value. | Upfront MIP: 1.75% of the loan (usually financed, not out of pocket) plus annual MIP ≈ 0.55%, paid monthly. With less than 10% down it lasts the life of the loan; with 10%+ down it drops after 11 years. | Upfront guarantee fee: 1.0% (usually financed) plus annual fee: 0.35% of the balance, paid monthly for the life of the loan. Still the cheapest insurance of any government program. | One-time VA funding fee instead of any monthly PMI — 2.15% first use / 3.30% repeat use at 0% down; 1.50% with 5% down; 1.25% with 10%+ down. Fully exempt for veterans with service-connected disability compensation (and certain others). |
| Property & borrower eligibility | Primary residence, second home, or investment property (with down-payment and reserve limits). Standard appraisal — no agency property-condition rulebook. | Primary residence only. The home must pass an FHA appraisal against HUD’s health-and-safety standards (roof, systems, peeling paint pre-1978, etc.). Condos must be FHA-approved. | Primary residence only, in a USDA-eligible area, with household income at or below 115% of area median income (all adult household income counts). See the note below — “rural” covers far more than farms. | Primary residence only — you must intend to occupy within 60 days of closing. The home must meet VA Minimum Property Requirements. A Certificate of Eligibility (COE) documents your entitlement. |
| Key advantages | Widest property flexibility, no upfront insurance fee, PMI that actually goes away, and typically the lowest lifetime cost for well-qualified buyers. | Lowest credit barrier of any major program, 3.5% down, gift funds welcome, and sellers may contribute up to 6% toward closing costs. | Zero down payment with the lowest monthly insurance cost available — often the cheapest path to homeownership for eligible buyers. | Zero down, zero monthly PMI, typically the lowest rates of any program, and reusable — the benefit isn’t one-and-done. |
| Potential drawbacks | Best pricing demands strong credit; PMI adds real monthly cost below 20% down; overlays vary widely by lender. | Both upfront and ongoing MIP; the annual MIP never drops with <10% down; property standards can kill a deal on fixer-uppers. | Hard geographic and income ceilings — earn too much or buy two streets outside the line and you’re out. Annual fee lasts the loan’s life. | Funding fee stings on repeat use (3.30%); occupancy and entitlement rules add paperwork; some sellers misunderstand the program. |
| Learn more | Conventional details → | FHA details → | USDA details → | VA details → |
CONVENTIONAL
Flexible & widely available
- Who it’s best for
- Buyers with stronger credit and stable, documentable income — including first-timers using 3%-down options.
- Minimum down payment
- As low as 3% (HomeReady / Home Possible); 5–20% is common.
- Credit score
- No agency minimum. Most lenders require 620+ (overlay).
- DTI
- Often up to 45–50% with strong compensating factors.
- Insurance & fees
- PMI below 20% down; no upfront fee; removable at 20% equity.
- Eligibility
- Primary, second home, or investment property (with limits).
- Key advantages
- Widest flexibility, no upfront fee, PMI goes away.
- Drawbacks
- Best pricing needs strong credit; PMI costs below 20% down.
FHA
Great for first-time buyers
- Who it’s best for
- First-time buyers, or anyone rebuilding credit.
- Minimum down payment
- 3.5% with 580+ credit; 10% with 500–579.
- Credit score
- 580+ for 3.5% down; 500–579 needs 10% down. Lenders often overlay higher.
- DTI
- 43% benchmark; up to 50% with compensating factors.
- Insurance & fees
- 1.75% upfront MIP + ~0.55%/yr annual MIP.
- Eligibility
- Primary residence only; must meet HUD health-and-safety standards.
- Key advantages
- Lowest credit barrier; gift funds allowed for full down payment.
- Drawbacks
- Upfront + ongoing MIP; strict property condition standards.
USDA
Zero down in eligible areas
- Who it’s best for
- Buyers in eligible rural or suburban areas with low-to-moderate income.
- Minimum down payment
- 0%. No down payment required.
- Credit score
- No USDA minimum. Most lenders want 640+ for automated approval.
- DTI
- 29% / 41% guidelines; exceptions with strong factors.
- Insurance & fees
- 1% upfront guarantee fee + 0.35%/yr annual fee.
- Eligibility
- Primary residence in a USDA-eligible area; income ≤115% of area median.
- Key advantages
- Zero down + cheapest insurance of any government program.
- Drawbacks
- Hard geographic and income ceilings.
VA
Built for those who serve
- Who it’s best for
- Active-duty service members, veterans, and eligible surviving spouses.
- Minimum down payment
- 0%. Full 100% financing available.
- Credit score
- No VA minimum. Most lenders require 620+ (overlay).
- DTI
- 41% benchmark; VA also weighs residual income.
- Insurance & fees
- One-time funding fee instead of monthly PMI: 2.15% first use / 3.30% repeat use at 0% down. Exempt with service-connected disability.
- Eligibility
- Primary residence only (occupy within 60 days); COE documents entitlement.
- Key advantages
- Zero down, no monthly PMI, typically lowest rates.
- Drawbacks
- Funding fee unless exempt; occupancy and entitlement paperwork.
USDA is not just for farms. “Rural” in USDA terms covers roughly 97% of U.S. land area — including a huge number of suburbs and small towns around Utah’s metros. The tests are the address (check it on USDA’s official eligibility map) and household income (at or below 115% of the area median, counting all adult household income). Plenty of ordinary suburban homes qualify.
What the down payment looks like on a $400,000 home
Closing costs are separate and vary — sellers can often contribute, depending on the program.
| Program | Minimum down | Cash at closing (down payment only) |
|---|---|---|
| Conventional (3% option) | 3% | $12,000 |
| FHA (580+ credit) | 3.5% | $14,000 |
| USDA | 0% | $0 |
| VA | 0% | $0 (funding fee usually financed) |
Figures reflect agency guidelines as of October 2026 and change over time — always confirm current numbers before relying on them. Lenders add their own overlays, and automated underwriting judges every file on its complete merits, so ranges above are realistic starting points, not guaranteed approvals and not a commitment to lend. Your actual options depend on your credit, income, debts, and the property.
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