How Much Down Payment Do You Need? NYC and US Rules

The minimum depends on the loan: 3.5% for an FHA loan, 0% for an eligible VA loan, and as little as 3% on some conventional loans. In New York City, the building often matters more than the loan: many co-ops require 20% down, and some ask for 25% to 50%.

Putting down less than 20% on a conventional loan usually means paying private mortgage insurance. Here are the rules by loan type, what co-ops ask for, and how 5%, 10% and 20% down change your costs.

Minimum down payment by loan type

Conventional loans

Conventional loans are not insured by the government. Fannie Mae allows loan-to-value ratios up to 97% on some programs, which means 3% down. Its HomeReady program, for example, goes up to 97% for buyers whose income is at or below 80% of the area median income, with extra conditions. Lenders can set higher minimums, and jumbo loans above the conforming limit have their own requirements. If you put down less than 20%, the Consumer Financial Protection Bureau notes you will usually pay private mortgage insurance (PMI), which protects the lender, not you.

FHA loans

HUD says an FHA down payment can be as low as 3.5% of the purchase price. FHA loans carry their own mortgage insurance: an upfront premium of 1.75% of the base loan amount (usually added to the loan) and an annual premium paid monthly. For a loan over 15 years with a base amount at or below $726,200, the annual premium is 0.55% if you put down less than 5%, and it lasts for the life of the loan. With 5% to under 10% down, it is 0.50% for the life of the loan. With at least 10% down, it is 0.50% and ends after 11 years. These rates come from HUD Mortgagee Letter 2023-05, effective for case numbers endorsed on or after March 20, 2023. FHA loans have county loan limits and property rules, so check with an FHA-approved lender. See the FHA loan calculator.

VA loans

The Department of Veterans Affairs says there is no down payment as long as the sales price is not higher than the appraised value, and no private mortgage insurance or mortgage insurance premium. Most borrowers pay a one-time VA funding fee instead, which depends on service type, down payment and whether it is a first VA loan. Run it with the VA loan calculator.

NYC co-ops: the building sets the minimum

A co-op is a corporation that owns the building. You buy shares, and the board decides whether to approve you. Boards set their own financing limit, and it is often stricter than any lender’s. Industry guides report that 20% is the most common co-op minimum, that 25%, 35% and 50% are also seen, and that a 10% minimum is rare.

Boards also look at what is left after closing. A typical co-op expects about one to two years of housing costs in liquid assets after you pay the down payment and closing costs. So a buyer with exactly 20% and nothing else may still be turned down. Read co-op financial requirements and run your numbers in the co-op board approval calculator.

Condos and houses generally follow the lender’s rules, although some condo buildings and new-development sponsors have their own conditions. Always ask the listing agent for the building’s financing limit before you make an offer.

5% vs 10% vs 20% down: a worked example

Here is a $600,000 condo bought with a conventional 30-year fixed loan at an assumed 6.5% rate. PMI is shown at an illustrative 0.5% of the loan a year; your quote depends on your credit score and down payment.

Going from 5% to 20% down costs $90,000 more upfront and lowers the payment by about $800 a month in this example. Most of that is the smaller loan; the rest is avoiding PMI. Ignoring interest you would earn on the cash, $90,000 ÷ $800 is about 112 months, roughly 9 years, of savings to recover the extra cash. That is why some buyers choose a smaller down payment and keep the cash as a cushion.

How to decide how much to put down

• Meet the building’s rule first. For a co-op, the board minimum is fixed. For condos and houses, you have more choice.
• Keep reserves. Don’t empty your savings. Lenders, boards and your own emergency fund all need cash after closing.
• Compare PMI to the cost of waiting. Saving another year or two to reach 20% avoids PMI, but prices and rates may change. PMI on a conventional loan can be removed later; see how PMI works and how to remove it.
• Look at help programs. NYC and New York State offer down payment assistance for eligible first-time buyers. See NYC HomeFirst and first-time homebuyer programs in New York.
• Gifts are allowed with paperwork. Family gifts can usually count toward the down payment with a gift letter; see using gift money for a down payment.

Plan how long it will take

Use the down payment savings calculator to see how long it will take to reach your target, and the PMI calculator to see what a smaller down payment costs each month. Then check whether the full monthly cost fits with how much house you can afford in NYC.

This guide is general information. Loan rules change, and each lender and co-op board applies its own standards.