how-to
How Much Down Payment for a House With Bad Credit?
Last Updated: October 26, 2026
Quick Summary
Most bad credit home loan programs require a down payment between 3.5% and 20%, depending on your credit score and loan program. FHA requires 3.5% down at a 580 score but 10% down for scores of 500 to 579. Below 500, owner financing typically requires 20% or more down.
- Conventional loans typically need 3% to 5% down with a 620 minimum credit score.
- VA and USDA loans offer 0% down, though lenders still set their own credit floors.
- On a $300,000 house, a 3.5% down payment is $10,500 and 20% is $60,000.
- Budget closing costs of roughly 2% to 5% of the loan amount on top of your down payment.
- Gift funds and down payment assistance can cover part of your down payment but require a paper trail.
Table of Contents
- How Much Down Payment Do You Need With Bad Credit?
- Minimum Credit Score and Down Payment Rules by Loan Program
- Bad Credit Mortgage Options Beyond FHA and Conventional
- Using a Down Payment Calculator to Run Your Numbers
- Down Payment for a $300,000 House at Different Credit Levels
- Closing Costs When Buying a House: The Cash You Forgot to Budget
- Gift Funds, Down Payment Assistance, and Lender Overlays
- Check Your Down Payment Options With Sold With Financing
- Frequently Asked Questions
How Much Down Payment Do You Need With Bad Credit?
The short answer: most bad credit home loan programs require between 3.5% and 20% down, and the right percentage depends on your credit score and which loan program you use. At Sold With Financing, we arrange owner financing with no minimum credit score, so your down payment, not your FICO score, does most of the qualifying work.
A down payment is the cash you pay upfront toward a home's purchase price; the rest is financed. It is the single largest lever you control when your credit history is thin or damaged.
Here's what most guides get wrong: they treat down payment as a fixed percentage. In practice, it moves with your credit score, your loan program, and the lender's own rules layered on top of both.
Down Payment by Credit Score Band
Down payment requirements rise as credit scores fall, and the jumps are steep at the low end. Here is how the bands generally line up across common loan programs.
| Credit Score Band | Typical Minimum Down Payment | Program That Fits |
|---|---|---|
| 740+ | 3% to 5% | Conventional, best rates |
| 620 to 739 | 3% to 5% | Conventional, higher pricing |
| 580 to 619 | 3.5% | FHA loan |
| 500 to 579 | 10% | FHA loan |
| Below 500 | 20% or more | Owner financing, non-QM |
Two things stand out. First, FHA is the only mainstream program that openly publishes a path for scores between 500 and 579, and it charges 10% down for it. Second, below 500, bank programs largely close their doors, which is where owner financing enters the picture.
Minimum Credit Score and Down Payment Rules by Loan Program
Each loan program pairs a minimum credit score with a minimum down payment, and lenders can tighten both. The table below summarizes the main options.
| Loan Program | Minimum Credit Score | Minimum Down Payment | Notes |
|---|---|---|---|
| Conventional | 620 typical | 3% to 5% | Lender overlays often push higher |
| FHA | 580 | 3.5% | 10% down if score is 500 to 579 |
| VA | Set by lender | 0% | Veterans and eligible spouses |
| USDA | Set by lender | 0% | Rural areas, income limits |
| Owner financing | None | Set by the seller | Income and down payment based |
The FHA single family housing policy handbook is the authoritative source on FHA credit and down payment rules, and it is worth reading before you assume a bank's answer is the final word. A common mistake is applying to one lender, getting a no, and concluding no program exists. Lender requirements vary widely, and overlays, the extra rules individual lenders add on top of program minimums, are where many bad credit borrowers get quietly filtered out.
Bad Credit Mortgage Options Beyond FHA and Conventional
Bank programs are not the only path. When credit history blocks a mortgage approval, several alternatives remain.
- VA loans: no down payment for eligible veterans and surviving spouses, though the lender still sets a credit floor.
- USDA loans: zero down in eligible rural areas, with income caps.
- Non-QM loans: portfolio lenders that underwrite on bank statements or assets rather than strict credit scores.
- Owner financing: the seller finances the purchase, so qualification rests on income and down payment instead of a minimum credit score. Buy a house with bad credit, no bank needed through owner financing.
For buyers whose credit was damaged by a bankruptcy or foreclosure, buy a home after bankruptcy or foreclosure with owner financing and no waiting period, because the decision looks at your finances now rather than years ago. That distinction matters: a bank sees a five-year-old foreclosure on a credit report, while an owner-financing arrangement sees your current income and savings.
Consumer Financial Protection Bureau guidance on mortgages explains how lenders assess credit and what borrowers can request during underwriting, which helps you spot when a denial is a program rule versus a lender preference.
Using a Down Payment Calculator to Run Your Numbers
A down payment calculator converts a percentage into a dollar figure and shows the monthly payment that follows. That sounds trivial until you realize most buyers budget for the percentage and forget the cash that accompanies it.
The formula is simple: home price × down payment percentage = down payment. On a $250,000 home, 3.5% is $8,750; 10% is $25,000; 20% is $50,000.
For owner financing, the down payment also changes your monthly payment and your loan terms. Learn how to use the owner financing calculator to run your numbers.
Watch out: a calculator gives you the payment, not the full cash requirement. Property taxes, insurance, and closing costs sit outside the down payment and catch buyers short at the closing table.
Down Payment for a $300,000 House at Different Credit Levels
On a $300,000 house, down payment requirements translate into real cash that varies sharply by credit band. Here is the breakdown.
- 620+ conventional at 3%: $9,000 down
- 580 to 619 FHA at 3.5%: $10,500 down
- 500 to 579 FHA at 10%: $30,000 down
- Below 500 owner financing at 20%: $60,000 down
The message is blunt. A 60-point drop in credit score can triple your cash requirement. That is why improving credit before you apply, even modestly, is often worth more than shopping for a lower rate.
A common mistake is assuming a bigger down payment automatically fixes bad credit. It helps with owner financing and can offset risk in a lender's eyes, but it does not erase a foreclosure or a thin credit file at a bank.
Closing Costs When Buying a House: The Cash You Forgot to Budget
Closing costs are the fees charged to finalize a home purchase, and they sit on top of your down payment. Buyers routinely budget for the down payment and forget this second pile of cash, then scramble at the closing table.
Typical closing costs include lender origination and underwriting fees, title search and title insurance, appraisal, credit report, recording fees, and prepaid taxes and homeowners insurance. On a $300,000 purchase, these commonly land in the range of roughly 2% to 5% of the loan amount, which works out to about $6,000 to $15,000 depending on the lender and location.
Total Cash to Close, Not Just Down Payment
The number that actually matters is your total cash to close: down payment plus closing costs plus any prepaid escrow amounts plus reserves the lender requires. Here is how that stacks up on a $300,000 purchase at different credit bands.
| Credit Band | Down Payment | Estimated Closing Costs (2%-5%) | Estimated Cash to Close |
|---|---|---|---|
| 620+ conventional at 3% | $9,000 | $6,000-$15,000 | $15,000-$24,000 |
| 580-619 FHA at 3.5% | $10,500 | $6,000-$15,000 | $16,500-$25,500 |
| 500-579 FHA at 10% | $30,000 | $6,000-$15,000 | $36,000-$45,000 |
| Below 500 owner financing at 20% | $60,000 | Varies; often lower | $60,000+ |
Earnest Money, Appraisal, and Inspection
Three costs often get overlooked because they are paid before closing rather than at it. Earnest money is a good-faith deposit, commonly 1% to 3% of the purchase price, that is credited toward your down payment at closing but must be available upfront. An appraisal typically runs several hundred dollars and is required by most lenders. A home inspection is optional but strongly recommended and usually costs a few hundred dollars. None of these are refundable if the deal falls apart for a reason not covered by your contract contingencies, so plan for them as part of your upfront cash.
Reserves and Prepaids
Many lenders require reserves, cash left over after closing, often measured in months of mortgage payments, and prepaid taxes and insurance are collected at closing into an escrow account. Both increase the cash you need on hand. With owner financing, the closing cost picture is often simpler because there is no bank underwriting layer, but title work and recording still apply. Get owner financing questions answered, including closing costs, deeds, and taxes.
Gift Funds, Down Payment Assistance, and Lender Overlays
Gift funds and down payment assistance can cover part or all of your down payment, but the rules are strict. Lenders require a gift letter, proof of the donor's ability to give, and a paper trail showing the money's source.
Down payment assistance programs exist at the state and local level, often aimed at first-time home buyers and lower-income households. Eligibility, amounts, and repayment terms vary by program, so check the official program page for current figures rather than relying on secondhand summaries.
For buyers weighing owner financing, we explain the income and down payment standards we look at, including how gift funds and savings are treated. See who qualifies for owner financing. ITIN holders and self-employed buyers are welcome, and there is no minimum credit score requirement.
Check Your Down Payment Options With Sold With Financing
The down payment question has a different answer for every credit band, and the gap between a 3.5% and a 20% requirement is thousands of dollars in cash. If bank programs have turned you down because of your credit score, income documentation, or an ITIN instead of a Social Security number, the standard mortgage path may simply not fit your situation.
At Sold With Financing, we arrange owner financing with no minimum credit score, and we qualify you on income and down payment instead. The deed is in your name at closing, there are no balloon payments, and there are no prepayment penalties if you refinance or pay off early. We reply within one business day.
See the owner financing option for yourself.
Frequently Asked Questions
Can I buy a $300,000 house with bad credit?
It depends on the loan program and how bad your credit is. FHA loans allow a 3.5% down payment with a 580 score, or 10% down with a score between 500 and 579. A 3.5% down payment on a $300,000 house is $10,500; 10% is $30,000. Conventional loans typically want a 620 score or higher. Owner financing arrangements may not require a minimum credit score at all, focusing instead on income and down payment.
Does a larger down payment make up for bad credit?
Sometimes, but not always. A bigger down payment lowers your loan-to-value ratio, which can offset risk in a lender's eyes and may help you qualify for a conventional loan with a lower score. However, most government-backed programs still enforce hard credit floors. Lenders also apply their own overlays on top of program rules. Ask each lender directly whether a larger down payment changes their minimum score requirement.
Is $20,000 a good down payment for a $200,000 house?
Yes, $20,000 is 10% of a $200,000 purchase price, which is a solid down payment. It exceeds the 3.5% FHA minimum ($7,000) and the 5% conventional minimum ($10,000). A 10% down payment also lowers your monthly mortgage payment and can reduce mortgage insurance costs. Just remember to budget for closing costs separately, which typically run 2% to 6% of the loan amount.
What other costs should I budget for when buying a house?
Beyond the down payment, plan for closing costs when buying a house: lender fees, appraisal, title insurance, and prepaid taxes and insurance, usually 2% to 6% of the loan amount. You may also need reserves, meaning a few months of mortgage payments left in savings. On a $300,000 house, closing costs alone could add $6,000 to $18,000 to your cash to close, so use a down payment calculator to see the full picture.
Your credit score does not have to decide whether you own a home. Get started with Sold With Financing and find out what your down payment can qualify you for.
