How Much Down Payment FHA and VA Loans Each Require on a $400K Home

The Quick Read: On a $400K home, an FHA loan asks for a 3.5% minimum investment, and a VA loan typically asks for nothing down. Both numbers come with conditions. FHA’s 3.5% needs a decision credit score of 580 or higher. VA’s zero depends on full entitlement and an appraisal that supports the price.

Neither number is the cash you bring to closing. Closing costs, insurance or fees, and any appraisal gap sit on top of the down payment.

How the FHA Down Payment Works at $400K

The FHA minimum is 3.5% of the lesser of the purchase price or the appraised value. That is the “minimum required investment,” FHA’s term for the down payment. Maximum financing is 96.5% of value.

Say your contract is at $400K and the appraisal comes back at $400K. You put 3.5% down and borrow the rest. If the appraisal comes back lower, the 3.5% is figured on the lower number. Then you either renegotiate, pay the gap in cash, or walk. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.

Credit score sets the tier. HUD has a lower tier for scores of 500 to 579 that requires 10% down. The wholesale programs Lendmire places FHA loans with start at 580, so that tier is not reachable through this network. Some lenders set their own floors above HUD’s too. A full file review decides where you land. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.

The loan must be on a home you will live in. One to four units can qualify. A non-occupant co-borrower is allowed, which helps some first-time buyers add a parent’s income.

Learn more about Lendmire’s FHA loan programs.

How the VA Down Payment Works at $400K

A VA loan typically requires no down payment. That is the headline, and it holds when you have full entitlement and the VA appraisal supports the price.

Entitlement is the amount of loan the VA will back for you. A Certificate of Eligibility documents it. If you have never used your benefit, you usually have all of it. If an earlier VA loan is still outstanding, some entitlement may be tied up. Then a $400K purchase can need money down.

VA also has no monthly mortgage insurance. You pay a one-time funding fee instead. It is a real cost, and most borrowers finance it into the loan. It is not a down payment, and it does not disappear because the down payment is zero.

For the larger-price version of this question, see Lendmire’s piece Can a Veteran Buy a High-Cost Home on a VA Loan With No Down Payment?.

Side by Side: FHA vs. VA on a $400K Purchase

The first row is the one most shoppers see. The next rows decide what the loan really costs you. A smaller down payment is only part of the picture.

What Else Lands on Your Cash-to-Close

Down payment and cash to close are different numbers. Mixing them up is the most common surprise in this process.

On an FHA loan, you bring the 3.5%, plus closing costs and prepaid items. The 1.75% upfront premium is added to the loan, so you do not pay it in cash. That raises your balance. Seller or interested-party contributions can help with closing costs, up to 6% of the price.

On a VA loan, you can bring $0 down. Savings still help. VA’s own home loan toolkit says reserves cover closing costs and unforeseen expenses. The funding fee can be financed.

Neither loan has a true “no closing cost” version. If you see that phrase, the costs are built into the loan terms or the balance.

The Monthly Budget Difference

FHA charges an annual mortgage insurance premium. It falls between 0.15% and 0.75% of the balance, depending on term, loan amount, and LTV. LTV, or loan-to-value, is the loan as a percentage of the home’s value. On a thirty-year FHA loan above 90% LTV, the premium lasts for the full term. At 90% or below, it ends after eleven years. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.

At 3.5% down, you are above 90% LTV. So the premium stays for the life of the loan unless you refinance out of it. That is a design fact of the program, not a flaw. Exact terms depend on the lender’s guidelines and a full review of your file.

VA has no monthly mortgage insurance. The tradeoff is the funding fee, which you pay once. The VA News funding fee guide shows the fee is lower when you put 5% or 10% down. It is higher on repeat use. Veterans receiving disability compensation are exempt. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.

So VA is often cheaper month to month. “Often” is not “always,” and total cost depends on your balance and how long you hold the loan.

Where Zero Down Breaks Down

The general rules hold until they don’t. These are the cases that change the cash you need.

A low appraisal. Both loans base the amount on value, not just your contract price. On FHA, 3.5% is figured on the lesser of price or appraised value. On VA, the loan generally cannot exceed what the appraisal supports without the gap coming out of your pocket. Run your numbers as if the gap could happen.

Partial entitlement. A VA buyer with a prior loan still outstanding may need to put money down. Lendmire’s piece FHA and VA Loan Down Payment Requirements for a Home Buyer covers how the two programs compare for different buyers.

A lower credit score. On FHA, a score under 580 leaves the 3.5% tier. Through the wholesale programs Lendmire works with, that means the file does not fit those programs.

Property standards. VA loans require the home to meet VA’s minimum property requirements. FHA has its own appraisal standards. A home that needs major repairs can stall either loan.

Occupancy. Both are primary residence programs. A vacation home or rental purchase does not qualify under either one.

Multi-unit homes. FHA allows two to four units if you live in one. The 3.5% minimum still applies at 580+, but your file is reviewed against the property’s own standards.

Where the Down Payment Can Come From

Your own savings are the cleanest source. Gift funds from a relative are commonly allowed on FHA, with a gift letter and a paper trail showing where the money came from. Lenders ask where every deposit came from. Large unexplained transfers into your account cause delays and extra documentation requests.

Seller contributions can cover closing costs on FHA, up to 6% of the price. They do not replace your minimum investment. Down payment assistance programs vary by area, and each has its own rules, so ask a broker whether one pairs with your loan.

Keep a cushion after closing. VA’s toolkit stresses savings for unexpected costs, and that advice holds for FHA too.

How a Lender Underwrites Each Loan

Underwriting means the lender checks your file and confirms you can repay the loan. Here is the order it usually follows.

1. Eligibility. FHA checks your decision score. VA checks your Certificate of Eligibility.

2. Appraisal. The appraiser sets the value that determines your loan amount.

3. Insurance or fee. FHA adds its upfront and annual mortgage insurance premiums to the loan. VA adds its one-time funding fee instead.

4. Income, assets, debts. The lender verifies each, plus where the down payment came from.

5. Debt ratios. On FHA, the base pair is 31/43, meaning housing costs and total debts as a percentage of income. Documented compensating factors can stretch that to 40/50 at the top tier. An automated finding governs most files.

6. Loan limit check. County limits apply. HUD’s maximum mortgage limits set a nationwide floor well above $400K, so this price fits in any county. The exact figure for your county is on the same page.

VA has no loan limit when you have full entitlement and meet the lender’s guidelines. The lender’s own underwriting sets the practical ceiling.

Which Loan Fits You

If you are an eligible Veteran with full entitlement, VA usually asks for less cash and carries no monthly mortgage insurance. That makes it the first loan to price. If your funding fee is waived, it gets even better.

If you are not VA-eligible, FHA is the lower-cash route for many buyers. The Consumer Financial Protection Bureau notes that FHA tends to cost more than conventional when you have strong credit and 10% to 15% down. With lower credit or a smaller down payment, FHA can be a more affordable option.

If you qualify for both, compare total cost, not just the down payment. Ask for a Loan Estimate on each. Look at the cash to close, the loan balance, and the monthly mortgage insurance line. A broker can run both side by side, and wholesale access means the comparison covers more than one lender.

A bigger down payment does something on either loan. On FHA, a smaller loan means a smaller balance to insure and pay interest on. On VA, 5% or 10% down drops you into a lower funding fee tier. Whether that is worth tying up the cash is your call. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.

Key Terms Defined

Minimum required investment: FHA’s term for your down payment, set at 3.5% of the lesser of price or appraised value at a 580+ score.

Entitlement: The amount of loan the VA will back for an eligible Veteran, documented by a Certificate of Eligibility.

Upfront mortgage insurance premium: FHA’s one-time charge, 1.75% of the base loan, which can be financed.

Funding fee: VA’s one-time charge on a purchase loan, based on your down payment and prior use. Some Veterans are exempt.

LTV: Loan-to-value, the loan amount divided by the home’s value.

Next Step

If you are buying a home and want to see whether an FHA loan fits your file, Lendmire can help you compare the options and what each one asks of the file. Program figures are subject to lender guidelines and full file review, and nothing here is a commitment to lend.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. VA Loan Guaranty – Eligibility toolkit

2. VA News – Funding fee: who pays, who is exempt

3. HUD FHA Lenders – Maximum Mortgage Limits

4. CFPB – FHA loans