3% down and 3.5% down: different loans, different total costs

The percentages are not interchangeable

Some conventional products allow 3% down for eligible borrowers. FHA can allow a down payment as low as 3.5%, subject to its requirements and lender review. FHA is not a 3%-down product. These options do not mean every household or property qualifies.

For an illustrative $400,000 home, 3% is $12,000 and 3.5% is $14,000. The $2,000 difference is only the down payment; pricing, insurance, fees and program conditions can change the overall comparison.

A small down payment is not the whole cash requirement

Ask for lender charges, title and settlement costs, prepaid taxes and insurance, and any reserves. Mortgage insurance can add upfront or recurring costs depending on the product. Putting 20% down is not a universal rule that eliminates every form of mortgage insurance.

If assistance is involved, compare the second loan’s interest, monthly payment and payoff triggers. Funds described as assistance may still be repayable.

Compare before choosing

Ask lenders to show conventional and FHA scenarios using consistent price, term and date assumptions. Review cash to close, total monthly payment, APR and the balance at the time you expect to sell. State assistance must be checked separately for Massachusetts or New Hampshire. Our inquiry form cannot determine product eligibility.