First Rental Down Payment and Costs: The Full Breakdown for $200K and $300K Properties

You've run the numbers. You've found a property. Now the real question: how much cash do you actually need to close? Down payment is just the start. Closing costs, reserves, and the type of loan you use — they all change the number. A $200K property could cost you $7,000 out of pocket or $55,000, depending on the path you take.

Here's the full breakdown. No shortcuts. Real numbers for a $200K and $300K purchase, so you know exactly what to save.

Down Payment Options: 3.5% to 25%

3.5% — [FHA loan](/glossary/fha-loan) with owner-occupancy. You live in one unit. This is house hacking. On a $200K duplex, that's $7,000 down. On $300K, it's $10,500. The catch: you must occupy the property. FHA also has loan limits — $498,257 in most areas for 2024. Above that, you need a jumbo or conventional.

15–20% — Conventional owner-occupied. You're living there. PMI applies below 20%, usually $50–150/month until you hit 20% equity. On $200K at 15% down: $30,000. At 20%: $40,000. On $300K at 15%: $45,000. At 20%: $60,000.

25% — Investment property conventional. You're not living there. This is a true rental from day one. Lenders want more skin in the game. On $200K: $50,000 down. On $300K: $75,000. No PMI — you're above 20%. But the bar is higher.

20–25% — DSCR loans. No income verification. Property qualifies on its own. Typically 75–80% LTV. On $200K at 75% LTV: $50,000 down. On $300K: $75,000.

Pick your path. House hack with FHA and you're in for $7K on a $200K deal. Go straight investment at 25% and you need $50K. That's a $43,000 difference. Plan accordingly. And don't forget: FHA has mortgage insurance (MIP) — typically 0.45–0.85% of the loan amount annually. On a $193K loan, that's $870–$1,640 per year. It drops off when you hit 20% equity, but that can take years. Factor it into your monthly cost when you're comparing paths.

Closing Costs: 2–5% of Purchase Price

Down payment is one line item. Closing costs are another. Lenders don't roll them into the loan on investment properties — you pay them at the table.

What's in there: Origination (0.5–1%), appraisal ($500–700), title search and insurance ($1,000–2,000), recording fees ($100–300), prepaid interest (a few days to a month), escrow setup for tax and insurance. Inspections — you pay those before closing, but they're part of your total cash to close.

$200K property: Plan $4,000–$10,000. Call it 2–5%. On the low end, you're in a cheap title state and you shopped lenders. On the high end, you're in a pricey market or didn't negotiate.

$300K property: Plan $6,000–$15,000. Same 2–5% range. Bigger loan, bigger fees.

Always get a Loan Estimate within three days of applying. That's your real number. Don't guess. And compare at least two lenders. Origination fees can vary by a full point. On a $200K loan, that's $2,000. On $300K, it's $3,000. An hour of shopping can save you real money.

Reserves: The Requirement Nobody Talks About

Lenders want to see reserves. Cash in the bank after closing. Typically 6–12 months of PITI (principal, interest, tax, insurance) for the new property. Sometimes they want reserves for all your mortgages if you have other properties.

$200K at 7%: Monthly PITI might be $1,450. Six months: $8,700. Twelve months: $17,400. You need that sitting in an account. They'll ask for statements.

$300K at 7%: Monthly PITI might be $2,100. Six months: $12,600. Twelve months: $25,200.

Reserves aren't part of your down payment. They're in addition. So your total "cash needed" = down payment + closing costs + reserves. On a $200K FHA house hack: $7,000 + $6,000 + $8,700 = $21,700 minimum. On a $300K investment at 25%: $75,000 + $10,000 + $12,600 = $97,600. That's the real number. I've talked to investors who saved exactly the down payment and showed up to closing without enough for reserves. The lender said no. The deal died. Add 10% to whatever you calculate — inspection issues, rate changes, last-minute fees. The buffer is cheap insurance.

Total Cash Needed: Two Examples

$200K duplex, FHA house hack: Down $7,000. Closing $6,000. Reserves $8,700. Total: ~$21,700. You're living in one unit. Lowest barrier to entry.

$200K duplex, 25% investment: Down $50,000. Closing $6,000. Reserves $8,700. Total: ~$64,700. You're not living there. Higher cash, but no occupancy requirement.

$300K fourplex, 25% investment: Down $75,000. Closing $10,000. Reserves $12,600. Total: ~$97,600. Scale up. The cash requirement scales with it.

$300K duplex, FHA house hack: Down $10,500. Closing $8,000. Reserves $12,600. Total: ~$31,100. Same property type, different path. House hacking cuts your cash requirement by two-thirds. The trade-off: you're living there. For many first-time investors, that's a feature, not a bug. You learn the property. You're on-site for issues. And you're building equity while someone else pays most of the mortgage.

Why Closing Costs Vary So Much

Location matters. Texas has high title costs. Some states require attorneys. Your lender's origination fee can be negotiated — shop two or three. Points — paying upfront to buy down the rate — add to closing costs but lower your payment. Run the math: sometimes 1 point ($2,000 on $200K) saves more than $2,000 over five years. Sometimes it doesn't. Get the Loan Estimate. Compare.

New construction adds another layer. Builders often offer closing cost credits or rate buydowns to move inventory. A $5,000 credit might cover most of your closing costs. But read the fine print — sometimes those credits come with a higher base price. And new construction appraisals can be tricky. The builder's price might not match what an appraiser thinks it's worth. If the appraisal comes in low, you're making up the difference in cash. Know the risk before you sign.

What to Do Before You Offer

Know your number. Add 10% buffer for surprises — inspection issues, repairs, rate changes. Get pre-approved so you know your exact terms. And if you're on the edge, consider house hacking first. The FHA path gets you in with less cash. You can refi or sell later and redeploy. One more scenario: what if you're using a gift for part of the down payment? FHA and conventional both allow gift funds, but the lender will want a gift letter and proof the donor has the funds. The gift can't be a loan — it has to be a true gift with no expectation of repayment. And the donor usually needs to be family. Know the rules before you count on that money.

The First Rental Property guide walks through the full journey — from saving to closing to that first tenant.