Last Updated: January 2026

The conventional loan down payment is often the biggest hurdle for homebuyers. The good news? You don't need 20% down to buy a home. With low down payment options starting at just 3%, a conventional loan down payment is more accessible than many people think.

This guide covers everything about conventional loan down payment requirements, including minimum amounts, payment options, PMI costs, and how to make a down payment work for your budget.

Conventional Loan Down Payment Requirements

The minimum down payment for a conventional loan depends on your buyer status and loan program. Unlike an FHA loan that requires 3.5% minimum, conventional mortgage loan options allow payments as low as 3%.

Down Payment Minimums by Situation

You can get a conventional mortgage loan with as little as 3% down if you're a first-time homebuyer using qualifying programs. The conventional loan type offers more loan options than FHA for buyers with good credit.

To qualify for a conventional loan with a low down payment, you'll need a credit score of at least 620, a manageable DTI ratio, and stable income. Lenders require a minimum down payment to reduce risk and qualify you for the best loan limits.

Low Down Payment Conventional Loan Programs

Several programs make homeownership more accessible with low down payment options.

Conventional 97 Loan

The Conventional 97 loan requires only 3% down for qualified borrowers:

• 3% minimum down payment required
• At least one borrower must be a first-time homebuyer
• Homebuyer education course required
• 620 minimum credit score
• Primary residence only

Benefits:

• No income limits (unlike HomeReady/Home Possible)
• Competitive mortgage rates
• Can combine with down payment assistance programs

HomeReady® (Fannie Mae)

HomeReady is designed for low-to-moderate income borrowers:

• 3% minimum down payment
• Income at or below 80% of Area Median Income
• 620 minimum credit score
• Homebuyer education required
• Reduced PMI compared to standard conventional loans
• Non-borrower household income can help qualify

Home Possible® (Freddie Mac)

Similar to HomeReady with flexible features:

• 3% minimum down payment
• Income at or below 80% of AMI
• 620 minimum credit score
• Sweat equity can count toward down payment
• Reduced private mortgage insurance rates
• 1-4 unit properties eligible (owner-occupied)

How Much Is a Conventional Loan Down Payment?

The payment required for a conventional home loan varies by home price. When you qualify for a conventional loan, your down payment affects your mortgage loan amount and monthly costs.

Down Payment Amounts by Home Price

These amounts help you plan how much to save to buy a home with a conventional mortgage. Compare these to FHA loan requirements, which typically require 3.5% minimum.

How Down Payment Affects Your Monthly Mortgage Payments

Your down payment directly impacts your loan amount, monthly payment, and PMI costs.

Monthly Payment Comparison: $400,000 Home at 6.5%

A higher down payment significantly reduces your monthly mortgage payments and eliminates or reduces PMI.

Private Mortgage Insurance (PMI) and Down Payment

When your payment is less than 20%, conventional loans typically require private mortgage insurance.

PMI Cost by Down Payment

PMI protects the lender if you default on the loan. Costs vary by credit score and loan-to-value:

How to Eliminate PMI

Unlike FHA mortgage insurance premiums that last the life of the loan, you can remove PMI from conventional loans:

• Automatic Removal: At 78% loan-to-value based on original value
• Request Removal: At 80% LTV with good payment history
• Refinance: When appreciation reaches 80% LTV

Many homebuyers choose a lower down payment initially, then work to reach 20% equity to eliminate PMI.

Acceptable Down Payment Sources

Lenders require documentation showing where your down payment funds originate.

Personal Savings

• 60 days of bank statements
• Funds must be "seasoned" (in account for 60+ days)
• Large deposits require explanation and documentation

Gift Funds

You can use gift funds for your entire down payment from:

• Family members (parents, grandparents, siblings)
• Domestic partners
• Fiancé(e)s

Gift Letter Requirements:

• Donor's name and relationship to borrower
• Gift amount
• Statement that repayment is not required
• Donor's signature

Payment Assistance Programs

Explore down payment assistance programs to reduce your out-of-pocket costs when you buy a home:

Types of Assistance:

• Grants: Free money that doesn't need repayment
• Forgivable Loans: Forgiven after 5-15 years of ownership
• Deferred Payment Loans: Repaid when you sell or refinance
• Low-Interest Loans: Second mortgages at below-market rates

Check your state housing finance agency and local government programs for available assistance. Many first-time homebuyer programs can be combined with a conventional home mortgage and Conventional 97 loan programs.

These payment assistance programs make homeownership more accessible by reducing the conventional loan down payment you need to save. A loan officer can help you explore down payment assistance programs in your area.

Retirement Account Funds

401(k) Loans:

• Borrow up to 50% of vested balance (max $50,000)
• Repay with interest to yourself
• No tax penalty if repaid

IRA Withdrawals (First-Time Buyers):

• Up to $10,000 penalty-free (lifetime limit)
• Still subject to income tax
• Must be first-time buyer (no ownership in 2 years)

Conventional Loan Down Payment Options: 3% vs 5% vs 20%

Choosing the right down payment involves balancing cash needs with monthly costs.

When to Put Down 3%

Consider 3% down if:

• You're a first-time homebuyer
• You want to buy sooner rather than save longer
• Home prices are rising faster than you can save
• You have limited savings but stable income
• You can qualify for HomeReady, Home Possible, or Conventional 97

When to Put Down 5%

Consider 5% down if:

• You're a repeat buyer
• You want slightly lower PMI than 3% down
• You have some savings but not enough for 10-20%

When to Put Down 20%

Consider 20% down if:

• You want to avoid PMI entirely
• You have significant savings
• You want the lowest possible monthly payment
• You're buying an investment property (where PMI is more expensive)

Conventional Loan Down Payment FAQs

Do you have to have 20% down for a conventional loan?

No, you don't have to put down 20% for a conventional loan. The minimum down payment is 3% for first-time homebuyers using Conventional 97, HomeReady, or Home Possible programs, and 5% for repeat buyers. However, putting less than 20% down requires paying private mortgage insurance until you reach 20% equity.

Are there 3% down conventional loans?

Yes, there are 3% down conventional loans available for first-time homebuyers. The Conventional 97 loan program, Fannie Mae's HomeReady, and Freddie Mac's Home Possible all allow down payments as low as 3%. These programs make homeownership more accessible with low down payment requirements.

Can I afford a 250k house on 50k salary?

With a $50,000 annual salary, you may be able to afford a $250,000 home depending on your down payment, debts, and local taxes. Using a mortgage calculator with 5% down ($12,500), a $237,500 loan at 6.5% would have monthly principal and interest of about $1,500. Add taxes and insurance, and your total payment might be $1,800-2,000. Lenders typically want total debt under 43% of income ($1,792/month on $50k).

Can I use gift funds for my entire down payment?

Yes, conventional loans allow gift funds for your entire down payment. Gift funds must come from acceptable donors (family, domestic partner, fiancé) and require a gift letter stating the funds don't need to be repaid. You'll also need documentation of the gift transfer and donor's ability to provide the gift.

Comparing Conventional Down Payment to FHA Loan

When comparing conventional loan down payment vs FHA loan requirements:

Both loan types offer low down payment options to help you buy a home. The best choice depends on your credit score, DTI, and long-term goals.

Summary: Conventional Loan Down Payment

Key takeaways about conventional loan down payment requirements:

• Minimum: 3% for first-time homebuyers, 5% for repeat buyers
• No PMI: Put 20% down to avoid private mortgage insurance
• Gift Funds: Can use gift money for your entire down payment
• Assistance: Explore down payment assistance programs in your area
• First-Time Homebuyer: Conventional 97 loan requires only 3% down

The conventional loan down payment you choose affects your loan amount, monthly mortgage payments, and whether you pay for private mortgage insurance. A mortgage loan officer can help you explore your loan options and find the right payment option for your situation.