How Much Down Payment Do You Need for a Conventional Loan?

When people start planning to buy a home, the down payment for a conventional loan is often the first number they worry about. And for years, many buyers assumed they needed to save 20% before they could even think about getting a conventional mortgage. That’s not necessarily true.

Qualified borrowers may be able to get certain conventional loans with as little as 3% down. Fannie Mae’s HomeReady program and Freddie Mac’s Home Possible program both offer eligible buyers 3% down options.

The amount you should actually put down, though, is a different question. Putting down the minimum may help you buy sooner, while putting down more can reduce your loan balance and potentially lower your monthly costs.

Is 20% Down Required for a Conventional Loan?

No.

A conventional mortgage does not automatically require a 20% down payment.

Depending on the loan program and your circumstances, you may qualify with a down payment of 3%, 5%, 10%, or 20% or more. Fannie Mae notes that some mortgage options allow down payments as low as 3%.

The 20% figure is important for another reason.

With a conventional mortgage, putting less than 20% down will generally mean you have private mortgage insurance (PMI), although the exact requirements depend on the loan structure.

So 20% isn’t necessarily the minimum.

It’s more of a financial milestone.

How Much Is 3% Down?

Let’s make the numbers easier to picture.

If you’re buying a $300,000 home:

3% down = $9,000
5% down = $15,000
10% down = $30,000
15% down = $45,000
20% down = $60,000

That’s a pretty big difference in the amount of cash you need upfront.

And for someone who has been saving for years, there’s another question: should you put every available dollar into the house?

Usually, you don’t want to think about the down payment in isolation.

What Is a 3% Conventional Loan?

Several conventional financing options can allow qualified buyers to finance up to 97% of the home’s value.

For example, Fannie Mae’s HomeReady program allows down payments as low as 3% for eligible borrowers. Freddie Mac’s Home Possible program also offers 3% down financing for qualifying borrowers.

There are eligibility conditions, though.

For example, HomeReady is designed for eligible borrowers whose income is generally no more than 80% of the area median income, while other 97% LTV conventional options can have different requirements.

So hearing “3% down conventional loan” doesn’t mean everyone automatically qualifies for one.

What If You Put 5% Down?

Five percent is another common target for conventional borrowers.

Using a $400,000 home as an example:

5% down = $20,000

Your approximate mortgage amount before other adjustments would be:

$380,000

Putting 5% down gives you more initial equity than 3%, but you’re still financing most of the purchase price.

For some buyers, that’s a comfortable middle ground.

You aren’t waiting years to save a huge down payment, but you’re also putting more money into the property upfront.

What Happens With 10% Down?

At 10% down on a $400,000 home, you’d put down:

$40,000

The mortgage would be approximately:

$360,000

A larger down payment can reduce the amount you borrow and may reduce your monthly mortgage costs.

It can also affect PMI.

But there’s no rule saying you have to reach 10% if doing so would wipe out your savings.

What Happens at 20% Down?

With a $400,000 house:

20% down = $80,000

The mortgage would be approximately:

$320,000

One major advantage is that a conventional borrower who puts 20% down can generally avoid PMI.

But there’s a practical downside.

You just used $80,000 of your savings.

If you have another $10,000 left afterward and your air conditioner breaks, your roof needs work, or you suddenly have a major expense, that low mortgage balance might not feel quite as comforting.

PMI and Your Down Payment

Private mortgage insurance is one of the biggest reasons your down payment matters.

Freddie Mac explains that conventional borrowers putting less than 20% down generally pay PMI until they build sufficient equity, subject to the applicable rules.

PMI isn’t necessarily something you’ll pay for the entire mortgage.

With conventional financing, homeowners can generally request cancellation when they reach the required equity threshold, and automatic termination rules can also apply under federal law.

That makes conventional PMI different from some other forms of mortgage insurance.

Does a Bigger Down Payment Always Make Sense?

Not necessarily.

Imagine you’ve saved $50,000.

You’re buying a $300,000 house.

You could put 15% down, which would be $45,000.

Sounds good, right?

But you’d only have $5,000 left.

Now think about closing costs, moving expenses, furniture, repairs, insurance and emergencies.

Suddenly, putting 15% down might not feel so comfortable.

A 10% down payment could leave more cash available.

Sometimes having money left after closing is more valuable than squeezing your down payment as high as possible.

Don’t Forget Closing Costs

Your down payment isn’t the same thing as your total cash needed to buy a house.

You’ll potentially need money for:

Down payment
Lender fees
Appraisal
Home inspection
Title services
Prepaid interest
Property taxes
Homeowners insurance
Escrow funding
Moving expenses

So if a lender says you need $15,000 for a 5% down payment, don’t assume $15,000 is all you’ll need to close.

Ask for an estimate of your total cash to close.

Can Gift Money Be Used?

Depending on the conventional program and transaction, eligible gift funds can be used toward down payment and closing costs.

For example, Fannie Mae’s 97% LTV options permit gifts and grants under applicable requirements, and HomeReady provides flexibility around eligible funding sources.

That can be helpful for first-time buyers who have some savings but need assistance reaching their required cash amount.

However, the money generally needs to be properly documented.

Don’t move a large amount of money into your account without telling your lender where it came from.

Can Down Payment Assistance Help?

Yes, depending on where you live and which programs you qualify for.

Down-payment assistance may come through grants, secondary financing, employer programs, housing agencies, or other eligible sources.

Some conventional programs specifically allow gifts, grants and other assistance sources.

If you’re struggling to reach even 3% or 5%, it’s worth asking your lender about available assistance before assuming you need to delay your purchase.

Does Your Credit Score Affect the Down Payment?

Your credit profile can affect the mortgage options and pricing available to you.

But there’s no simple rule like:

“Good credit = 5% down.”

Your lender considers your entire application.

That can include:

Credit history
Income
Debt
Assets
Property type
Loan amount
Occupancy
Loan program

Also, agency guidelines and lender overlays can differ, so it’s important to ask about the exact program you’re being offered.

First-Time Buyers May Have More Options

First-time buyers sometimes assume conventional loans are only for people with large savings.

That’s not true.

Fannie Mae offers 97% LTV conventional financing for certain first-time buyers through standard programs, while HomeReady doesn’t require the borrower to be a first-time buyer.

Freddie Mac’s Home Possible program is another conventional option that can provide 3% down financing to qualifying borrowers.

This can make conventional financing worth investigating even if you’re buying your first home.

How Much Should You Actually Put Down?

There’s no universal answer.

Think about three things:

1. What Can You Afford?

Don’t choose a down payment that leaves you financially stretched.

2. How Much Cash Will Remain?

You want some money available after closing.

3. How Much Does PMI Cost?

If you’re putting less than 20% down, ask the lender how much PMI will add to your monthly payment.

Then compare the cost of PMI against the benefit of keeping more money in savings.

A Simple Example

Let’s say you’re buying a $350,000 Florida home.

3% Down

Down payment: $10,500

Approximate loan: $339,500

5% Down

Down payment: $17,500

Approximate loan: $332,500

10% Down

Down payment: $35,000

Approximate loan: $315,000

20% Down

Down payment: $70,000

Approximate loan: $280,000

The larger down payment gives you a smaller mortgage.

But it also requires significantly more cash upfront.

That’s the trade-off.

Is 3% Down Better Than 20% Down?

Not necessarily.

A 3% down payment can help you become a homeowner sooner and preserve cash for emergencies and other expenses.

A 20% down payment can reduce your loan balance and may eliminate PMI.

Neither option wins automatically.

If you have $100,000 saved, putting $20,000 down and keeping $80,000 available might make more sense for you than putting $60,000 down and keeping only $40,000.

On the other hand, if you have substantial savings and want to minimize your monthly mortgage payment, putting more down could be attractive.

What About 2026 Conventional Loan Limits?

Your down payment isn’t the only factor that determines how much you can borrow.

Conventional conforming loan limits also matter.

The applicable limit depends on factors such as the property location and number of units. If you’re purchasing an expensive home, your lender can determine whether the mortgage amount falls within the applicable conforming limit or whether another loan type may be necessary.

This becomes particularly important when you’re putting a small percentage down on a high-priced property.

Does the Type of Home Matter?

Yes.

The minimum down payment can depend on the property and the specific conventional program.

A one-unit primary residence may qualify for different financing than:

A second home
An investment property
A multi-unit property
Certain manufactured homes
Certain condos

For example, Fannie Mae’s 97% LTV option is limited to eligible one-unit principal residences under the applicable program requirements.

So don’t assume that because you can get 3% down on one house, you’ll automatically get 3% down on every property.

What If You’re Buying in Florida?

Florida buyers have another thing to think about.

Your actual monthly housing cost can include more than principal and interest.

Depending on the property, you may also have:

Property taxes
Homeowners insurance
Flood insurance
HOA fees
PMI

Insurance in particular can have a noticeable effect on the cost of owning a Florida property.

Before deciding how much to put down, look at your complete monthly housing budget.

Should You Put 20% Down Just to Avoid PMI?

Not automatically.

Let’s say you have enough money to put 20% down, but doing so would leave you with almost no emergency savings.

You might be better off putting down 10% or 15% and keeping some cash available.

PMI isn’t necessarily permanent on a conventional loan.

Ask the lender:

“How much will my PMI be, and when can it be removed?”

Then compare that cost with the benefit of keeping additional cash in your account.

What If You Have Only 3% Saved?

If you’re close to being ready but don’t have a large down payment, don’t automatically assume you need to wait.

Ask a lender about:

3% conventional programs
HomeReady
Home Possible
Down-payment assistance
Gift funds
Grants
State and local programs

Some programs are specifically designed to make a smaller down payment possible.

Questions to Ask Your Mortgage Lender

Before choosing your down payment, ask:

What is the minimum down payment for my loan?
What would my payment be with 3%, 5%, 10% and 20% down?
How much would PMI cost?
When could PMI be removed?
What are my estimated closing costs?
How much cash should I have left after closing?
Can I use gift funds?
Do I qualify for down-payment assistance?
Which option has the lowest total cost over five years?

Seeing the numbers side by side can make the decision much easier.

Frequently Asked Questions

Can you get a conventional loan with 3% down?

Yes. Certain conventional programs, including Fannie Mae HomeReady and Freddie Mac Home Possible, offer down payments as low as 3% for eligible borrowers.

Do you need 20% down for a conventional mortgage?

No. Qualified borrowers can potentially obtain conventional financing with substantially less than 20% down. However, a down payment below 20% may require PMI.

Is 5% down enough for a conventional loan?

It can be, depending on the loan program, property and borrower qualifications. Some conventional loans allow 5% down or less.

Is PMI required with 10% down?

Generally, conventional loans with less than 20% down require PMI, although exact requirements depend on the loan structure.

Can I use gift money for my conventional loan down payment?

Eligible gift funds can be permitted for certain conventional transactions when the applicable requirements are met.

Is it better to put 20% down?

Not always. A larger down payment can reduce your mortgage balance and may eliminate PMI, but putting too much money into the house can leave you without enough cash for emergencies and other expenses.

Final Thoughts

So, how much down payment do you need for a conventional loan?

The answer could be as little as 3% for certain qualifying conventional programs, but that doesn’t necessarily mean 3% is the best amount for you.

A smaller down payment can help you buy sooner and keep more money available.

A larger down payment can reduce the amount you borrow and potentially lower your monthly costs.

The sweet spot is usually somewhere between what gets you into the home and what allows you to remain financially comfortable after closing.

Before choosing a number, compare several scenarios with your lender. Look at the down payment, PMI, monthly payment, closing costs and the amount of savings you’ll have left afterward.

That’s a much better way to choose your down payment than simply chasing the biggest percentage you can afford.