Conventional loans typically require 3% to 20% down, depending on your credit score, income, and the lender
A conventional loan is a mortgage that is not backed by a government agency like the FHA or VA. The down payment you need depends on the lender's rules, your credit profile, and the loan program you choose. Most lenders will accept 3% down if your credit score is 620 or higher and your debt-to-income ratio is reasonable. If your credit is stronger or you have more savings, you may may have access to for a lower percentage or get better terms by putting down more.
The down payment is the cash you bring to closing. The rest of the home's purchase price is borrowed. A larger down payment means a smaller loan, lower monthly payments, and often no requirement to pay private mortgage insurance (PMI)—an extra monthly fee that protects the lender if you default. If you put down less than 20%, PMI is mandatory until you reach 20% equity in the home.
Key Takeaways
- Conventional loans require a minimum of 3% down for most borrowers, though some lenders offer 0% down programs with stricter credit and income requirements.
- Putting down 20% or more eliminates the requirement to pay private mortgage insurance, which can save hundreds of dollars per month.
- Your credit score, debt-to-income ratio, and employment history affect both the minimum down payment a lender will accept and the interest rate you receive.
- Down payment assistance programs run by nonprofits, employers, and some state housing agencies can cover part or all of your down payment without requiring repayment.
Down payment amounts by credit score and loan type
Lenders use credit score bands to set down payment minimums. A score of 740 or higher typically qualifies you for 3% down with the best available interest rates. Scores between 680 and 739 may require 5% to 10% down, depending on the lender. Scores below 680 are riskier to lenders and may require 10% to 15% down, or the lender may decline the application altogether.
Some lenders offer low down payment programs specifically designed for first-time homebuyers or borrowers with limited savings. These programs may allow 3% down even with a lower credit score, but they typically charge a higher interest rate or require PMI for the life of the loan rather than until you reach 20% equity. Ask your lender whether they offer first-time buyer programs, as the terms vary widely.
If you have a co-signer with a stronger credit profile, some lenders will use the co-signer's score to determine your down payment requirement, which may lower the percentage you need to bring.
What happens when you put down less than 20%
When your down payment is less than 20%, you must pay private mortgage insurance (PMI). This is an insurance policy that reimburses the lender if you stop paying the loan. PMI is not homeowners insurance—it protects the lender, not you. The cost varies by lender, loan amount, and credit score, but typically ranges from 0.5% to 1.5% of the loan amount per year, added to your monthly payment.
PMI is required until you reach 20% equity in the home through a combination of your down payment and principal payments. Once you hit that mark, you can request that the lender remove PMI. Some loans allow automatic removal at 22% equity. The timeline depends on how quickly you pay down the principal and how much the home's value changes. On a 30-year mortgage with a 5% down payment, PMI typically stays in place for 10 to 15 years.
If you put down 10% instead of 3%, you reach 20% equity faster and remove PMI sooner, which can save tens of thousands of dollars over the life of the loan. Use a mortgage calculator to compare the total cost of different down payment amounts, including PMI.
Down payment assistance and grant programs
You do not have to save the entire down payment yourself. Nonprofits, employers, and state housing agencies offer programs that provide down payment money as a grant (no repayment required) or a forgivable loan (repayment is waived if you stay in the home for a set period). These programs often target first-time homebuyers, teachers, healthcare workers, or people in specific income ranges.
NeighborWorks America and National Foundation for Credit Counseling (NFCC) maintain searchable databases of local down payment assistance programs. Your state's housing finance agency also publishes a list of programs available in your area. Some programs are tied to specific lenders or mortgage products, so the lender you choose affects which programs you can access.
Employer programs are common at large companies and nonprofits. Ask your HR department whether your employer offers down payment assistance, a forgivable loan, or a matched savings account. Some programs match your savings dollar-for-dollar up to a cap, effectively doubling your down payment fund.
How down payment size affects your interest rate and monthly payment
A larger down payment typically earns you a lower interest rate. The difference is usually 0.25% to 0.5%, which may not sound large but compounds over 30 years. On a $300,000 loan, a 0.5% rate difference can mean $100 to $150 more per month. Lenders view a larger down payment as lower risk because you have more skin in the game and are less likely to walk away if the home value drops.
Your monthly payment is also directly affected by the loan amount. If you put down 10% instead of 5%, your loan is smaller, and your principal and interest payment is lower. Add the PMI savings on top, and the monthly benefit of a larger down payment is substantial. However, this assumes you have the cash available without depleting your emergency fund or taking on high-interest debt.
Minimum down payment requirements by lender and program
| Loan Program | Minimum Down Payment | Credit Score Requirement | PMI Required |
|---|---|---|---|
| Conventional (standard) | 5% to 20% | 620+ | Yes, if under 20% |
| Conventional (low down payment) | 3% | 620+ | Yes, if under 20% |
| Conventional (first-time buyer) | 3% to 5% | 640+ | Yes, if under 20% |
| Jumbo loan (over conforming limit) | 10% to 20% | 700+ | Varies by lender |
Conforming loans are conventional mortgages that meet the size and credit standards set by Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy mortgages from lenders. Jumbo loans exceed these limits and are held by the lender or sold to private investors, so they carry stricter down payment and credit requirements. If you are buying a home above your area's conforming loan limit, expect to put down at least 10% to 20%.
The conforming loan limit changes each year based on home prices in your region. Your lender can tell you the current limit for your county. If your purchase price is close to the limit, a slightly smaller home or a larger down payment can keep you in the conforming category, which usually means a lower interest rate.
Saving versus borrowing for your down payment
Lenders want to see that you have saved the down payment yourself, not borrowed it. If you take out a personal loan or credit card advance to cover your down payment, the lender will count that debt in your debt-to-income ratio, which may disqualify you or raise your interest rate. Some lenders allow a gift from a family member to cover part or all of the down payment, but they require a signed letter stating the money is a gift and does not need to be repaid.
If you are close to having enough saved but fall short, explore down payment assistance programs before borrowing. The money from these programs does not count against your debt-to-income ratio and does not require repayment in most cases. Saving an extra few months may also improve your credit score, which can lower your interest rate enough to offset the delay.
Frequently Asked Questions
Can I get a conventional loan with 0% down?
Some lenders offer 0% down conventional loans, but they are rare and come with strict requirements: a credit score of 700 or higher, a debt-to-income ratio below 43%, and often a higher interest rate. You will pay PMI for the life of the loan. Compare the total cost against FHA loans, which allow 3.5% down and may be cheaper overall.
What if I have a gift from family for the down payment?
Most lenders allow a gift to cover your entire down payment. You will need a signed gift letter from the family member stating the amount, that it is a gift and not a loan, and that no repayment is expected. The lender will verify the gift funds are in your account before closing. Some lenders require the gift to come from a relative; others allow gifts from anyone.
How long does it take to remove PMI from my loan?
PMI is removed when you reach 20% equity through a combination of your down payment and principal payments. On a 30-year loan with a 5% down payment, this typically takes 10 to 15 years. You can request removal once you hit 20% equity; automatic removal usually happens at 22% equity. Refinancing into a new loan can also eliminate PMI if your home has appreciated significantly.
Does a larger down payment always mean a better deal?
A larger down payment lowers your monthly payment and interest rate, but only if you have the cash without borrowing or depleting your emergency fund. If putting down 20% means carrying credit card debt or having less than three months of expenses saved, a smaller down payment may be the better choice. Calculate your total costs and your financial security before deciding.
What is the difference between a conventional loan and an FHA loan down payment?
FHA loans require 3.5% down for borrowers with a credit score of 580 or higher, compared to 3% to 5% for conventional loans. However, FHA loans charge mortgage insurance for the life of the loan, while conventional PMI can be removed at 20% equity. For some borrowers, conventional is cheaper; for others, FHA is the better option. Compare both before deciding.