Most homebuyers need a down payment for a conventional mortgage, but it does not have to be 20%.
The minimum down payment for a conventional loan can be as low as 3% for borrowers who qualify for certain 97% loan-to-value programs. A 5% down payment is available across a broader range of conventional primary-residence scenarios.
Your exact minimum depends on the loan program, number of units, occupancy and other conventional loan requirements.
Conventional Loan Down Payment Basics
| Purchase Scenario |
Potential Minimum Down Payment |
Important Qualification |
| Eligible 1-unit primary residence using a 97% LTV option |
3% |
Program-specific first-time buyer or income requirements may apply |
| Standard 1-unit primary residence |
5% |
Subject to underwriting and product requirements |
| 2- to 4-unit primary residence |
5% with eligible automated underwriting |
Manual underwriting and other loan types can require more |
| 1-unit second home |
10% |
Maximum standard purchase LTV is generally 90% |
| 1-unit investment property |
15% |
Maximum standard purchase LTV is generally 85% |
| 2- to 4-unit investment property |
25% |
Maximum standard purchase LTV is generally 75% |
These percentages reflect current standard Fannie Mae and Freddie Mac conforming purchase guidelines. Specific products, manual underwriting, property types and lender requirements can be more restrictive.
The home affordability calculator can show how changing the down payment affects your estimated home price and monthly payment.
What Is the Minimum Down Payment for a Conventional Loan?
The lowest conventional loan down payment is generally 3% for an eligible one-unit primary-residence purchase using a qualifying 97% LTV option.
That does not mean every conventional borrower qualifies for 3% down. The 97% options from Fannie Mae and Freddie Mac have their own eligibility rules.
Current standard automated underwriting guidelines also allow up to 95% LTV, or 5% down, across a broader range of primary-residence transactions.
For example, Fannie Mae's current eligibility matrix and Freddie Mac's current guidelines permit up to 95% LTV on eligible 2- to 4-unit owner-occupied purchases under automated underwriting. That means a qualifying borrower could potentially buy an owner-occupied duplex, triplex or fourplex with 5% down.
Who Qualifies for a 3% Down Payment?
Several conventional programs can reach 97% LTV, but they do not all use the same borrower requirements.
Fannie Mae Standard 97% LTV
Fannie Mae permits up to 97% LTV on an eligible fixed-rate purchase of a one-unit primary residence when at least one borrower is a first-time homebuyer.
For this purpose, Fannie Mae generally considers someone a first-time buyer if they have not had an ownership interest in residential property during the previous three years.
Fannie Mae HomeReady
Fannie Mae HomeReady can also provide 97% financing on an eligible one-unit primary residence.
HomeReady does not require every purchase borrower to be a first-time buyer. Instead, qualifying income generally cannot exceed 80% of area median income for the property's location. Homeownership education requirements can also apply.
Freddie Mac HomeOne
Freddie Mac HomeOne allows qualified first-time buyers to purchase an eligible one-unit primary residence with 3% down.
HomeOne does not impose an income or geographic limit.
Freddie Mac Home Possible
Freddie Mac Home Possible can also reach 97% LTV on an eligible one-unit primary residence.
Qualifying income is generally limited to 80% of area median income. The program also allows several potential sources for the down payment and closing costs.
If 3% down is your target, buying a home with 3% down has a more detailed comparison of these options.
Conventional Loan With 5% Down: Requirements
Yes, you can get a conventional loan with 5% down in many primary-residence scenarios.
A 5% down payment creates a 95% LTV. Both Fannie Mae and Freddie Mac permit 95% LTV on eligible standard one-unit principal-residence purchases, and their automated underwriting frameworks can also allow 95% LTV on eligible 2- to 4-unit primary residences.
Qualification still depends on the full application. The lender evaluates factors including:
- Credit history and underwriting findings
- Income and employment
- Debt-to-income ratio
- Assets and cash needed to close
- Property type and occupancy
- Mortgage insurance eligibility
There is not one universal credit-score rule that applies to every conventional mortgage. Fannie Mae and Freddie Mac requirements vary by product and underwriting method, and lenders can apply additional standards.
How Much Is 3%, 5%, 10% or 20% Down?
The percentage tells you only the down payment. It does not include closing costs, prepaid expenses or reserves that may also be needed.
On a $400,000 home:
| Down Payment |
Cash Down |
Starting Loan Amount |
| 3% |
$12,000 |
$388,000 |
| 5% |
$20,000 |
$380,000 |
| 10% |
$40,000 |
$360,000 |
| 20% |
$80,000 |
$320,000 |
A larger down payment reduces the amount you borrow. But tying up more cash in the home can also leave less available for closing costs, reserves, repairs and other expenses.
The 20% Rule and PMI
You have probably heard that you need 20% down for a conventional mortgage. You do not.
The 20% threshold is primarily associated with avoiding borrower-paid private mortgage insurance, or PMI, rather than qualifying for the mortgage itself.
Conventional mortgages above 80% LTV commonly require mortgage insurance. The actual PMI cost depends on the mortgage, LTV, credit profile and mortgage-insurance coverage.
A conventional loan calculator can compare payments with different down payments and estimated PMI.
| Down Payment |
Starting LTV |
Borrower-Paid PMI Generally Expected? |
| 3% |
97% |
Yes |
| 5% |
95% |
Yes |
| 10% |
90% |
Yes |
| 20% |
80% |
Generally no |
For many covered principal-residence mortgages, the Consumer Financial Protection Bureau says you can generally request PMI cancellation when the principal balance reaches 80% of the home's original value and applicable conditions are met.
PMI generally terminates automatically when the scheduled balance reaches 78% of original value if the borrower is current.
There are also investor-specific cancellation rules and other ways PMI may be removed.
If you are deciding whether to wait until you have more cash, compare how 20% down affects affordability with the lower-down-payment scenarios.
Down Payment Requirements for Second Homes and Investment Properties
Conventional financing becomes more restrictive when the home will not be your primary residence.
Second Home Minimum Down Payment
Fannie Mae and Freddie Mac currently permit up to 90% LTV on an eligible one-unit second-home purchase, which corresponds to a 10% minimum down payment under the standard maximum-LTV rules.
Second homes also have separate occupancy and property requirements. A second-home mortgage is not treated the same as an investment-property loan simply because you do not live there year-round.
Investment Property Minimum Down Payment
For a one-unit investment property, current Fannie Mae and Freddie Mac standard purchase guidelines allow up to 85% LTV, which means at least 15% down.
For a 2- to 4-unit investment property, the maximum standard purchase LTV is generally 75%, which means at least 25% down.
That distinction is important. A duplex you occupy as your primary residence may potentially qualify for 5% down under eligible automated conventional underwriting, while the same duplex purchased entirely as an investment property generally requires substantially more equity upfront.
The investment-property down payment requirements cover that distinction in more detail.
Can Gift Funds Be Used for a Conventional Down Payment?
Often, yes, but the rules depend on the occupancy, unit count and transaction.
Fannie Mae permits eligible gift funds on principal residences and second homes. For a one-unit principal residence, properly documented gift funds can potentially provide all of the required down payment under Fannie Mae rules.
Fannie Mae does not permit personal gift funds for an investment-property purchase. Some higher-LTV second-home and multi-unit transactions also require a minimum contribution from the borrower's own funds.
Freddie Mac products have their own source-of-funds requirements, including flexible funding rules for Home Possible.
Can Seller Concessions Cover the Conventional Down Payment?
No. A normal seller financing concession cannot be used to make the borrower's required down payment.
Seller concessions can instead cover eligible closing costs and, when allowed, costs associated with permanent or temporary rate buydowns.
Fannie Mae and Freddie Mac currently use the same general financing-concession structure for primary residences and second homes:
| LTV |
Maximum Financing Concession |
| Above 90% |
3% |
| Above 75% through 90% |
6% |
| 75% or less |
9% |
| Investment property at any eligible LTV |
2% |
That can matter in a higher-rate environment. On a 3%- or 5%-down conventional purchase, an eligible seller credit might reduce closing costs or help pay for discount points, leaving more of your available cash for the required down payment and reserves.
The credit cannot simply replace the required down payment. Fannie Mae also limits financing concessions to eligible buyer costs.
Can You Get a Conventional Loan With Zero Down?
A standard conventional first mortgage does not generally finance 100% of the purchase price.
Some conventional transactions can combine the first mortgage with eligible down payment assistance or subordinate financing. Depending on the program, that can reduce the amount of the buyer's own cash needed.
Government-backed products work differently. Eligible VA loans can provide 100% financing, as can eligible USDA loans.
FHA loans generally require at least 3.5% down for borrowers who qualify for maximum financing.
If upfront cash is the main constraint, compare the broader low-down-payment mortgage options rather than looking only at the conventional minimum.
How to Compare Conventional Down Payment Options and Other Mortgage Programs
The lowest down payment does not automatically produce the lowest monthly payment or overall cost.
Compare:
- The cash required for the down payment
- Closing costs and prepaid expenses
- Interest rate and APR
- PMI or other mortgage insurance
- Seller concessions and available rate-buylown options
- Required reserves
- How long you expect to keep the mortgage
The down payment requirements by loan type show how conventional, FHA, VA and USDA financing differ.
If the choice is specifically between government-backed FHA financing and conventional financing, compare the down payment with the mortgage-insurance structure in the FHA vs. conventional mortgage comparison.
Bottom Line
The minimum conventional loan down payment can be as low as 3% for borrowers who qualify for an eligible 97% LTV program. A 5% down payment is available across a broader range of conventional primary-residence transactions.
You do not need 20% down, although putting 20% down generally avoids borrower-paid PMI and reduces the loan amount.
Occupancy and unit count matter. Current standard guidelines generally correspond to at least 10% down for a one-unit second home, 15% for a one-unit investment property and 25% for a 2- to 4-unit investment property.
Frequently Asked Questions
What Is the Lowest Down Payment for a Conventional Loan?
The lowest conventional down payment is generally 3% for an eligible one-unit primary-residence transaction using a 97% LTV program. Program-specific first-time buyer, income, property and underwriting requirements can apply.
Can You Get a Conventional Loan With 5% Down?
Yes. Eligible conventional primary-residence purchases can use 95% LTV financing, which corresponds to 5% down. Qualification still depends on the borrower, property and underwriting results.
What Percentage Down Payment Is Required for a Conventional Loan?
There is no single percentage for every conventional loan. Eligible primary residences can start at 3% or 5% down, one-unit second homes generally start at 10%, one-unit investment properties at 15%, and 2- to 4-unit investment properties at 25% under current standard Fannie Mae and Freddie Mac maximum-LTV guidelines.
Is a Down Payment Always Required for a Conventional Loan?
A standard conventional first mortgage generally requires some down payment. Eligible assistance or subordinate-financing programs can sometimes cover part or all of the buyer's required contribution, depending on program rules.
Do You Need 20% Down for a Conventional Loan?
No. Twenty percent down is not a general conventional-loan qualification requirement. Its main advantage is that a loan starting at 80% LTV generally does not require borrower-paid PMI.
How Does a Smaller Down Payment Affect the Monthly Payment?
A smaller down payment creates a larger mortgage balance. If the loan starts above 80% LTV, mortgage insurance may also increase the monthly housing payment.
Can Gift Funds Be Used for the Down Payment?
Yes, on many eligible principal-residence and second-home conventional purchases. The exact rules depend on the loan program, property and LTV. Gift funds are generally more restricted for investment properties.
What Credit Score Do You Need for a Low-Down-Payment Conventional Loan?
Credit requirements vary by program, underwriting method and lender. For example, Fannie Mae's standard 97% LTV option and Freddie Mac low-down-payment products have their own credit and automated-underwriting requirements, and lenders can apply additional standards.
Should You Put 3%, 5%, 10% or 20% Down?
Compare the resulting mortgage balance, monthly payment, PMI, cash remaining after closing and other financial obligations. A larger down payment lowers the loan amount, but using all available savings for the down payment can leave less cash for closing costs, reserves and home expenses.
