How Much Is a Conventional Loan Down Payment?

A conventional loan down payment ranges from 3% to 20% of a home’s purchase price. According to the Home Mortgage Disclosure Act (HMDA) dataset, the typical down payment on a conventional home loan for a primary residence in 2023 was 20%. Home buyers who can afford a down payment of 20% or more can avoid paying private mortgage insurance (PMI) and save money over the life of the loan. However, you can still qualify for a conventional loan with a smaller down payment. In a recent Zillow survey, about half (48%) of mortgage buyers reported putting down less than 20% on the home they purchased. First-time homebuyers reported higher interest rates as the main incentive for putting down more money.

What is the minimum down payment on a conventional loan?

Most lenders require a minimum down payment of 5% on a conventional loan. First-time home buyers can usually qualify for a conventional loan with as little as 3% down, as long as they meet the other necessary financial qualifications. 

Can you put 3% down with a conventional loan?

Some eligible borrowers can qualify for a conventional loan with a 3% down payment as long as their loan-to-value ratio (LTV) does not exceed 97%. LTV is what lenders use to compare the loan amount with the home’s appraisal value, which ensures the borrowing amount isn’t greater than what the property is worth. This allows lenders to finance up to 97% of the home loan, leaving borrowers with only 3% to cover with their down payment.

Here are the conventional loan programs that accept a down payment as low as 3%:

Conventional 97 loan

Conventional 97 loans enable first-time home buyers and homeowners refinancing a Fannie Mae loan to take out a mortgage with as little as a 3% down payment. With a Conventional 97 loan, your lender will finance up to 97% of the home’s value, leaving you to pay for the remaining 3%.

To qualify for a Conventional 97 loan, you must meet the following criteria:

• Be a first-time homebuyer or co-borrowing with a first-time homebuyer
• A 620 minimum credit score
• A debt-to-income (DTI) ratio of 50% or less
• A maximum LTV of 97%
• Homeownership education for at least one first-time homebuyer when LTV is greater than 95%

HomeReady mortgage

The Fannie Mae Home Ready mortgage program is geared towards helping low- to moderate-income borrowers receive financing. While it’s similar to the Conventional 97 loan, the HomeReady Mortgage is open to all homebuyers who fall below the median income level in their area. 

To qualify for a HomeReady mortgage, you must meet the following criteria:

• A 620 minimum credit score
• A DTI of 50% or less
• A maximum LTV of 97%
• An annual income that doesn’t exceed 80% of the median income for the home’s area
• Homeownership education for at least one borrower when all borrowers are first-time homebuyers, regardless of LTV 

Home Possible mortgage

The Freddie Mac Home Possible mortgage program is also for low-income borrowers. While it has similar criteria to the HomeReady mortgage program, it’s slightly stricter with its credit score minimum requirements.

To qualify for the Home Possible mortgage, you must meet the following criteria: 

• A minimum 660 credit score
• A DTI of 45% or less
• A 97% LTV maximum
• An annual income that does not exceed 80% of the median income for the home’s area

HomeOne mortgage

The Freddie Mac HomeOne loan is for first-time home buyers who meet the following criteria:

• A minimum 620 credit score
• A DTI of 45% or less
• A maximum LTV of 97% 

Is it better to put down 5% or 10% on a house?

For homebuyers who can afford it, putting 10% down on a house is more ideal than 5%. A 10% down payment means you're borrowing less money, which can decrease the amount of interest you'll pay over the loan term and lower your PMI payments — saving you money. Your lender can walk you through scenarios to show you potential savings, and when you'll reach a breakeven point based on how long you plan to own the home.

Some types of mortgages and homes may require a higher down payment minimum when using a conventional loan. An adjustable-rate mortgage (ARM), for instance, typically requires at least a 5% down payment. The same is true for multi-family home purchases, as long as you live in one of the units. If purchasing a second home, like a vacation property, a 10% conventional loan down payment is usually required. 

When making a 5% or 10% down payment, borrowers can typically qualify for a conventional loan with:

• A minimum 620 credit score
• A DTI below 45%
• No major credit report discrepancies
• Private mortgage insurance (PMI)

The advantages of putting down 20% on a conventional loan

While a 20% down payment is no longer a home-buying requirement, lenders still recommend it as it comes with the following advantages:

• You can avoid paying additional costs, like PMI
• It may help you qualify for better interest rates
• You’ll have lower monthly payments
• You’ll have more equity in your home faster

Things to consider when determining your down payment percentage

When it comes to figuring out how much to put down on a home when using a conventional loan, consider the following:

Your home-buying budget

While programs are available to meet the needs of all income levels, lenders always recommend making a larger down payment when possible. This is because your down payment can influence your interest rates, monthly payments, and potential savings over the life of the loan. To determine what type of down payment you can comfortably afford, start by evaluating your budget.

The cost of private mortgage insurance (PMI)

PMI is a policy designed to protect lenders against loss if borrowers default on their mortgage payments. Lenders require that borrowers pay PMI on conventional loans when making a down payment of less than 20%. By putting down 20% more, you can avoid paying PMI altogether.

With PMI, you can expect to pay an additional $30-$70 for every $100,000 borrowed per month. PMI only remains on your mortgage until you build up 20%-22% equity in your home. Once you reach that milestone, your lender automatically removes PMI from your mortgage payment. 

If down payment assistance is an option

With down payment assistance, borrowers can maximize their down payment amounts to avoid paying PMI or reduce their borrowing amount. Down payment assistance programs are available to help first-time homebuyers maximize their down payments. These programs come in several forms, such as loans, grants, and vouchers. The amounts range from a few thousand to tens of thousands of dollars and are typically offered through state and local housing authorities and non-profit organizations.

To qualify for down payment assistance, borrowers must have a 620 credit score, DTI below 45%, and a steady income. Not owning a home within the previous three years of applying for assistance is also a requirement.

When determining your down payment for a conventional, a good place to start is with pre-qualification. Find out how much you pre-qualify for with us at Zillow Home Loans to better understand your conventional loan down payment options.*

*An equal housing lender. NMLS #10287