Down Payment

How much down payment is required for a conventional loan?

Short answer

As little as 3% down for eligible primary-residence borrowers (HomeReady, Home Possible, and standard 97% LTV programs). 5% down is common on standard conventional. 10% on second homes. 15-25% on investment properties. 20% down avoids monthly PMI.

Plain-English explanation

Conventional down payment minimums by occupancy and program: 1) Primary residence — 3% on HomeReady, Home Possible, or 97% LTV (income limits may apply); 5% on standard conventional; 2) Second home — typically 10% minimum; 3) Investment property — typically 15% on a 1-unit, 25% on 2-4 unit. Larger down payments improve pricing through LLPAs and reduce or eliminate PMI. Subject to Fannie/Freddie programs and lender overlays.

Practical example

A first-time Florida buyer at 720 credit and area-median income qualifies for HomeReady with 3% down on a $350k home — $10,500 down plus closing costs. A different buyer at 740 credit puts 20% down on the same home and avoids PMI entirely.

What can change the answer?

Gift source, seller credit limits, DPA program rules, source-of-funds documentation, and program eligibility (HomeReady, Home Possible) can change the answer.

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