How Much Cash a Low Down Conventional Loan Takes on a Condo

The Quick Read: The down payment is only the first piece of the cash you need. On a one-unit primary-residence condo, the minimum is 3% down when at least one borrower is a first-time buyer, and 5% otherwise. Closing costs, prepaid items, HOA charges, and cash you keep in the bank come on top. The building must also pass its own review before your loan can move forward. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.

What “Cash Needed” Actually Means on a Condo

Cash needed is everything you must pay at closing, plus what you keep afterward. The down payment is one line. The rest sits on top.

Think of it as two buckets. The first is cash to close: down payment, closing costs, and prepaid items like the first stretch of insurance and interest. The second is cash to keep: the savings you hold after closing so one broken water heater does not sink you.

Condos add a third layer. HOA questionnaire fees, transfer charges, and prepaid dues vary by building, and no single national figure covers them. Ask for these early, because they change by association.

How Low Can the Down Payment Go?

Across the wholesale programs I place files with, a one-unit primary residence with a fixed rate can reach 97% LTV (3% down) when at least one borrower is a first-time buyer. That means no ownership interest in a residence in the previous three years. Otherwise the standard purchase goes to 95% LTV (5% down). Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.

Fannie Mae’s Eligibility Matrix lists these limits by occupancy and transaction, and Fannie Mae’s 97% LTV FAQ confirms condos are eligible for that option. The loan must be fixed-rate and run through automated underwriting. Matrices change, so check the current version. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.

HomeReady and Home Possible, the income-limited programs, carry an income limit of 80% of area median income.

Occupancy decides the leverage. A second home tops out at 90% LTV, and investment property is lower still. This article covers the home you live in. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.

Why the Building Gets Its Own Approval

The condo project must pass a review separate from yours. Your credit can be spotless and the loan can still stall if the building fails.

Many older web articles are out of date here. Fannie Mae retired its Limited Review shortcut for established projects, effective for applications dated on or after August 3, 2026, per its own Selling Guide Q&A. Under that shortcut, 90% was the top LTV on a primary residence. Treat any article that still describes it as stale.

The review method depends on the project type. Per the Selling Guide’s project standards:

Attached units in a 5–10-unit project inside a master association need a Full Review.

What the Lender Checks in the Building

The lender looks at the HOA’s budget, reserves, delinquencies, and insurance, plus a list of disqualifying traits.

Budget and reserves. The lender confirms the budget is adequate and funds replacement reserves of at least 10% of the budget. Per Fannie Mae Lender Letter LL-2026-03 that minimum rises to 15% for Full Review applications dated on or after January 4, 2027. The trigger is the application date, not your contract or closing date.

Ineligible traits. The Selling Guide lists examples: HOA income above 10% of the budget from non-incidental business arrangements, more than 35% of the building in commercial space, mandatory third-party recreational memberships, and failed mandatory structural or safety inspections. Condo hotels and timeshares are out entirely.

Project status. A project marked “Unavailable” in Fannie Mae’s Condo Project Manager is ineligible for purchase, whatever the review type.

You do not control how fast the HOA hands over documents. Expect requests for the budget, financial statements, reserve study, and insurance certificates. A reserve study does not automatically pass a project, either.

The Cash Stack, Line by Line

Here is every bucket, with no dollar figures because they vary by loan and building.

Closing costs appear on your Loan Estimate and Closing Disclosure. Compare those documents line by line. The final number comes from them, not from a rule of thumb.

Mortgage Insurance and the Monthly Side

Above 80% LTV, conventional loans carry mortgage insurance. Published typical annual premiums run 0.58% to 1.86% of the balance. That is a range, not a quote, and your actual premium depends on your file. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.

HOA dues sit on top and count toward your monthly housing cost, so a building with high dues cuts into what you can borrow.

The insurance does not last forever on a conventional loan. Lasting for the life of the loan is an FHA trait. On a conventional loan you can ask the servicer to cancel when the balance is scheduled to reach 80% of the original value. That requires a good payment history, no junior liens, and no decline in value. It terminates automatically at 78%, as the CFPB explains. Reaching 80% gives you a right to ask. It does not drop the insurance by itself.

Where the Rule Breaks

Several situations change the cash picture.

A low appraisal. The lender sets LTV from the lower of price and appraised value. If the value comes in under your price, you cover the gap or renegotiate.

A failing or unavailable building. Reserves too thin, too many delinquent owners, or active litigation can sink a project, even one approved earlier. A non-warrantable building also narrows your future buyer pool when you sell, since fewer buyers can use conventional financing.

An adjustable rate. The 97% option is fixed-rate only. High-balance loans are not eligible for it either.

A cash-out refinance. A cash-out on a one-unit primary residence tops out at 80% LTV. That is far more equity than a purchase takes. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.

A rate-and-term refinance. It can reach 95% LTV on a one-unit primary residence, and 97% where the existing loan is agency-owned and the first-time-buyer program allows it. Lenders may have different project-review treatment for refinances, so confirm the current rule. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.

Credit and ratios. The wholesale conventional programs start at a 620 decision score. Automated underwriting governs most files, with a total ratio ceiling of 50%. Lenders may set higher floors. After a foreclosure, agency rules set a seven-year wait. After a chapter 7 discharge, a short sale, or a deed-in-lieu, they set four years, shorter with documented extenuating circumstances.

Ways to Reduce the Cash You Bring

Gifts, grants, and community second mortgages are eligible sources for the down payment on the standard 97% product, according to a Fannie Mae fact sheet hosted by the FDIC. That product has no minimum borrower contribution on a one-unit purchase.

Seller credits can help with closing costs. They typically cannot fund the down payment itself. Whether a credit fits depends on the program and your LTV, so ask before you write the offer.

A caution: draining every dollar into the down payment leaves nothing for the first repair. Keep a cushion.

Before You Write an Offer

Request these from the listing agent or HOA first:

1. The HOA budget and latest financial statement.

2. The reserve study, if one exists.

3. The condo questionnaire, and its fee.

4. The master insurance certificate.

5. Any notice of special assessments or pending litigation.

Your lender can also check whether the project is listed in the agency tools. Brokers with a Freddie Mac third-party originator number can use Condo Project Advisor’s lookup feature, per Freddie Mac’s FAQ. Doing this early costs little. Discovering a problem after your earnest money is down costs a lot.

A reader weighing a 3% down loan against waiting to save more faces a real tradeoff. Lower cash upfront means mortgage insurance for longer. More down shrinks that. Neither is wrong, and the right call depends on how much cash you want left after closing. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.

Many borrowers also repeat-buy; Lendmire’s piece Can a Repeat Buyer Get a Low-Down Conventional Loan on a Condo? covers that case.

Key Terms Defined

LTV (loan-to-value): The loan amount divided by the lower of price and appraised value.

Warrantable condo: A building that meets agency project rules, so its units can be financed conventionally.

Full Review: The lender’s detailed check of an HOA’s budget, reserves, delinquencies, and insurance.

Reserves: Money the HOA sets aside for future repairs, measured as a share of its budget.

Prepaids: Costs paid upfront at closing for items like insurance and interest, deposited ahead of time.

Mortgage insurance: Coverage the borrower pays above 80% LTV that protects the lender, not you. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.

If you are buying a home and want to see whether a conventional loan fits your file, Lendmire can help you compare the options and what each one asks of the file. Start with the conventional loan programs page.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Fannie Mae Eligibility Matrix

2. Fannie Mae FAQs: 97% LTV Options

3. Fannie Mae Selling Guide Q&A

4. Fannie Mae Selling Guide B4-2.1-01: General Information on Project Standards

5. CFPB: When can I remove PMI from my loan?

6. Fannie Mae fact sheet hosted by the FDIC

7. Freddie Mac’s FAQ