The Quick Read: A conventional loan has no single down payment. The minimum runs from 3% to 5% for most people buying a home to live in, and it climbs for second homes and rentals. Your buyer status, the number of units and how you will use the home decide which row applies. Twenty percent is the point where mortgage insurance drops off, not a program requirement.
Key Takeaways
- A first-time buyer purchasing a one-unit home with a fixed rate can go as low as 3% down.
- Most other buyers of a primary residence need a down payment that varies by scenario, including those buying a two- to four-unit home they will live in.
- A second home needs more than a primary home, and an investment property needs more again.
- Mortgage insurance applies above 80% loan-to-value and can come off later.
- The appraisal can change your cash needed, because the loan is measured against the lower of price or value. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
The Quick Lookup: Your Minimum by Buyer and Home Type
Down payment is simply 100% minus the highest loan-to-value (LTV) ratio the program allows. LTV is the loan amount divided by the home’s value. A 97% LTV means a 3% down payment. Find your row below, then read the sections that follow for the fine print. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Conventional payment estimate
The starting figures are an example price at the first-time buyer’s minimum down payment. Replace them with yours.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a conventional loan quote.
Estimate seeded at the low end of Fannie Mae’s published range (0.58%–1.86% a year); the insurer prices the actual premium on the score and the leverage. Applies only above 80% loan-to-value.
Illustrative starting assumptions: a $350,000 price, the first-time buyer’s minimum down payment, a thirty-year term at the current Freddie Mac benchmark, mortgage insurance at the low end of Fannie Mae’s published range, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a conventional loan quote; your rate is set by the lender at lock. The mortgage insurance figure is an editable estimate seeded from Fannie Mae’s published typical range, not a premium quote; the insurer prices the actual premium, and the cancellation month assumes scheduled payments with no extra principal and no change in value. Taxes, insurance and dues are editable estimates; closing costs are not included. Conforming loan limits apply by county. Licensed in sixteen states for consumer mortgages.
| Buyer / home type | Max LTV | Minimum down |
|---|---|---|
| First-time buyer, one unit, fixed rate, lives in it | 97% | 3% |
| Other buyer, one unit, lives in it | 95% | 5% |
| Two- to four-unit home you live in | 95% | 5% |
| Second home | 90% | 10% |
| Investment property, one unit | 85% | 15% |
| Investment property, two to four units | 75% | 25% |
These are the ceilings across the wholesale conventional programs Lendmire works with. Every figure is subject to lender guidelines and full file review. None of it is a commitment to lend.
Two more programs sit on top of this table. HomeReady and Home Possible are income-limited programs with a cap of 80% of area median income. They are built for buyers with lower or moderate incomes, and they can reach the same low down payment tier.
How Lenders Set Your Minimum
The down payment a conventional loan needs comes from a short chain of decisions. The lender classifies the file first, then measures the loan against the home’s value, then adds credit and ratio checks. Here is the order.
Step 1: The file gets sorted. The lender looks at three things: how you will use the home, how many units it has, and whether this is a purchase. Those three answers pick the row in the table above. Say you declare a duplex as your primary home. That puts you in the 95% row, not the investment row.
Step 2: The loan is measured against the lower value. On a purchase, LTV is based on the lesser of the sales price and the appraised value. Fannie Mae’s Selling Guide says the same thing and adds a rounding rule. The result is cut to two decimals and then rounded up to the next whole percent. A loan that lands just past a tier line gets treated as the next tier up.
Step 3: The appraisal can move your cash. Suppose you sign a contract and the appraisal comes in under the price. The lower number becomes the base for LTV. To keep the same tier, you either bring more cash or renegotiate the price. Your down payment is not truly fixed until the appraisal is in.
Step 4: Credit and ratios get checked. Across the wholesale conventional programs, the floor is a 620 decision score. The automated underwriting finding governs most files, with a total debt-to-income ceiling of 50%. A manually underwritten loan uses tighter ratios of 36% or 45%, depending on score and reserves. A bigger down payment can offset a thinner credit profile, but it does not replace the floor.
Step 5: Mortgage insurance is placed. If LTV is above 80%, insurance is added. That is covered in its own section below.
Which Buyer Are You?
If you are buying a home to live in, you land in one of four situations. Read the one that fits and ignore the rest.
First-Time Buyer: How Much Down Payment
Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
The 97% option exists for buyers with no ownership interest in a residence in the previous three years. The home must be a one-unit principal residence, and the loan must be a fixed rate. Freddie Mac’s HomeOne flyer describes its version of this: 97% LTV, and at least one borrower on the purchase must be a first-time buyer. Homebuyer education is required when every borrower is a first-timer. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
The first-time label applies to the loan, not to each person. On a purchase with two borrowers, one first-time buyer can be enough. Ask your loan officer how that works on your specific file.
Repeat Buyer: How Much Down Payment
Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
If you have owned a home in the last three years, the standard path tops out at 95% LTV. That is 5% down on a one-unit primary home. The jump from 3% to 5% is small, but it matters when your cash is tight. Plan for it from the start. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Income-Limited Buyer: A Second Door to Low Down
HomeReady and Home Possible work differently. They look at your income instead of your first-time status. Your qualifying income must be at or under 80% of the area median. That can open the low down payment tier to a buyer who is not a first-timer. If your income is close to the line, a loan officer can check the area figure for your county.
Buyer With a Co-Borrower or Family Help
A parent or relative may help, either as a co-borrower or by gifting funds. Both can change how the file is built. Gifts are covered in the money-source section below.
Which Home Are You Buying?
The home itself also moves the number. Here are the common cases.
One-unit house. This is the baseline. The 97% and 95% rows apply, depending on your buyer type.
Condo, co-op or planned community. Eligible versions generally follow the same leverage as a house. Fannie Mae’s 97% LTV options FAQ lists condos, co-ops and planned unit developments as eligible for the low tier. The project itself has to meet lender standards, so the building matters as much as the unit.
Two- to four-unit home you live in. You live in one unit and rent the others. The program treats it as a principal residence, so the ceiling is 95% LTV, or 5% down. It is not treated as an investment property. This is one of the more useful quirks in the whole table. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Manufactured home. A standard manufactured home on a primary residence is generally capped at 95%. Certain newer manufactured designs can reach 97%, per that same FAQ. Ask your lender which category the home falls into.
Second home. A second home tops out at 90% LTV, so plan on at least 10% down. If the loan is large enough to be a jumbo, the numbers change again. Lendmire’s piece How Much Down Payment a Jumbo Loan Needs on a Vacation Home covers that case. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Rental or investment property. Occupancy decides the leverage. A one-unit rental tops out at 85% LTV, and a two- to four-unit rental at 75%. That is a different lane from the home-buyer programs here, so this guide stops at those two numbers. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
What the Agencies Allow, in Plain Terms
Conventional loans follow rules set by Fannie Mae and Freddie Mac, the two agencies that buy most of these loans from lenders. The Fannie Mae Eligibility Matrix is the master chart for maximum LTV by occupancy and unit count. It lists 97% for a one-unit fixed-rate purchase, 95% for the adjustable-rate version and for two- to four-unit principal residences, and 90% for second homes.
Two details trip up buyers. First, the 97% tier is for fixed-rate loans. An adjustable-rate loan on the same home typically drops to 95%. Second, a few lenders set their own minimums above the agency ceiling. Some lenders ask for more down, or a higher credit score, than the agencies require. Across the wholesale programs Lendmire places files with, the ceiling in the table is the ceiling, but each lender’s own overlays can narrow it.
Where the Money Can Come From
Your down payment does not have to come only from your own savings. The rules depend on the loan size and the home type.
Gifts. On a one-unit primary home, Fannie Mae’s gift rules allow all of the down payment to come from a gift. On a two- to four-unit primary home, or a second home, above 80% LTV, a minimum slice must come from your own money. A gift can cover the rest. The lender will document the transfer, usually by an electronic transfer or an official check sent to the closing agent.
Gifts of equity. A seller who is an acceptable donor, such as a relative, can give you part of the home’s value as a gift. That lowers the price and counts toward your equity.
Assistance programs. Freddie Mac’s Home Possible allows funds from family, employer assistance, secondary financing and sweat equity. Eligible sources can include grants and community second loans, depending on the program.
Seller credits. This is where buyers get caught. A seller credit can help with closing costs. It cannot count as your down payment or your reserves. The credit also has a cap, and the cap steps up as your down payment grows. Undisclosed credits, such as a side deal for moving costs, can make a loan ineligible. Put every credit in the contract.
Savings and other accounts. Cash in your own accounts is the simplest source. The lender will want to see where large deposits came from.
Less Than 20% Down: What Mortgage Insurance Does
Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Mortgage insurance is required on a conventional loan above 80% LTV. It protects the lender, not you. Its cost depends on your credit score, your down payment and the coverage level. Published typical annual premiums run from about 0.58% to 1.86% of the loan balance. That is a range, not a quote. Your actual figure will show on your Loan Estimate.
Here is the part buyers like. Conventional mortgage insurance is not permanent. According to the Consumer Financial Protection Bureau, you can ask the servicer to cancel when your balance reaches 80% of the home’s original value. You need a good payment history, no subordinate liens and no decline in value. The servicer must end it automatically at 78%. That makes the tradeoff clear: a smaller down payment now, plus a monthly insurance cost until you build equity.
Think of it as buying sooner versus paying more each month. A lower down payment gets you into the home sooner. Waiting to save 20% avoids the insurance but costs time and exposes you to price changes. Neither choice is wrong. The right one depends on your cash, your timeline and your comfort with a bigger monthly bill.
Where the Rule Breaks
The table covers most files. These cases bend it.
- Down payment is not cash to close. Closing costs, prepaid items and reserves are separate. A 3% down payment does not mean 3% total cash.
- The appraisal gap. A low appraisal can add a surprise cash requirement, as explained above.
- Rounding up. A loan that falls a hair above a tier line rounds up to the next whole percent and can change your insurance tier.
- Concessions lower the price used. If a seller concession exceeds the limit, the excess reduces the price used for LTV.
- Shared-equity and subsidized programs. On some affordable-housing structures, the underwriting system bases LTV on the appraised value alone. This applies to primary residences only.
- Recent credit events. The agencies set waiting periods: four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu. Documented extenuating circumstances can shorten them.
- Income-limited programs. Older articles sometimes claim there is no income cap in low-income areas. The current Freddie Mac page lists a flat 80% limit, so check the current rules. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Key Terms Defined
Loan-to-value (LTV): The loan amount divided by the home’s value, shown as a percentage. Your down payment is the rest.
Principal residence: The home you live in as your main address. Occupancy is declared on the application.
Mortgage insurance: A policy required above 80% LTV that protects the lender if you default. It can be cancelled later.
Seller credit: Money the seller agrees to put toward your closing costs. It cannot fund your down payment.
Gift of equity: A seller who is an acceptable donor lowers the sale price as a gift, which counts toward your equity.
Decision score: The credit score a lender uses to review the file. The wholesale conventional floor is 620.
What Your Decision Looks Like in Practice
Picture a first-time buyer, a one-unit home and a fixed rate. That buyer is in the 3% row. Now picture a buyer who owned a home two years ago. Same house, same loan type, but 5% down. The house did not change. The buyer’s history did.
Now picture a buyer eyeing a duplex to live in one side. That buyer needs 5% down. If the same buyer wants the duplex as a rental, the 5% row disappears. Occupancy is the switch.
Questions like these will usually pin down your number:
1. Will you live in the home, and in how many of its units?
2. Have you owned a home in the last three years?
3. Is your income under 80% of the area median?
Then check four things before you choose:
- Your cash for closing costs and reserves, not just the down payment.
- Whether your gift or assistance fits the rules for your home type.
- How the appraisal could move your tier.
- Whether mortgage insurance fits your monthly budget until you reach 80%.
Next Step
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 Lendmire’s conventional loan programs page, then bring your questions about down payment, gifts and mortgage insurance to a loan officer.
Frequently Asked Questions
Can I really buy a home with 3% down on a conventional loan?
Yes, if you meet the first-time buyer test or an income-limited program’s rules. The home must be a one-unit principal residence with a fixed rate. The first-time test means no ownership interest in a residence in the previous three years. Credit, ratios and the lender’s own guidelines still apply to your file.
Do I need 20% down to avoid mortgage insurance?
You need 20% down, or 80% LTV, to avoid it at the start. Below that, insurance is required. It can come off later at 80% of the original value on request, and it ends automatically at 78%, if you meet the conditions.
Can my down payment be a gift?
Often yes. On a one-unit primary home, a gift can cover the whole down payment. On a two- to four-unit primary home or a second home above 80% LTV, part of the money has to be your own. The lender will document the transfer.
Can the seller pay my down payment through a credit?
No. Seller credits can help with closing costs, within caps that depend on your down payment size. They cannot count toward your down payment or reserves. Any credit must be disclosed in the contract.
Does a low appraisal change how much I put down?
Yes, it can. LTV is based on the lower of the price and the appraised value, so a low appraisal raises the cash needed to stay in the same tier. You can bring more cash, ask the seller to lower the price, or move to a different tier.
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.
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References
1. Fannie Mae Selling Guide B2-1.2-01, Loan-to-Value Ratios
4. Fannie Mae Eligibility Matrix
5. Fannie Mae Selling Guide B3-4.3-04, Personal Gifts
6. Consumer Financial Protection Bureau
This article is part of Lendmire’s conventional loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Document a Gift for a Conventional Loan Down Payment · How Much More Down Lowers PMI on a Conventional Loan for a Condo · How Much in Reserves a Conventional Loan Requires for a Second Home
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.