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- What is the minimum down payment for a conventional mortgage?
- Low down payment home loans: Conventional 97 & FHA loans
- Is a low down payment conventional mortgage better than FHA?
- Typical conventional mortgage down payment amount
- FHA vs conventional mortgage payment showdown
- Where FHA and conventional monthly costs differ
- How your credit score and savings shape the choice
- Compare FHA and conventional 97 rate quotes
What is the minimum down payment for a conventional mortgage?
Most people assume they need a 20% down payment to buy a home. However, a conventional mortgage down payment can be much smaller. Low down payment conventional loans are available, including the Conventional 97 loan program. This program allows qualifying borrowers to get a conventional loan with as little as 3 percent down.
In fact, this low down payment program can be a competitive option for homebuyers with limited down payment funds. It can suit buyers who are otherwise considering an FHA loan.
Check your conventional mortgage rates. Start here (Nov 14th, 2026)
Low down payment home loans: Conventional 97 & FHA loans
You may need to weigh a conventional mortgage against a loan insured by the Federal Housing Administration (better known as FHA). At first, the choice may seem a little ambiguous and confusing.
FHA loans allow a down payment as low as 3.5 percent. That sounds great especially if you don’t have a lot of money to spend upfront on home buying. But conventional loan programs now allow qualifying borrowers to put just 3 percent down for a mortgage.
With so many loan options, how do you choose the right type of mortgage for your financial situation?
“It’s all about who you are talking to,” says Susan Stevenson, who has served as president of the Ohio Mortgage Bankers Association. “You really have to educate yourself on the different loans and get options. As a loan officer, I could take the same options and make them look different than someone else. There are a lot of variables in mortgages, and plus it also depends on what kind of house you buy and where you buy it.”
Is a low down payment conventional mortgage better than FHA?
The federal government insures FHA loans, and participating lenders issue them.
When you get a conventional loan, there is no such government insurance. That means no government agency shares the risk of your potential default on the loan.
Combined with the smaller down payment requirements, the mortgage lender’s exposure is simply higher on these low-down payment conventional loans. So they don’t issue them to just anyone.
That means the underwriting guidelines are tougher. To qualify, borrowers will need a pretty good credit score. They also need good current and future income, and a nearly unblemished credit history.
Say you plan on getting one of those 3 percent down payment conventional loans that Fannie Mae or Freddie Mac buy from lenders. In that case, you need to pay your bills on time, Stevenson says. The lender sets credit score minimums. Fannie Mae’s Desktop Underwriter has no minimum score, and Freddie Mac’s Loan Product Advisor sets no fixed score.
“It’s a great program. If you are approved, you can get your down payment through gift money, too,” she says. “The guidelines have been tweaked. It used to be that if you were putting down 5 percent on a conventional loan, that 5 percent had to come from you.”
Stevenson has worked with all kinds of borrowers. Some have more than 20 percent down, while others have nothing to put toward a down payment. Believe it or not, there are loans for those who have saved zero dollars. Plus, there are lots of down payment assistance programs to help people across the country to become homeowners.
Check your conventional mortgage rates. Start here (Nov 14th, 2026)
Other low-down payment programs
USDA and VA loans require no down payments, but you have to be eligible for them. The U.S. Department of Agriculture backs USDA loans. To qualify for one, you must buy a home in a designated rural or suburban area. You also need a low to moderate income for the area. The Department of Veterans Affairs backs VA loans. And of course, to receive one, you have to be an eligible veteran, service member or surviving spouse.
These programs aim to help borrowers finance a primary residence. Their goal is to make homeownership more accessible. As a result, it’s unlikely you’ll be able to buy a second home with no money down.
Typical conventional mortgage down payment amount
“Conventional loans are very popular still. Older people usually have 20 percent down because they are downsizing or upsizing, and they are selling a house. They put that money towards a new place,” Stevenson says.
But she usually sees the majority of people putting down between five and 10 percent of the purchase price.
Minimum down payment requirements for jumbo loans
Each lender sets its own jumbo loan down payment minimum. It is often higher than the minimum for a conforming loan.
These loans are non-conforming, meaning the lender can’t sell them to Fannie Mae or Freddie Mac. By offering a loan above conforming loan limits, the lender is already assuming additional risk. As a result, it’s unlikely they’ll be willing to take on the added risk of a low down payment.
FHA vs conventional mortgage payment showdown
Many people don’t have 5% down and only have money for a small down payment. For them, the dilemma is whether to get a conventional loan or an FHA loan.
Both loans require mortgage insurance. Conventional loan borrowers making a down payment of less than 20 percent will need to get Private Mortgage Insurance (PMI). The good news: once your loan balance falls to 80 percent of the home’s original value, you can ask to cancel the insurance.
The bad news: FHA mortgage insurance, called MIP, lasts longer. With less than 10 percent down, you pay it for the life of the loan unless you refinance. With 10 percent or more down, it ends after 11 years.
Where FHA and conventional monthly costs differ
Take an FHA loan with 3.5 percent down and a conventional loan with 3 percent down.
Stevenson says the interest rate on a conventional loan with a 3 percent down payment is often higher. An equivalent borrower might get a lower rate on an FHA loan. But remember, all of this really hinges on your credit score. With a higher credit score, you may get a lower interest rate.
Fannie Mae charges loan-level price adjustments (extra fees based on credit score and down payment) on many conventional loans. Typically borrowers pay those fees by accepting a higher rate rather than paying out of pocket. So the rate can end up higher than that of the FHA option. Fannie Mae waives these fees on HomeReady loans. It also waives them for first-time homebuyers with income at or below 100% of the area median (120% in high-cost areas).
The conventional loan’s monthly PMI depends on your credit score, so compare it with the FHA monthly premium on the same house. In 2026, that FHA premium is 0.55% of the base loan amount per year on most 30-year loans with 3.5 percent down.
Before taxes, the monthly payment on the FHA loan would be a little lower as well, she says. FHA also charges upfront mortgage insurance of 1.75% of the base loan amount. Borrowers can roll it into the loan rather than pay it at closing.
On the conventional loan, PMI ends automatically when your balance is scheduled to reach 78% of the home’s original value. In other words, you then have 22% equity based on that original value.
How your credit score and savings shape the choice
“Every scenario is going to be different. But those with lower credit scores probably would head toward a FHA loan,” Stevenson says. “If you have a 750 credit score and have 3 to 5 percent down, you most likely would go with a conventional loan.”
With a conventional loan, you can put down as much as you can afford. A larger down payment will help lower your monthly payments. But remember not to leave yourself without any money for emergencies such as a busted water heater or broken window. Stuff happens, and you need a fund set aside for such purchases and repairs.
Check your FHA eligibility. Start here (Nov 14th, 2026)
Compare FHA and conventional 97 rate quotes
An article can’t tell you if an FHA or conventional loan is the best mortgage option for your home purchase. You can receive live quotes from real lenders now. They can help you determine which type of loan is best for your financial situation.
