A conventional loan down payment is the money you give the lender upfront when you buy a home
When you borrow money to buy a house, the lender wants to know you have real money in the game. The down payment is that money — it comes from your own pocket, not from the loan itself. The lender then lends you the rest.
Conventional loans are mortgages that are not backed by a government agency like the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Because the lender carries more risk with a conventional loan, they typically ask for a larger down payment than government-backed programs do. That down payment can range from 3% to 20% of the home's purchase price, depending on your credit score, income, and the lender's rules.
The lower your down payment, the more you borrow, and the more interest you pay over time. A higher down payment means a smaller loan and lower monthly payments — but it also means saving more money before you can buy.
Key Takeaways
- A conventional loan down payment is typically between 3% and 20% of the home price, with 20% being the amount that avoids mortgage insurance.
- If you put down less than 20%, you will pay for private mortgage insurance (PMI), which adds to your monthly payment until you reach 20% equity in the home.
- Your credit score, savings history, and debt-to-income ratio all affect whether a lender will accept a 3% down payment or require 10% or more.
- The down payment comes entirely from your own funds — it cannot be borrowed, though some lenders allow gifts from family members.
How much down payment different lenders expect
There is no single rule for all conventional loans. Each lender sets its own minimum, and that minimum depends on your financial picture. A borrower with a credit score above 740, steady income, and low debt might put down 3% to 5%. A borrower with a score below 680 or irregular income might need to put down 10%, 15%, or even 20%.
Some lenders specialize in lower down payments and will work with borrowers who have less savings. Others focus on borrowers who can put down 15% or more. The best way to know what a specific lender will accept is to talk to them directly — not to assume based on what you heard from a friend or read online.
The lender will also look at your debt-to-income ratio, which is the total of your monthly debt payments divided by your gross monthly income. If you already owe money on a car, student loans, or credit cards, that affects how much house you can borrow for and how much down payment the lender wants to see.
What happens when you put down less than 20%
If your down payment is less than 20%, you will pay for private mortgage insurance, or PMI. This is an insurance policy that protects the lender if you stop paying the loan. You pay the premium — usually between 0.5% and 1.5% of the loan amount per year — as part of your monthly mortgage payment.
PMI is not optional if you put down less than 20%. It is a cost you will carry until you have paid down the loan enough that you own at least 20% of the home's value. Depending on the loan terms and how much you borrowed, that can take 5 to 10 years or longer.
Some borrowers choose to put down 20% specifically to avoid PMI. Others put down 5% or 10% because they would rather buy sooner and pay PMI for a few years than wait another two or three years to save more money. Both choices are reasonable — it depends on your situation and what you can afford.
Where down payment money comes from
Your down payment must come from your own savings, investments, or a gift. You cannot borrow it from another lender. However, many lenders do allow a family member to give you money as a gift, as long as you document that it is a gift and not a loan you have to repay.
Some lenders require you to show bank statements or investment account statements going back two or three months to prove the money has been in your account. This is called "seasoning" the funds — the lender wants to see that you actually saved the money, not that you borrowed it from someone else the day before you applied.
If you are buying with a partner or spouse, both of your savings can count toward the down payment. If one person has more saved, that person's funds go toward the down payment, and the other person's income and credit still matter for the loan itself.
How down payment size affects your monthly payment
A larger down payment lowers your monthly mortgage payment in two ways. First, you borrow less money, so the principal (the amount you owe) is smaller. Second, you avoid or reduce PMI costs.
For example, on a $300,000 home: a 3% down payment means you borrow $291,000 plus you pay PMI. A 20% down payment means you borrow $240,000 with no PMI. The difference in monthly payment can be $300 to $500 or more, depending on interest rates and loan length.
Over the life of a 30-year loan, that difference adds up to tens of thousands of dollars. But if you do not have $60,000 saved for a 20% down payment, a 3% or 5% down payment lets you buy a home now instead of waiting years to save.
Down payment information programs
Some states, cities, and nonprofits offer down payment help to first-time homebuyers or people buying in certain neighborhoods. These programs may give you a grant (money you do not repay), a low-interest loan, or a combination of both. The rules vary widely by location.
Your real estate agent, mortgage lender, or local housing authority can tell you whether programs exist in your area and what the income limits are. Some programs are only for first-time buyers, while others are open to anyone buying in a specific area that the city wants to develop.
Down payment help does not change how much you can borrow or how your credit score affects the loan. It straightforward reduces the amount of your own money you need to have saved before closing day.
Frequently Asked Questions
Can I use a credit card or personal loan for my down payment?
No. Lenders require that your down payment come from your own funds or a family gift, not from borrowed money. If you take out a personal loan or use a credit card, the lender will see that new debt and may deny your mortgage or require a larger down payment.
What if I have only 2% saved but the lender wants 5%?
You have a few options: save more money and wait, look for a lender with a lower minimum, explore down payment help programs in your area, or ask a family member for a gift. Some lenders also allow you to roll closing costs into the loan, which can free up some of your cash.
Does a larger down payment mean a lower interest rate?
Usually yes, but not always. A larger down payment shows the lender you are less risky, so many will offer a lower interest rate. However, your credit score, income, and the current market also affect your rate. Always ask the lender to show you rates for different down payment amounts so you can compare.
Can I put down 15% and avoid PMI?
No. PMI is required on any conventional loan with less than 20% down. At 15% down, you will pay PMI until your loan balance drops to 80% of the home's original value, which typically takes 5 to 10 years depending on your payment schedule.
What if the home appraises for less than the purchase price?
If the home appraises lower than you agreed to pay, your down payment percentage goes up automatically. For example, if you agreed to pay $300,000 with a 10% down payment ($30,000), but it appraises at $280,000, your down payment is now 10.7% of the actual value. You may need to bring more cash to closing or renegotiate the price.