Down Payment · 7 min read
A Practical Guide to Down Payment Assistance
How grants, second liens, and state programs actually work, and when they're worth using.
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Buying a Home · Conventional Loans
Conventional loans, explained plainly.
Most of the mortgages closed every year are conventional loans. Not the flashiest program, but for buyers with steady income and reasonable credit, they quietly do the best job of keeping payments predictable and equity building over time.
Corie Adams · Producing Branch Manager · NMLS #1875205
Who this is for
Whether this fits the plan you have.
Conventional loans get chosen because they are flexible in the ways that matter most: how much you put down, what kind of home you are buying, and how long the payment stays with you.
Buyers with steady income
You have consistent income and reasonable credit, and you want a mortgage that follows Fannie Mae and Freddie Mac guidelines rather than a government agency.
First-time buyers
A dedicated conventional program offers reduced mortgage insurance and down payments as low as 3 percent, often more affordable month to month than FHA.
Buyers who want flexible down payment options
Down payments range from 3 to 20 percent or more, depending on the program and your financial situation, so you choose what fits your cash position.
Second home buyers
Unlike some specialty loans, conventional financing is available for a second home, not just your primary residence.
Real estate investors
Conventional financing is one of the primary ways investors purchase single-family rentals and small multi-unit properties, typically with 15 to 25 percent down.
Buyers who want PMI to disappear
Private mortgage insurance drops off automatically once you reach 20 percent equity, meaningful savings over the life of the loan.
How it works
The path, step by step.
The old stereotype, 20 percent down and perfect credit, has not reflected reality for more than a decade. Today's conventional programs are more flexible than most buyers realize.
We review your income, credit, and goals
A conversation and a look at your documents tells us whether conventional is the strongest fit compared to FHA, VA, or USDA for your situation.
We choose the down payment that fits your plan
Options range from 3 percent for qualifying first-time buyers up to 20 percent or more, each with different effects on payment and mortgage insurance.
You receive a written pre-approval
A full underwriting review before you write an offer, so sellers see a clean approval rather than a quick estimate.
We move through underwriting and appraisal
Documentation is thorough. Expect a real review of income, assets, and the property itself before your loan clears to close.
You close and mortgage insurance starts its countdown
If you put down less than 20 percent, PMI applies at closing but removes automatically as you build equity toward that threshold.
Start with a real number, not an estimate.
A pre-approval reviews your income, assets, and credit so you know the price range you can actually work with before you tour a home or sign a builder contract.
Requirements at a glance
What underwriting looks at.
These are typical expectations rather than fixed rules. One strong area often offsets another.
- Down payment
- 3 to 20 percent, depending on the program and buyer type
- Credit score
- Commonly 620 and above, with better pricing at higher scores
- Debt to income
- Firmer guidelines than FHA, generally reviewed case by case
- Property types
- Primary residences, second homes, and investment properties
- Loan amount
- Up to the conforming limit, higher in certain counties
- Terms
- Fixed-rate terms of 10, 15, 20, or 30 years, plus adjustable options
- Mortgage insurance
- Applies below 20 percent down, removable once you reach 20 percent equity
- Documentation
- Thorough income, asset, and credit review through underwriting
Guidelines vary by investor and change over time. Nothing here is a commitment to lend or an approval of credit.
Costs and assumptions
What it costs, and what we assumed.
Costs follow the same categories as any mortgage. Understanding them upfront keeps the closing table free of surprises.
Down payment
Ranges from 3 to 20 percent or more. Moving to 20 percent removes mortgage insurance from the payment entirely.
Private mortgage insurance
Applies when you put down less than 20 percent, but it is not permanent. It removes automatically once you reach 20 percent equity.
Closing costs
Title, transfer tax, appraisal, and lender fees, quoted in a written Loan Estimate early in the process.
Common misconceptions
What people get told, and what is actually true.
Often heard
I need 20 percent down to qualify for a conventional loan.
In practice
Many qualified buyers purchase with significantly less down, commonly 5 percent, with 3 percent available to certain qualifying first-time buyers.
Often heard
Conventional loans are only for buyers with excellent credit.
In practice
Most conventional programs start at a 620 credit score, and pricing improves as your score climbs rather than shutting out borrowers below a high bar.
Often heard
Mortgage insurance lasts for the life of the loan.
In practice
PMI on a conventional loan drops off automatically once you reach 20 percent equity, unlike FHA mortgage insurance, which is built in for life.
Often heard
You cannot buy a second home or investment property this way.
In practice
Conventional financing is available for primary residences, second homes, and investment properties, with different down payment expectations for each.
Often heard
The documentation is the same as any other loan.
In practice
Documentation is thorough. Expect a real underwriting review of income, assets, and credit before your loan clears to close.
Questions
Asked at the kitchen table.
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