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Ask most people how much you need to put down on a home and they’ll say 20%. It’s one of the most persistent myths in real estate — and it stops a lot of qualified buyers from even starting the process.
The truth is, you don’t need 20% down to get a conventional loan. In fact, you may need far less than you think. Here’s a clear breakdown of what’s actually required, what your options are, and how your down payment choice affects your monthly payment and long-term costs.
The 20% figure comes from one specific benefit: putting down 20% on a conventional loan means you avoid private mortgage insurance (PMI). That’s a real financial advantage, but it’s not a requirement to buy a home. Lenders and the mortgage system have offered low down payment options for decades — the myth just stuck around longer than it should have.
Here’s what conventional loans actually allow:
3% Down — First-Time Buyers
If you haven’t owned a home in the past three years, you may qualify for a conventional loan with just 3% down. Programs like Fannie Mae’s HomeReady and Freddie Mac’s Home Possible are specifically designed for buyers with moderate incomes and limited savings, and both allow 3% down with competitive rates.
5% Down — Repeat Buyers
If you’ve owned a home before, the standard minimum down payment on a conventional loan is 5%. Still a far cry from 20%, and enough to get you into a home with strong loan terms for qualified borrowers.
10% Down — A Middle Ground
Putting down 10% significantly reduces your PMI cost and lowers your monthly payment without requiring you to save all the way to 20%. For many buyers, this is a smart balance between preserving cash and keeping costs manageable.
20% Down — No PMI
If you can put down 20%, you’ll avoid PMI entirely — which can save you a meaningful amount each month, especially on larger loan amounts. This is worth targeting if you have the savings and it doesn’t leave you cash-strapped after closing.
The more you put down, the lower your loan balance — and the lower your monthly payment. But the relationship between down payment and monthly cost isn’t always linear once you factor in PMI.
Here’s a simplified example on a $300,000 home:
The key question isn’t just “how much can I put down?” — it’s “what makes the most financial sense given my savings, my other financial goals, and how long I plan to stay in the home?”
Private mortgage insurance is the main cost associated with putting less than 20% down on a conventional loan. PMI typically runs between 0.5% and 1.5% of your loan amount annually, divided into monthly payments added to your mortgage bill.
On a $300,000 loan, that’s roughly $125 to $375 per month depending on your credit score and lender.
The important thing to know about PMI on a conventional loan: it’s not permanent. Once you reach 20% equity in your home — through your payments, home appreciation, or a combination of both — you can request to have PMI removed. Your lender is legally required to cancel it automatically once you reach 22% equity based on your original amortization schedule.
This is a key advantage over FHA loans, where mortgage insurance often stays for the life of the loan regardless of your equity position.
If saving for a down payment feels like the biggest barrier to buying, it’s worth knowing that down payment assistance programs exist specifically to help. Both North and South Carolina offer state-level programs that can provide grants or low-interest secondary loans to cover some or all of your down payment and closing costs.
Eligibility requirements vary by program and income level, but many first-time buyers are surprised to find out they qualify. A local loan officer can help you identify which programs are available for your specific situation and location.
There’s no single right answer — it depends on your financial picture, your goals, and how long you plan to stay in the home. Here are a few guiding questions:
The best way to figure out the right number for your situation is to run the actual numbers with a loan officer — not guess based on a rule of thumb that may not apply to you at all.
For a full breakdown of conventional loan requirements and benefits, visit our Conventional Loans page.
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