- Personal Finance
- Mortgages
Some offers on this page are from advertisers who pay us, which may affect which products we write about, but not our recommendations. See our Advertiser Disclosure.
You may have heard that you need a 20% down payment to buy a home, but that isn’t the case. In reality, many types of mortgage loans allow for a lot less. One of the most common low-down-payment options is the 3%-down conventional loan, which allows you to put down just 3% of the purchase price when taking out a mortgage.
-
MORE: See our top picks for mortgage lenders accepting low or no down payments.
Where can you get a 3% down payment home loan?
The 3%-down mortgage is a type of conventional loan called a conforming loan. These are offered by private mortgage lenders, but their rules are set by Fannie Mae and Freddie Mac — the government-sponsored enterprises (GSEs) that keep money flowing into the mortgage market by purchasing loans and selling them later on to investors.
Conventional loans are offered by most mortgage lenders and are the most common type of mortgage in the U.S. According to Home Mortgage Disclosure Data, they accounted for roughly 9.2 million of the 12.2 million mortgage loans issued in 2024.
Qualifying for a 3%-down-payment mortgage
To qualify for a 3%-down conventional mortgage, you’ll first need to have the 3% saved up and ready to go in your bank account. Beyond this, there are some other requirements you’ll need to meet.
These can vary by mortgage lender, but at the bare minimum, you must meet the following requirements:
-
Have a credit score of at least 620
-
Be buying a primary residence
-
Have a debt-to-income ratio of 45% or less
-
Take a homeownership education course
For some types of 3%-down loans, you may also need to fall under a certain income limit. Others may require you to be a first-time home buyer.
Mortgage insurance requirements
When you make a 3% down payment on a conventional loan — or, typically, any amount under 20% — you’ll have to pay for private mortgage insurance (PMI).
PMI protects your lender in case you default on your loan and serves as a way of compensating for the extra risk that a low-down-payment loan entails. It’s usually included as part of your monthly mortgage payments, though some lenders require you to pay up front at closing (or a combination of the two). Generally speaking, you can expect PMI to add about $30 to $70 to your monthly payment for every $100,000 you borrow.
Fortunately, you can request that your mortgage lender cancel your PMI once you reach 20% equity in your home, or when your loan balance is 80% or less of your home’s value. Your lender must automatically cancel your PMI policy once the balance falls under 78% of your home's value.
Up Next
Pros and cons of 3%-down-payment mortgage loans
The big benefit of using a 3%-down mortgage is that you need a lot less cash up front to buy a house. That means less time spent saving, potentially allowing you to purchase a home sooner than expected.
You may also free up cash to put toward other expenses, such as purchasing new furniture or decor, or renovating specific areas of your new house. You could even put the money toward achieving another milestone, such as saving for a wedding or having a baby, alongside buying a house.
On the downside, though, you’ll have to pay for PMI, which adds to your monthly mortgage payment. A small down payment also means you’ll build equity more slowly, as the bulk of your payments will go toward your interest costs for the first few years of the loan. This could increase the chance of going upside down on your mortgage if your home's value falls.
Last but not least, a smaller down payment means a larger loan balance, which increases your total interest costs over the long haul.
-
This map shows how long it takes Americans to save for a 20% vs. 5% down payment.
Alternatives to the 3%-down-payment mortgage
The 3% conventional loan isn’t your only option if you want to avoid making a large down payment. Here are some other common mortgage types to explore:
-
FHA loans: These are mortgages insured by the Federal Housing Administration. If you have a credit score of at least 580, the FHA only requires a 3.5% down payment. (With a credit score of 500 to 579, you’ll need 10% down.) You’ll have to pay a mortgage insurance premium, which lasts for the life of your loan in most cases.
-
VA loans: These are loans backed by the U.S. Department of Veterans Affairs and are available to eligible military members, veterans, and their spouses. They require zero down payment or mortgage insurance.
-
USDA loans: These are another type of no-down-payment loan. They’re guaranteed by the U.S. Department of Agriculture and can only be used for home purchases in designated rural parts of the country. You must also meet certain income requirements.
Down payment assistance programs can also help you buy a house with less up-front cash. These are sometimes offered as grants that do not need to be repaid, low-interest loans, or loans that are eventually forgiven if you meet specific requirements.
3%-down-payment mortgage FAQs
Can you put 3% down on a mortgage?
Yes, you can get a mortgage with just a 3% down payment, although you will need to pay for private mortgage insurance as a result. You will also need to meet certain credit score, debt-to-income ratio, and, in some cases, homeowner education requirements.
How much is a 3% down payment on a $300,000 house?
A 3% down payment on a $300,000 house would be $9,000. For a 3%-down mortgage, you’ll need to use a conventional loan, a type of mortgage offered by private mortgage lenders.
How do I get a 3% mortgage?
You’ll first need to find a lender that offers conforming, conventional loans. You will then need to meet the lender’s credit score, debt-to-income ratio, and other requirements for the loan and pay for mortgage insurance. This is added to your monthly payments until you reach at least 20% equity in the home.
Laura Grace Tarpley edited this article.
Read More
How a 40-year mortgage loan works
A 40-year mortgage has low monthly payments, but you’ll pay more interest and accumulate home equity slowly. Learn whether a 40-year mortgage loan is a good fit.
Best low- and no-down-payment mortgage lenders of 2025
The best mortgage lenders for low and no down payments have programs for low-income borrowers, down payment assistance, and more. Find out which is best for you.
What is a mortgage note, and why do you need one?
A mortgage note is a legal document explaining your home loan's details, and you’ll sign it on closing day. Learn why mortgage notes are important for borrowers.
How and when do you pay back a reverse mortgage?
Paying back a reverse mortgage is necessary upon death or selling the home, and there are ways to repay the funds early. Learn more about your options.
Small mortgage loans: How they work and where to find them
The minimum mortgage amount is typically $150,000 for most lenders, although some may allow you to borrow less. Learn how and where to get small mortgage loans.
What is a blanket mortgage, and who should get one?
A blanket mortgage covers multiple properties under one loan, which is ideal for real estate investors. Here’s what you need to know about this complex loan product.
