Need a Spanish interpreter? Text us to arrange a phone call. Interpreter assistance is available by appointment only.
Start with how you will use the home
A conventional mortgage may be used for an eligible primary home, second home or investment property, depending on the program. Occupancy affects the down payment, documentation and terms. Tell me how you intend to use the property rather than choosing the category with the smallest down payment.
Loan size also matters. Conforming loan limits vary by location and unit count and are updated over time. A larger financing request may need a jumbo or portfolio option. A property with multiple units has different requirements from a one-unit primary home.
Three percent down has more than one eligibility path
One standard low-down-payment route requires at least one first-time buyer and has no program income cap. Separate affordable conventional routes can serve qualifying repeat buyers but generally limit qualifying income to 80% of area median income. Homebuyer education may be required.
The 3%-down examples on this page apply to eligible one-unit primary residences and conforming fixed-rate financing. They should not be read as a 3%-down offer for an investment property, multi-unit building or every manufactured home. The options in the table begin at 620 and require automated underwriting approval.
What the lender reviews beyond the credit score
Conventional underwriting looks at the stability and documentation of income, monthly obligations, assets, credit history and the property. Mortgage-insurance eligibility can add requirements of its own. A score that meets a program floor does not make every down-payment level available.
If you receive variable pay, own a business, have student loans or will use a non-occupant co-borrower, raise those details early. They can change the qualifying calculation or available route. We can review the documentation before you rely on a particular price range.
Understand private mortgage insurance
Private mortgage insurance, or PMI, is generally required when the down payment is less than 20%. Its cost depends on the actual loan and borrower profile. Some conventional options have different insurance coverage requirements, so two loans with the same down payment can still have different costs.
Ask how PMI is paid and what cancellation rules apply. Compare the total payment and expected costs over the period you expect to own the home. A larger down payment may reduce borrowing costs but also use savings you would otherwise keep for repairs or other priorities.
Purchase and refinance choices
For a purchase, the comparison starts with price, down payment, cash to close and the savings left afterward. For a refinance, explain whether you want to change the payment, adjust the payoff timeline or access equity. Cash-out refinancing follows different limits and conditions from a refinance with little or no cash back.
A fixed-rate loan keeps its interest rate for the loan term. An adjustable-rate option, when available and appropriate, has future rate and payment changes to evaluate. Do not assume an option available for one property or transaction is available for another.
Compare conventional with the alternatives
FHA may be useful when its complete costs and qualification rules better fit your circumstances. Eligible military borrowers should also evaluate VA financing, and buyers considering an eligible location can ask about USDA. Down payment assistance is another separate review rather than a feature of every conventional mortgage.
I can help compare eligible choices using the same purchase assumptions. Ask what you will pay upfront, what you will pay each month and which costs or conditions could change. The smallest advertised down payment is only one part of a workable financing plan.
When standard conventional guidelines do not fit
A recent credit event or an income detail can make a standard conventional loan difficult even when you can document your finances. Some separate specialty mortgages use full income documentation with program-specific credit-history requirements. These are separate from the conforming options described above and still require a complete review.
Tell me about a past bankruptcy, foreclosure or other major credit event and the payment history since then. We can identify whether a separately available full-documentation option deserves review and compare its costs with waiting or improving the standard conventional application. A past event does not create automatic approval, and waiting-period rules belong to the actual program.
For example, a separate full-documentation specialty option may consider an eligible credit event at least 24 months earlier with a 660 score, up to $1 million at 75% financing, a maximum 45% total debt-to-income ratio and three months of base reserves. It excludes interest-only, asset and written-employment-only qualification. Other options have 36- or 48-month event requirements with different financing and reserve limits.
The two-year example is for an eligible primary purchase or rate-and-term refinance. Multiple bankruptcies are ineligible; property, current payment history and borrower overlays apply. A non-occupant co-borrower needs a separate 43% ratio limit, documented occupant income and additional reserves. These specialty requirements do not change the conventional-program rules above.
Options and eligibility to compare
Compare the option that fits your credit, loan amount, property and documentation. Each has its own requirements, and the full application must qualify.
First-time-buyer low down payment
Credit and underwriting: 620 or higher; automated underwriting approval; no manual path in this option.
Financing and amount: Up to 97% financing on an eligible conforming fixed-rate purchase; minimum loan $50,000.
Income and property: One-unit primary home; at least one first-time buyer; no program income cap.
Benefits and conditions: Potential 3% down. Mortgage insurance generally applies; education rules apply. Non-occupant co-borrowers are not permitted above 95% in this option. High-balance loans are excluded from the 97% tier.
Income-limited low down payment
Credit and underwriting: 620 or higher; automated approval.
Financing and amount: Up to 97% financing on eligible one-unit conforming fixed-rate loans; minimum loan $50,000.
Income and property: Primary residence; qualifying income no more than 80% of area median income. First-time-buyer status is not required.
Benefits and conditions: Potential 3% down with reduced mortgage-insurance coverage requirements. Education applies when all occupying borrowers are first-time buyers. No non-occupant co-borrowers above 95% in this option.
Owner-occupied multi-unit purchase
Credit and underwriting: 620 for two units; 700 for three to four units when financing exceeds 75%; automated approval.
Financing and amount: Up to 95% financing for eligible conforming two- to four-unit purchases; applicable unit-count limits and $50,000 minimum.
Income and property: Borrower occupies the property; standard income documentation. Manufactured homes excluded from this tier.
Benefits and conditions: A separate multi-unit option. The one-unit 3%-down terms do not apply. High-balance variants have lower financing limits.
Compare the alternatives
Compare mortgage insurance, credit requirements and the complete cost of the same home purchase.
For a loan above the applicable conforming limit, review a separately qualified jumbo option.
What to gather for a useful conversation
Income and employment records
Asset statements and gift plans
Current housing and debt information
Intended occupancy and property type
For a refinance, the current mortgage statement
Frequently asked questions
Do I need to be a first-time buyer for 3% down?
It depends on the option. A standard 97% financing route has a first-time-buyer condition. Separate income-limited routes may allow repeat buyers.
Is there one minimum score for all conventional loans?
No. Program, underwriting, mortgage-insurance and lender requirements differ. The specific low-down-payment options shown here start at 620 with automated approval.
Can I buy a duplex with 3% down?
The one-unit 3%-down examples do not apply to a duplex. Eligible owner-occupied multi-unit options have their own financing and credit requirements.
Can gift funds help?
Permitted gifts may help with eligible funds to close, subject to donor, property, occupancy and documentation rules. Discuss the gift before money moves.
Related mortgage learning
Who Can Give You Gift Funds for a Home Purchase?
How Lenders Document Variable Income
Second home or investment property? Start with how you will use it
Related articles
FHA vs. Conventional: Which Loan Fits the Borrower Better?
Authoritative resources
Fannie Mae low-down-payment options
CFPB explanation of private mortgage insurance
Talk through your Ohio mortgage options
Call or text Gordon Hinchen at (440) 975-6216. Start with your plans and general questions. Use our secure application process for financial documents.
Educational information only. Not a commitment to lend or a guarantee of approval. Eligibility, availability and terms depend on the complete application, property and underwriting review. DRG Mortgage, LLC | NMLS #2657603 | Gordon Hinchen | NMLS #2751302 | Ohio residential mortgage brokerage services only | Equal Housing Opportunity.