Which loans allow 3% down
A 3% down payment is possible on a few conventional loan programs. Each one is backed by Fannie Mae or Freddie Mac and has its own rules.
- Conventional 97: a standard conventional loan with 3% down, usually when at least one borrower is a first-time buyer.
- HomeReady (Fannie Mae): 3% down with income limits based on where the home is.
- HomePossible (Freddie Mac): 3% down with similar income limits.
Who usually qualifies
These programs are generally for a primary home you'll live in, not a second home or rental. Income limits on HomeReady and HomePossible depend on the area, so a buyer who qualifies in one county may not in another.
Some programs ask at least one borrower to take a homebuyer education course. Your loan consultant can check which programs fit your income, credit and location.
The trade-offs of a small down payment
Putting 3% down lets you buy sooner and keep more cash on hand for moving, repairs or savings. The cost is a larger loan, a higher monthly payment and PMI until you build more equity.
You'll also start with less equity. If prices dip, or you sell within a few years, a small down payment leaves less cushion.
How PMI works on a conventional loan
PMI protects the lender when you put down less than 20%. It's added to your monthly payment. On most conventional loans, you can ask to remove it once your balance reaches 80% of the home's original value. It usually ends on its own at 78% if your payments are current. Your loan documents explain the exact rules.
How 3% down compares with FHA
FHA loans start at 3.5% down and can be more flexible on credit. FHA has an upfront mortgage insurance premium and a monthly premium, and in many cases the monthly premium lasts longer than conventional PMI.
Buyers with stronger credit often find a conventional 3% loan costs less over time. Buyers with lower scores may do better with FHA. Comparing both quotes side by side is the simplest way to tell.
A sample payment on a $350,000 home
Hypothetical example. APR may differ; example only. Rates change daily.
- Down payment at 3%: $10,500
- Loan amount: $339,500
- Principal and interest at 6.875% on a 30-year fixed: about $2,230 a month
- Add PMI, property taxes, homeowners insurance and any HOA dues for the full payment
Example details: $339,500 30-year fixed at 6.875% (6.903% APR): 360 monthly payments of $2,230.27. Purchase price $350,000 with a $10,500 (3%) down payment. Mortgage insurance is typically required with less than 20% down and is not included here; it would raise the payment and the APR. Principal and interest only; taxes and insurance not included, so the actual payment will be higher. Unless noted, APR assumes ZERO Closing Costs, no discount points and 15 days of prepaid interest. Hypothetical example prepared November 4, 2026, not a current CapCenter rate offer; subject to credit approval.
Ways to cover the 3%
Your down payment can come from savings, and many programs also allow gift money from a family member with the right paperwork. Down payment assistance may cover part of it. CapCenter partners with Virginia Housing on grants for qualified first-time buyers in Virginia, which pair with a conventional or FHA loan. Income and sales price limits apply.
