What is the typical requirement for a conventional loan down payment?

The typical requirement for a conventional loan down payment is often around 20%. This amount is significant because it allows borrowers to avoid private mortgage insurance (PMI), which is an additional cost that protects lenders in case the borrower defaults on the loan. A 20% down payment signifies to lenders that the borrower has a strong financial position and a willingness to invest a substantial amount into the property, reducing their risk.

While there are options for lower down payments on conventional loans—such as 5% or 10%—these typically come with the caveat of requiring PMI, making the overall cost of borrowing higher. Additionally, a down payment of 30% is less common as it represents an even larger financial commitment that most buyers may not be prepared to make. Thus, the standard and more conventional down payment expectation aligns closely with the 20% figure.