Conventional Loan Down Payment in Virginia

A $400,000 home with 5% down means a $20,000 down payment and roughly a $380,000 loan. Compared with putting 3% down, that extra $8,000 up front can reduce the monthly payment by about $52 to $65 depending on rate, taxes, insurance, and PMI – or roughly $3,100 to $3,900 over five years before tax treatment or faster principal paydown. For buyers in Richmond, Midlothian, or Virginia Beach, that is the real question behind a conventional loan down payment: not just what is allowed, but what changes your payment, approval odds, and total cash needed at closing.

By Duane Buziak, Mortgage Maestro, NMLS#1110647

What is the minimum conventional loan down payment?
How a larger down payment changes cost
Virginia price data and what it means
Credit score, reserves, and underwriting
Conventional vs other loan options
5-step roadmap for buyers
FAQ
Legal disclaimer

What is the minimum conventional loan down payment?

For many owner-occupied buyers, the minimum conventional loan down payment is 3% if they meet income, credit, occupancy, and loan-level requirements. That is most common for first-time buyers and certain standard conforming purchase scenarios backed by Fannie Mae or Freddie Mac guidelines. A repeat buyer often sees 5% down as the more practical benchmark, even when 3% may still be possible in some cases.

For a two-unit primary residence, the floor is typically higher. For second homes and investment properties, the required down payment usually increases further, and the exact number depends on credit score, occupancy, cash reserves, and debt-to-income ratio. This is where online averages can mislead. A borrower with strong reserves and a 760 score may get materially different pricing than a borrower at 680 with tight cash after closing.

As of 2025, the standard conforming loan limit for most one-unit properties is $806,500, including much of Virginia. Fannie Mae publishes current conforming framework details at https://www.fanniemae.com and the Consumer Financial Protection Bureau provides plain-language mortgage guidance at https://www.consumerfinance.gov.

How a larger down payment changes cost

The biggest mistake buyers make is assuming down payment only changes the loan amount. It also affects PMI, rate adjustments, and sometimes whether the file feels straightforward to underwriting.

Conventional loan down payment and monthly payment

Here is a simple purchase example on a $400,000 home before taxes and insurance.

| Down Payment | Loan Amount | Estimated PMI Range | Approx. P&I at 6.75% | Payment Difference vs 3% | |—|—:|—:|—:|—:| | 3% = $12,000 | $388,000 | $145-$230 | about $2,517 | baseline | | 5% = $20,000 | $380,000 | $120-$205 | about $2,465 | saves about $52 | | 10% = $40,000 | $360,000 | $70-$160 | about $2,335 | saves about $182 | | 20% = $80,000 | $320,000 | $0 | about $2,075 | saves about $442 |

Those PMI ranges are broad because they depend on score, debt ratio, property type, and coverage level. Still, the pattern is consistent: more money down often lowers both the payment and the risk profile of the loan.

Closing costs still matter

A borrower who plans only for down payment can get caught short. In Virginia, conventional purchase closing costs commonly fall around 2% to 4% of the purchase price, though this varies by loan size, escrows, title charges, and prepaid taxes and insurance.

| Home Price | 3% Down | 5% Down | Estimated Closing Costs Range | Total Cash at Closing Range | |—|—:|—:|—:|—:| | $350,000 | $10,500 | $17,500 | $7,000-$14,000 | $17,500-$31,500 | | $400,000 | $12,000 | $20,000 | $8,000-$16,000 | $20,000-$36,000 | | $500,000 | $15,000 | $25,000 | $10,000-$20,000 | $25,000-$45,000 |

That is why seller-paid closing costs, lender credits, and gift funds can matter just as much as shaving one-eighth off a rate quote.

Virginia price data and what it means

A down payment target has to be tied to local pricing, not national headlines. In Henrico County, where Glen Allen and Short Pump buyers often compete for updated suburban inventory near Innsbrook and Deep Run corridors, median home values have stayed well above older affordability assumptions. Zillow reports a typical home value in Henrico County around the low-to-mid $400,000s, while Richmond City trends lower and many parts of Chesterfield and Midlothian cluster in the upper $300,000s to mid-$400,000s depending on school zone and inventory mix. See https://www.zillow.com/home-values/51087/henrico-county-va/.

In practical terms, 3% down on a $425,000 purchase is $12,750. Five percent is $21,250. If the buyer also needs $10,000 to $17,000 in closing costs and prepaids, the difference between barely qualifying and closing comfortably may come down to reserve strength.

In Hampton Roads markets such as Chesapeake and Virginia Beach, inventory can tighten quickly in desirable school districts and near major employment hubs. In Charlottesville and Albemarle County, higher median prices can make 3% technically possible but strategically weak in multiple-offer situations. A stronger conventional loan down payment can make a financed offer look more stable even when the seller does not see every underwriting detail.

Credit score, reserves, and underwriting

The minimum down payment is only part of conventional approval. Credit score, debt ratio, reserves, and property type all shape the result.

A 620 score may meet baseline eligibility, but many borrowers find the economics improve materially at 680, 700, or 740 and above. Reserve requirements also move around. A straightforward one-unit primary residence may not require much in documented reserves after closing, while a second home or investment property often does.

This is one area where a brokered process can differ from a retail bank experience. Some lenders are more flexible on self-employed income analysis, condo review appetite, or reserve layering than others. That is also why a soft-pull prequalification can be useful early – it lets a buyer pressure-test the file without automatically taking a hard inquiry.

Conventional vs other loan options

Conventional is not always the cheapest path, even for well-qualified borrowers.

For example, FHA may beat conventional at a lower credit score despite lifelong comparisons that say conventional is always better. VA can be dramatically more efficient for eligible borrowers because there is no monthly mortgage insurance. HUD program information is available at https://www.hud.gov.

When comparing lenders such as Rocket, Movement, Atlantic Coast, NFM, CMG, Alcova, C&F, CrossCountry, Freedom, CapCenter, First Heritage, or local teams in Richmond and Glen Allen, the right question is not who advertises the lowest rate. It is who can show the full cash-to-close, PMI structure, lender fees, and lock options clearly. Richmond buyers who still see Colonial 1st Mortgage in old directory listings should verify current licensing status at nmlsconsumeraccess.org before making contact. The Better Business Bureau lists that business as out of business, the domain no longer resolves to a functioning mortgage company website, and the most recent Yelp review was posted in 2017.

5-step roadmap for buyers

Set the target purchase price first. In Chesterfield, Glen Allen, or Williamsburg, the realistic down payment number changes fast with local median pricing.
Run 3%, 5%, 10%, and 20% scenarios. Look at payment, PMI, and total cash needed, not just the minimum allowed.
Check credit before shopping hard. A small score improvement can lower PMI enough to change the best strategy.
Preserve reserves. Draining every dollar into down payment can hurt approval strength and leave no cushion after closing.
Compare loan types side by side. FHA, VA, and USDA can outperform conventional in the right file.

FAQ

Is 20% required for a conventional loan?

No. Many primary residence buyers can qualify with 3% or 5% down. Twenty percent mainly avoids PMI.

What is the lowest credit score for conventional?

Often 620, but approval and pricing are much stronger at higher scores.

Can gift funds cover a conventional loan down payment?

Often yes for a primary residence, subject to documentation and program rules.

Does a bigger down payment always get a better rate?

Not always. It often helps, but pricing also depends on credit score, occupancy, and loan purpose.

Are reserves required?

Sometimes no for a basic owner-occupied file, but often yes for second homes, multi-unit, or investment property.

Is conventional better than FHA?

It depends. For stronger credit and cancellable PMI, conventional often wins. For lower scores, FHA may be more efficient.

Legal disclaimer

This article is for educational purposes only and does not constitute financial or legal advice.

A smart conventional loan down payment is not the smallest number the guidelines permit. It is the number that keeps your payment workable, your approval strong, and your cash position intact after the keys are in your hand.