Mortgage Insurance

• While several government-insured loan programs allow for down payments of 0 to 3.5 percent, most conventional mortgages require at least 5 percent down. Any loan with a down payment of less than 20 percent requires a mortgage insurance policy. This policy guarantees the lender against any losses should the loan go into default or foreclosure. The borrower pays for insurance as part of his monthly mortgage payment. Once the loan balance on the mortgage has reached 78 to 80 percent of the market value of the home, the borrower can request a cancellation of the policy.
  
  

Credit Score

• Credit score heavily determines the minimum amount a borrower needs to put down. Many mortgage insurers have a minimum credit score for those they will insure. According to the websites Bankrate and Interest, the majority of mortgage insurers will not give mortgage insurance to a borrower with a credit score of less than 700, though a few will take borrowers with scores over 660. Borrowers with scores below this will have to put 20 percent down, since they cannot qualify for mortgage insurance.
  
  

Variable Down Payments

• Even for those who can qualify for mortgage insurance, the minimum amount required for a down payment varies. Those with the lowest qualifying scores of 660 to 700 will likely have to put between 10 and 15 percent down. They will also have to pay a higher interest rate on the loan to reflect the additional risk to the lender. Borrowers with a 740 or better may be able to put only 5 to 10 percent down. This is in addition to the three to 12 months of reserve savings most conventional loan programs require.
  
  

Luxury Home Buyers

• Loans that exceed the conforming loan limit of $417,000 to $729,750, depending on geographic area, require at least 20 percent down. This is because the majority of mortgage insurers will not cover loans that exceed these limits, since they exceed the maximum loan limits set by Fannie Mae and Freddie Mac for sale in the secondary loan market. Some private lenders ask for as much as 25 percent.
  
  

Condominium Buyers

• Condominiums, especially those in highly distressed areas, are a higher risk loan category. Lenders will typically require more money down on these properties than for a single family detached home. Down payments for conventional loans on condominiums run as high as 50 percent, with 10 to 20 percent being the average.
  
  

Self-employed Borrowers

• Self-employed borrowers with less than a five-year record of consistent positive income are another high-risk group. Income must be documented and verified. Lenders require anywhere from 20 to 40 percent down on these loans. Self-employed borrowers with a documented long-term history of stable income can qualify under the same down payment terms as an employed borrower.