You find a home in Seattle or Bellevue that checks the boxes, then the number that hits you is not the rate – it’s the down payment. In a market where prices can move fast, saving 20% can feel like a multi-year project. The good news is that a conventional loan does not automatically mean 20% down. Conventional loans with low down payment options are real, common, and often the cleanest way to buy if your credit and income profile are solid.

This is where buyers tend to get tripped up: low down payment does not mean “cheap” financing, and it also does not mean “bad” financing. It’s a trade-off between cash-on-hand, monthly payment, and mortgage insurance costs – plus what a seller will accept when multiple offers are on the table.

What “low down payment” means for conventional financing

With a conventional loan, “low down payment” typically means anywhere from 3% to 10% down, depending on the program and your situation. In practice, the most common setups are 3% down for certain first-time buyer programs, 5% down for many repeat buyers, and 10% down when borrowers want a little more cushion (often to reduce mortgage insurance or improve approval strength).

Conventional loans are backed by private lenders and generally follow Fannie Mae and Freddie Mac guidelines. That matters because it creates consistency: the rules for down payment, credit, debt-to-income ratio, and mortgage insurance are more standardized than many people expect.

Low down payment can be a strategic move when you would rather keep cash available for reserves, renovations, or simply because your savings is better used elsewhere. For tech professionals, it can also be about timing – you might have strong income and assets, but your liquidity moves around due to vesting schedules, stock sales timing, or bonus cycles.

Conventional 3% down: who it’s for and what it requires

The headline option many buyers care about is 3% down. This is usually designed for first-time home buyers, which is defined in lending as someone who has not owned a home in the past three years. That means you can be “first-time” again even if you owned years ago.

Most 3% down conventional programs require owner-occupancy, meaning you plan to live in the home. They also come with income limits in many cases, which can surprise Seattle-area buyers. If your household income is above the cap for the property’s location, the program may not be available even if everything else looks perfect.

Credit matters more at 3% down. You can sometimes qualify with less-than-perfect credit, but the pricing and mortgage insurance can get expensive quickly. In competitive neighborhoods, it’s also important that your overall file is clean – steady employment, documentable assets, and minimal outstanding debts. The low down payment itself is not the problem. The risk layering is what underwriters and sellers worry about.

Conventional 5% down and 10% down: often the sweet spot

If 3% down is not available because of income limits or other rules, 5% down is frequently the next best conventional option. It’s still low down payment, but it can be meaningfully easier to approve and sometimes results in better mortgage insurance pricing.

At 10% down, you are still not at 20%, but you may notice a bigger improvement in monthly costs. Not always, but often. The exact math depends on credit score, property type, and how mortgage insurance is priced on that loan.

In the Seattle and Bellevue market, a practical advantage of 5% to 10% down is psychological – it can strengthen how your offer feels to a seller even when financing is still “conventional.” Sellers and listing agents tend to view conventional financing as straightforward, and a little more down payment can reduce the perceived risk of a deal falling apart.

Mortgage insurance (PMI) is the main trade-off

With conventional loans, if you put less than 20% down, you usually pay private mortgage insurance (PMI). PMI is not automatically “good” or “bad.” It’s a tool that lets you buy sooner with less cash.

Here’s the nuance that matters: PMI pricing is highly credit-sensitive. Two buyers can put the same amount down, buy similarly priced homes, and end up with very different PMI payments because their credit profiles differ.

PMI is also not forever. Unlike FHA mortgage insurance, conventional PMI can typically be removed once you reach enough equity. That can happen through paying the loan down, appreciation, or a combination. In a market that has historically seen strong appreciation, PMI removal is a real planning point, but it should never be assumed. Values can flatten or dip, and you do not want your budget to depend on “PMI will disappear quickly.”

If you’re weighing whether to wait to buy until you have 20% down, compare two scenarios: the cost of PMI versus the cost of waiting. Waiting can mean higher prices, a different rate environment, or missing out on a home that fits your life. Sometimes waiting is the right move. Sometimes PMI is the bridge that makes the timing work.

What lenders look at: credit, DTI, and reserves

Low down payment conventional loans tend to be straightforward when three pillars are strong: credit score, debt-to-income ratio (DTI), and reserves.

Credit score affects not only your rate, but also your PMI. DTI is the ratio between your monthly debt obligations and your gross monthly income. In higher-cost areas like King County, DTI becomes a common constraint because the housing payment is large, even for high earners.

Reserves are what you have left after closing – funds in checking, savings, brokerage accounts, retirement accounts (sometimes with limitations), and other verified assets. Reserves matter more than many buyers expect, especially for higher loan amounts, certain property types, or self-employed borrowers. Even when reserves are not strictly required, they can make an approval feel stronger and reduce stress when underwriting asks for “just one more” document.

How RSUs and stock compensation play into low down payment deals

For many Seattle-area tech professionals, the question is not whether you earn enough. It’s whether your income can be documented in a way that fits conventional guidelines.

Base salary is usually simple. Bonuses, RSUs, and stock compensation can be usable too, but the lender typically needs a documented history and a reasonable expectation it will continue. The details vary by employer and by how your compensation is structured. If you are counting on stock income to qualify, you want that conversation early – not after you’re already in contract.

There’s also a cash planning angle. Some buyers prefer a low down payment because they want to avoid selling stock at the wrong time or triggering larger tax consequences than necessary. That can be a rational strategy, as long as the monthly payment remains comfortable and you keep healthy reserves.

Low down payment and winning in a competitive Seattle-area market

In a multiple-offer situation, sellers tend to prioritize certainty and speed. A low down payment does not automatically hurt you, but it can if the rest of the offer looks fragile.

If you’re using conventional financing with a low down payment, the strength of your pre-approval matters. A fully reviewed, well-documented pre-approval is different from a quick pre-qualification. When your lender has already reviewed income, assets, and credit in detail, you reduce surprises and can often move faster once you’re under contract.

Appraisal risk is another piece. With low down payment loans, you have less flexibility if the appraisal comes in low, because you may not have extra cash to cover a gap while still meeting minimum down payment requirements. That does not mean you should avoid low down payment financing. It means you should understand the neighborhood comps, your offer strategy, and your cash position before you waive contingencies or stretch beyond what the data supports.

A realistic example of when low down payment helps

A scenario I see often: a buyer has strong income, strong credit, and enough cash for 20% down, but using 20% would wipe out their reserves and leave them tight for repairs, furnishings, or the first year of ownership.

In that case, choosing 10% down can be the more conservative move even though it sounds “riskier” on paper. You may pay PMI for a period, but you keep liquidity. That liquidity can matter more than saving a few dollars a month if the home needs work or if you want to maintain flexibility in a volatile job market.

On the flip side, if your credit score is borderline and your budget is already stretched, low down payment plus high PMI can push the monthly payment into uncomfortable territory. That is where waiting, paying down debt, or building a larger down payment can be the smarter call.

Common mistakes to avoid with conventional low down payment loans

One mistake is assuming all low down payment options are the same. Program rules, income limits, PMI pricing, and allowable property types vary. Another is focusing only on the down payment and ignoring closing costs. In Washington, closing costs can be significant, and you need a plan for them whether your down payment is 3% or 20%.

Also watch for “payment shock” when you compare rent to ownership. Your monthly housing cost is not just principal and interest. It includes property taxes, homeowners insurance, and potentially HOA dues. The right low down payment strategy is the one that keeps your total monthly cost stable and sustainable.

If you want a clean, numbers-first way to evaluate conventional loans with low down payment in Seattle, Bellevue, or anywhere in King County, that’s the kind of planning we do at The Mortgage Reel – mapping out the cash-to-close, the monthly payment, and the timeline to remove PMI so you can make a decision you feel good about.

When a low down payment conventional loan is a strong choice

A low down payment conventional loan tends to shine when you have good credit, stable income, and you value keeping cash reserves. It can also be a strong fit if you expect your income to rise, you plan to refinance or recast later, or you simply want to buy before prices move again.

It’s less compelling when PMI is high due to credit, when you have minimal reserves, or when you’re buying a property that has added complexity (certain condos, multifamily properties, or homes with condition issues). In those cases, a different down payment level or even a different loan type may be more efficient.

The goal is not to chase the smallest possible down payment. The goal is to choose a structure that keeps you competitive, keeps underwriting smooth, and keeps your finances flexible after closing.

Closing thought: if you’re deciding between waiting for 20% and buying with less, run the numbers on both timelines – not just the payment. The best decision is the one that still feels comfortable six months after you get the keys.

Estimated reading time: 9 minutes