Conventional Loan
Conventional Loan Down Payment Requirements in Vermont
Reviewed by the HomeMath editorial team Updated 2026-08-06
Key takeaways
- Minimum down payment for a primary‑ residence conventional loan: 3% of the purchase price.
- Minimum down payment for a second home or investment property conventional loan: 5% of the purchase price.
- Putting 20% down typically eliminates private mortgage insurance (PMI).
Conventional loans are not backed by the federal government, so lenders set their own qualification standards. The most common down‑payment thresholds are 3% for qualified primary‑residence borrowers and 5% for second homes or investment properties.
Why the down‑payment level matters
- A larger down payment reduces the loan‑to‑value (LTV) ratio, which can lower your interest rate.
- When the LTV is 80% or less (i.e., you put down at least 20%), private mortgage insurance (PMI) is usually not required, saving you monthly premiums.
- Higher equity at closing can make the loan easier to approve, especially if you have limited credit history or higher debt‑to‑income ratios.
Vermont‑specific considerations
- Many Vermont transactions close with a real‑estate attorney rather than a title‑company, which can affect closing‑cost timing but not the down‑payment percentage itself.
- The Vermont Housing Finance Agency (VHFA) offers down‑payment assistance programs that can supplement a 3% contribution for first‑time homebuyers, effectively lowering the cash you need to bring to the table.
Typical down‑payment scenarios
- 3% down: Often requires private mortgage insurance and a higher credit score. May be combined with VHFA assistance for eligible buyers.
- 5% down: Common for second homes or investors; still usually requires PMI.
- 10%–20% down: Reduces PMI costs and may qualify you for better loan terms.
Remember that lenders may ask for a larger down payment if the property is in a rural area with limited comparable sales, which can happen in parts of Vermont.
This article provides general information and is not personalized financial or lending advice.
FAQ
Can I get a conventional loan with less than 3% down in Vermont?
Conventional lenders typically require at least a 3% down payment for primary residences. Anything lower usually falls into the category of government‑backed loans (FHA, USDA) or specialized programs, not standard conventional financing.
What is private mortgage insurance (PMI) and how does my down payment affect it?
PMI protects the lender if you default when your loan‑to‑value ratio is above 80%. If you put down 20% or more, the LTV is 80% or less, so PMI is generally not required. With lower down payments, PMI is added to your monthly payment until you reach the required equity threshold.
Are there Vermont‑specific programs that can help with my down payment?
Yes. The Vermont Housing Finance Agency (VHFA) runs several down‑payment assistance initiatives for first‑time homebuyers, including grants and low‑interest loans that can be combined with a conventional loan that has a 3% down payment requirement.
Does using an attorney at closing in Vermont change the down‑payment requirements?
The presence of a real‑estate attorney affects the closing process and document review, but it does not alter the lender’s down‑payment percentage rules. The required down payment is set by the loan program, not by the closing method.
Estimate your monthly payment →