Conventional loans are privately funded mortgages that are not insured or guaranteed by the federal government. Because they are not backed by a government agency, lenders set their own down‑payment rules based on risk and borrower qualifications.

Standard minimums

In Washington, the baseline down‑payment thresholds for a conventional loan are:

  • 3% of the purchase price – often available to qualified first‑time homebuyers who meet stricter credit and reserve requirements.
  • 5% of the purchase price – the most common requirement for borrowers with a good credit history and stable income.
  • 20% or more – eliminates private mortgage insurance (PMI) and can result in a lower interest rate because the lender has a larger equity cushion.

Why lenders set these percentages

Lenders use the down payment as an early equity buffer. A larger down payment reduces the lender’s exposure if the borrower defaults, which is why lower‑down‑payment options often come with higher interest rates or the requirement for PMI. PMI protects the lender until the borrower reaches roughly 20% equity.

Washington‑specific considerations

  • Washington is a community‑property state, meaning assets and debts acquired during marriage are generally owned jointly. Both spouses may need to be listed on the loan application, and the down payment is treated as marital property.
  • The state typically uses title companies to handle closings, though attorneys may also be involved, especially in more complex transactions.
  • Washington has no state income tax, which can affect overall affordability but does not change the down‑payment percentages.
  • The Washington State Housing Finance Commission offers down‑payment assistance programs for eligible first‑time buyers, which can be combined with a conventional loan.

Factors that can raise the required down payment

  • Lower credit scores or limited credit history.
  • High debt‑to‑income ratios.
  • Purchase of an investment property or second home.
  • Insufficient cash reserves after the down payment.

This article provides general information about conventional loan down‑payment requirements in Washington and is not personalized financial advice. Consult a qualified mortgage professional for guidance specific to your situation.