The minimum down payment for conventional mortgage loans is now 3%. posted by: What's My Payment? Related CalculatorsConventional Mortgage Payment CalculatorPreviously, if a home buyer was looking for a minimal down payment, an 3.5% down payment FHA loan was most likely the best option - unless he/she meets income limits and is buying in an eligible USDA area or he/she is a qualified veteran or active duty military.USDA Mortgage Payment CalculatorVA Mortgage Payment CalculatorFannie Mae and Freddie Mac - the two agencies responsible for establishing conventional loan guidelines - have introduced conventional mortgage loans with a 3% down payment. The new 3% down payment loan provides a potentially less expensive alternative to an FHA loan. As with any conventional mortgage loan with less than a 20% down payment, private mortgage insurance (PMI) is required. The additional risk associated with the smaller down payment requires a higher PMI premium than conventional mortgage loans with 5% or larger down payments.To remain competitive, effective January 26, 2015, FHA has reduced their annual mortgage insurance premium (MIP), which is paid monthly as part of your FHA payment, to 0.85% for most 30 year fixed, 3.5% down payment loans.FHA Mortgage Payment CalculatorThis new 3% down payment conventional loan has made borrowing less expensive for all homebuyers in the market for a low down payment mortgage loan. Next: What is Lender Paid Mortgage Insurance?