What Realtors Actually Need to Know
Conventional financing is one of the most common mortgage options and can work for primary residences, second homes, and investment properties.
 
🏠 HOW MUCH DOES THE BUYER NEED DOWN?

Primary Residence
• As little as 3% down for eligible first-time homebuyers
• 5% down is a common conventional option
• 20% down is NOT required

Second Home
• As little as 10% down in some situations

Investment Property
• Typically 15%–25%+ down, depending on the property and loan structure
 
💡 REALTOR TAKEAWAY → Don't assume a conventional buyer needs 20% down. A qualified buyer may be able to purchase a primary residence with just 3%–5% down.
 
💰 WHAT ABOUT MORTGAGE INSURANCE?
Putting less than 20% down will generally mean the buyer has private mortgage insurance (PMI).
Unlike FHA mortgage insurance, conventional PMI doesn't necessarily stay for the life of the loan and may eventually be removed once applicable requirements are met.

The actual cost can vary significantly based on the buyer's:
• Credit profile
• Down payment
• Loan amount
• Overall loan structure

💡 REALTOR TAKEAWAY → Don't automatically steer a buyer toward 20% down just to avoid PMI. Sometimes keeping cash available for renovations, reserves, or other goals can make more sense.

📊 DOES MY BUYER NEED PERFECT CREDIT? No.
 
Conventional financing can work for buyers across a range of credit profiles. However, credit can have a meaningful impact on the interest rate, mortgage insurance, and overall cost of the loan.
For buyers with lower credit scores, it can be worth comparing Conventional vs. FHA rather than assuming one program is automatically better.
 
💡 REALTOR TAKEAWAY → A credit score alone doesn't tell you which loan program is best. Let the lender compare the actual payment and cash-to-close options.
 
💳 WHAT ABOUT DEBT-TO-INCOME?
Car payments, student loans, credit cards, and other monthly obligations can affect how much house a buyer qualifies for. But qualification isn't based on one universal DTI number. Automated underwriting evaluates the buyer's overall financial profile.
 
⚠️ WATCH OUT → A new car payment, new credit card balance, or other debt taken on before closing can change the buyer's qualification.
 
💡 REALTOR TAKEAWAY → Encourage buyers to talk to their lender before opening new credit or taking on additional debt during the transaction.
 
👔 SELF-EMPLOYED BUYERS
A business owner earning $250,000 in gross revenue does not necessarily have $250,000 of qualifying income.
Mortgage qualifying income is generally determined using the borrower's tax returns and applicable underwriting guidelines.
 
💡 REALTOR TAKEAWAY → Get self-employed buyers connected with the lender early—ideally before you establish a price range or start seriously shopping.
 
🎁 CAN THE BUYER USE GIFT FUNDS? Yes.
Eligible gift funds can often be used toward the buyer's down payment and/or closing costs.
Gift documentation requirements apply, so the buyer should coordinate with the lender before moving the money.
 
💡 REALTOR TAKEAWAY → If gift funds are part of the plan, tell the lender upfront. Don't have the buyer or donor start transferring money without instructions.
 
🤝 HOW MUCH CAN THE SELLER CONTRIBUTE?

Primary Residence & Second Home

• Less than 10% Down → 3% Maximum

• 10%–24.99% Down → 6% Maximum

• 25% or More Down → 9% Maximum

Investment Property
All Down Payment Amounts → 2% Maximum

Seller contributions can generally help cover eligible:
• Closing costs
• Prepaid expenses
• Discount points
• Temporary rate buydowns
• Permanent rate buydowns

⚠️ IMPORTANT → Seller contributions cannot simply become extra cash back to the buyer or be used as additional down payment.

💡 REALTOR TAKEAWAY → Before writing a large seller credit into an offer, call me. I'll calculate how much the buyer can actually use and help you structure the concession appropriately.

⭐ 5 THINGS I WANT EVERY REALTOR TO REMEMBER
1. CONVENTIONAL DOES NOT MEAN 20% DOWN.
Primary-residence buyers may qualify with as little as 3%–5% down.

2. PMI ISN'T NECESSARILY PERMANENT.
Don't assume putting 20% down is always the best financial strategy.

3. DON'T JUDGE QUALIFICATION FROM INCOME OR CREDIT SCORE ALONE.
The complete borrower profile matters.

4. SELF-EMPLOYED BUYER? GET ME INVOLVED EARLY.
Gross business revenue and mortgage qualifying income can be very different.

5. CALL BEFORE STRUCTURING SELLER CONCESSIONS.
I'll help determine what the buyer can actually use so you're not leaving money on the table—or writing an unusable credit into the contract.