Final answer:
Conventional conforming loans typically expect a down payment of 20%, but options for lower down payments such as 0-3.5% exist, which necessitate purchasing mortgage insurance and potentially increase the total mortgage cost over time.
Step-by-step explanation:
Conventional conforming loans typically require a down payment, which is often expected to be around 20%. However, it's important to note that you can sometimes opt for a lower down payment of 0-3.5%. If you do choose a down payment under 20%, be aware that you will generally need to purchase mortgage insurance, which can add to the overall cost of your mortgage. This insurance is designed to protect lenders in case you default on your payments.
For instance, if you're buying a home that costs $100,000, a 20% down payment would require you to pay $20,000 up front and borrow the remaining $80,000. Paying less than the traditional 20% will indeed reduce your initial costs but also increase the total amount of your mortgage over time due to the additional cost of mortgage insurance.