Last reviewed: September 25, 2026 · Chicago Condo Loans Editorial Team · How we research
Quick answer You can buy a Chicago condo to live in with as little as 3% down on a conventional loan or 3.5% down on an FHA loan, but only if the building qualifies for that loan type. With a conventional loan and less than 20% down you pay private mortgage insurance (PMI), which you can cancel once your balance is scheduled to reach 80% of the original value and which ends automatically at 78%. FHA charges a 1.75% upfront premium plus an annual premium that lasts 11 years with at least 10% down, or for the life of the loan with less. Condos also carry a Fannie Mae pricing adjustment of 0.750% of the loan amount when you put down less than 25%, which drops to 0.125% at 25% to 39.99% down and to zero at 40% or more.
This guide is part of our complete guide to Chicago condo loans.
Key takeaways
- 3% down is possible on a conventional loan for a one-unit primary residence, including a condo, through Fannie Mae’s 97% LTV options or HomeReady and Freddie Mac’s HomeOne or Home Possible, if you qualify for the program.
- 3.5% down is the FHA minimum with a credit score of 580 or higher; scores from 500 to 579 need 10% down.
- 20% down avoids PMI on a conventional loan. It does not remove FHA mortgage insurance.
- 25% down cuts Fannie Mae’s condo pricing adjustment from 0.750% to 0.125% of the loan amount; 40% down removes it.
- The building has to qualify first. A non-warrantable condo usually needs a portfolio or non-QM loan with a much larger down payment.
What is the minimum down payment for a Chicago condo?
The minimum depends on the loan type, how you’ll use the unit, and whether the building meets that program’s rules. For a condo you’ll live in:
| Loan type | Minimum down payment | Mortgage insurance | Building must be |
|---|---|---|---|
| Conventional, 97% LTV (Fannie Mae standard 97% or HomeReady; Freddie Mac HomeOne or Home Possible) | 3% | PMI until the loan reaches 78%–80% of original value | Warrantable (full review, or waiver for 10 or fewer units) |
| Conventional, standard | 5% or more | PMI if less than 20% down | Warrantable |
| FHA, credit score 580+ | 3.5% | 1.75% upfront plus annual premium | FHA-approved project, or FHA single-unit approval |
| FHA, credit score 500–579 | 10% | 1.75% upfront plus annual premium | FHA-approved project, or FHA single-unit approval |
| VA (eligible veterans and service members) | 0% in many cases | None; VA charges a funding fee instead | VA-approved condo project |
| Portfolio / non-QM (non-warrantable) | Often 20%–25% or more; set by each lender | Varies | Set by each lender |
The 3% conventional options have conditions. Fannie Mae’s standard 97% LTV loan requires at least one borrower to be a first-time homebuyer (no ownership interest in a home in the past three years); HomeReady has no first-time buyer rule but has income limits. Freddie Mac’s HomeOne also requires a first-time homebuyer. These loans must be fixed-rate. If every borrower is a first-time buyer, at least one must complete homeownership education. The loan can go up to the 2026 Cook County conforming limit of $832,750; above that, see jumbo loans and high-rise condos in Chicago.
None of this helps if the building doesn’t qualify. Check early whether the building is warrantable or FHA-approved: see warrantable vs. non-warrantable condos and FHA condo approval in Chicago.
How does the condo pricing adjustment change with your down payment?
Fannie Mae charges loan-level price adjustments (LLPAs) based on risk factors, and attached condos have their own line in the matrix. The adjustment is a percentage of the loan amount. Lenders usually turn it into a slightly higher interest rate rather than a separate fee, so you may never see it listed.
| Loan-to-value (LTV) | Down payment | Fannie Mae condo adjustment (purchase) |
|---|---|---|
| 60% or less | 40% or more | 0.000% |
| 60.01%–75% | 25% to 39.99% | 0.125% |
| Above 75% | Less than 25% | 0.750% |
That makes 25% down a meaningful threshold for condo buyers. On a $300,000 condo, the adjustment at 20% down ($240,000 loan) equals $1,800; at 25% down ($225,000 loan) it’s $281.25. Two exceptions matter: first-time homebuyers with qualifying income at or below 100% of area median income get Fannie Mae’s LLPAs waived, and HomeReady loans are exempt as well. Freddie Mac has its own credit-fee schedule, which your lender will apply to Freddie Mac loans.
How does PMI work on a conventional condo loan?
Fannie Mae and Freddie Mac require mortgage insurance when the loan is more than 80% of the home’s value. The borrower usually pays it monthly as private mortgage insurance (PMI). Its cost depends on your credit score, down payment, and the coverage level, so get quotes from lenders rather than relying on a rule of thumb.
PMI doesn’t last forever. Under the federal Homeowners Protection Act:
- You can request cancellation when your principal balance is scheduled to fall to 80% of the home’s original value (or earlier if you pay it down). You must ask in writing, be current with a good payment history, have no second mortgage, and show the value hasn’t dropped below the original value, often with an appraisal.
- It ends automatically when the balance is scheduled to reach 78% of the original value, if you are current.
- It ends at the midpoint of the loan term at the latest, if you are current (for example, after 15 years on a 30-year loan).
For condos, the “no decline in value” condition matters. If the building faces a large special assessment, litigation, or a drop in comparable sales, an appraisal may not support early cancellation.
How does FHA mortgage insurance work on a condo?
FHA loans have two premiums, and neither is removed the way PMI is:
| Premium | Rate (loans over 15 years, up to $726,200) | How long it lasts |
|---|---|---|
| Upfront (UFMIP) | 1.75% of the base loan amount, usually added to the loan | One time |
| Annual, less than 5% down (LTV above 95%) | 0.55% a year, paid monthly | Life of the loan |
| Annual, 5% to 9.99% down (LTV above 90% up to 95%) | 0.50% a year, paid monthly | Life of the loan |
| Annual, 10% or more down (LTV 90% or less) | 0.50% a year, paid monthly | 11 years |
On a $300,000 condo with 3.5% down, the base loan is $289,500. The upfront premium is $5,066.25, and the annual premium at 0.55% is about $1,592 in the first year, or roughly $133 a month, falling slightly as the balance drops. Because the annual premium lasts for the life of the loan at that down payment, many FHA borrowers later refinance into a conventional loan once they have enough equity.
Conventional vs. FHA: which costs less for a Chicago condo?
There’s no single answer, because PMI pricing depends heavily on credit score and FHA premiums don’t. In general:
- Conventional often wins with strong credit, because PMI can be cancelled and there is no upfront premium, although the condo adjustment adds cost at less than 25% down.
- FHA often wins with lower credit scores, because its premiums don’t rise with lower scores the way PMI and LLPAs do.
- The building can decide for you. Many Chicago buildings are warrantable but not FHA-approved, or the reverse. A loan type the building can’t support isn’t an option.
Ask lenders for Loan Estimates on both loan types for the same unit, and compare the total monthly payment, the cash needed at closing, and how long the mortgage insurance will last.
What else affects how much you should put down on a condo?
- Assessments count against you. Lenders include monthly condo assessments in your debt-to-income ratio. In buildings with high assessments, a larger down payment can be what keeps the payment within limits.
- Keep cash for closing and reserves. The down payment is only part of the cash you need. Budget for closing costs, prepaid items, and any special assessment the contract makes you responsible for.
- Non-warrantable buildings need more. Portfolio and non-QM lenders commonly ask for 20% to 25% or more, and terms vary by lender.
- Second homes and investment units follow different rules, with higher minimum down payments than a primary residence.
Can you use a gift or down payment assistance for a Chicago condo?
Gifts. For a conventional one-unit primary residence with more than 80% LTV, Fannie Mae doesn’t require any of your own money: all funds can come from a gift. Acceptable donors include relatives, a domestic partner or fiancé, and people with a long-standing family-like or mentorship relationship. The donor can’t be the seller, builder, real estate agent, or another interested party. Expect to provide a gift letter and proof of the transfer.
IHDA assistance. The Illinois Housing Development Authority offers down payment assistance through participating lenders, with income and purchase price limits:
| IHDA program | Assistance | Terms | First-time buyer required? |
|---|---|---|---|
| Access Forgivable | 4% of the price, up to $6,000 | Forgiven monthly over 10 years | No |
| Access Deferred | 5% of the price, up to $7,500 | Interest-free, deferred for the life of the mortgage | No |
| Access Repayable | 10% of the price, up to $10,000 | Interest-free, repaid monthly over 10 years | No |
| Access Home | 6% of the price, up to $15,000 | Interest-free, deferred for the life of the mortgage | Yes, with exemptions for eligible veterans and targeted areas |
IHDA loans still go through normal condo project review, so confirm with the lender that the building and unit qualify before counting on assistance.
Frequently asked questions
What is the minimum down payment for a condo in Chicago?
For a primary residence in a building that meets agency rules, 3% with a conventional loan through Fannie Mae’s 97% LTV options or HomeReady, or Freddie Mac’s HomeOne or Home Possible, if you qualify for one of those programs. FHA requires 3.5% with a credit score of 580 or higher, but the building or unit must be FHA-approved. Non-warrantable condos usually need much more, often 20% to 25% or more, set by each lender.
Do I need 20% down to avoid PMI on a condo?
With a conventional loan, yes. Fannie Mae and Freddie Mac require mortgage insurance when the loan is more than 80% of the home’s value, so putting at least 20% down avoids it. FHA loans charge mortgage insurance premiums at any down payment.
How do I get rid of PMI on a conventional condo loan?
Under the federal Homeowners Protection Act, you can ask your servicer in writing to cancel PMI once your balance is scheduled to reach 80% of the home’s original value, if you are current, have a good payment history, have no second mortgage, and can show the value hasn’t dropped. It ends automatically when the balance is scheduled to reach 78%, or at the midpoint of the loan term, as long as you are current.
Does FHA mortgage insurance ever go away?
It depends on your down payment. With a 30-year FHA loan and at least 10% down (90% LTV or less), the annual premium lasts 11 years. With less than 10% down, it lasts for the life of the loan, so the usual way to drop it is to refinance into a conventional loan later.
Is there an extra cost for a conventional condo loan with less than 25% down?
Usually. Fannie Mae’s pricing matrix adds a condo adjustment of 0.750% of the loan amount for attached condo purchases above 75% loan-to-value, 0.125% from 60.01% to 75%, and nothing at 60% or less. Lenders usually build it into your rate. First-time buyers with income at or below 100% of area median income qualify for a waiver of these adjustments.
Can I use a gift or down payment assistance for a Chicago condo?
Often, yes. For a conventional one-unit primary residence with more than 80% LTV, Fannie Mae allows the entire down payment to come from an acceptable gift, such as from a relative. The Illinois Housing Development Authority (IHDA) also offers assistance of up to $6,000 to $15,000 depending on the program, with income and purchase price limits. Ask a participating lender whether your building and unit qualify.
Sources
- Fannie Mae: FAQs on 97% LTV options
- Fannie Mae Loan-Level Price Adjustment Matrix (September 9, 2026)
- Fannie Mae Selling Guide B3-4.3-04, Personal Gifts
- Freddie Mac Guide Section 4605.1, HomeOne Mortgages
- HUD Mortgagee Letter 2023-05: FHA annual mortgage insurance premiums
- HUD Mortgagee Letter 2010-29: FHA credit score and LTV requirements
- CFPB: When can I remove PMI from my loan?
- Illinois Housing Development Authority: Getting an IHDA loan
This guide is educational and is not lending, legal, or financial advice. Chicago Condo Loans is not a lender or broker. Rules and pricing change and every building and borrower is different, so confirm details with a licensed mortgage professional. See our Disclaimer.