fha loan inspection guidelines how does the harp loan work? minimum down payment mortgage conventional loans Available with 3% Down Payment – 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.Think before you tap 401(k) to pay off mortgage – When he turns 59½, would it be good to use our 401(k) retirement savings to pay off this mortgage? Or do we have other options. You may be able to modify the loan under the HARP or HAMP programs..