Do You Really Need 20% Down to Buy a Home? Here’s the Truth

How to become a homeowner sooner than you think.

If you've been dreaming about buying a home but feel held back by the idea of needing a 20% down payment—you're not alone. Many would-be buyers delay homeownership because they believe they need to save tens of thousands of dollars upfront. The good news? That’s a myth. You don’t need 20% down to buy a home—and in many cases, far less will do.

Where Did the 20% Rule Come From?

The 20% down payment “rule” comes from the days when mortgage lending standards were stricter and options were limited. While putting 20% down can help you avoid private mortgage insurance (PMI) and reduce your monthly payment, it’s not a requirement for most home loans today.

Low Down Payment Options Are Available

Depending on your situation, there are several mortgage programs that allow for much lower down payments:

• FHA Loans – As low as 3.5% down
  Backed by the Federal Housing Administration, these loans are great for first-time buyers and those with less-than-perfect credit.

• Conventional Loans – As low as 3% down
  Many lenders offer conventional mortgages through programs like Fannie Mae’s HomeReady or Freddie Mac’s Home Possible, with down payments starting at just 3%.

• VA Loans – 0% down
  Available to eligible veterans, active-duty service members, and some surviving spouses, VA loans require no down payment and often have favorable terms.

• USDA Loans – 0% down
  Designed for rural and suburban homebuyers, USDA loans can also be obtained with no money down, depending on location and income eligibility.

Down Payment Assistance Is Also a Thing

Local and state governments, nonprofits, and even employers offer down payment assistance (DPA) programs. These can come in the form of grants, forgivable loans, or deferred payment second mortgages to help cover the upfront costs.

But What About Mortgage Insurance?

If you put less than 20% down, you’ll typically need to pay PMI or a similar insurance. While this adds to your monthly payment, it’s not permanent. Once you build up enough equity—usually when you hit that 20% mark—you can remove PMI.

The Bottom Line

Waiting to save 20% could delay your dream of owning a home by years. In that time, home prices and interest rates may rise, costing you more in the long run. With today’s flexible lending options, homeownership is more accessible than ever.

Want to explore your options?
Contact us today to see how much home you can afford—and how little you may need for a down payment.