Do I Need to Put 20% Down to Buy a Home?
Do I Need to Put 20% Down to Buy a Home?
As a real estate agent, one of the most common questions I get from first-time homebuyers is: "Do I really need to put 20% down to buy a home?" The short answer? No, you don’t. While a 20% down payment has its advantages, there are many financing options that allow you to buy a home with as little as 3% down — or even zero in some cases.
Let’s break it down.
What Is a 20% Down Payment?
A 20% down payment means you're putting down 20% of the home’s purchase price upfront. For example, on a $400,000 home, that’s $80,000. While this amount can help you avoid private mortgage insurance (PMI) and reduce your monthly payment, it’s not a requirement.
Low Down Payment Loan Options
If saving 20% feels out of reach, you’re not alone. Luckily, there are several mortgage programs designed to help buyers get into homes with a much lower initial investment:
1. Conventional Loans with 3% Down
Many lenders offer conventional loans that require just 3% to 5% down for qualified buyers. These are ideal for buyers with good credit scores.
2. FHA Loans – 3.5% Down
The Federal Housing Administration (FHA) offers loans that require only 3.5% down, even for buyers with lower credit scores.
3. VA Loans – 0% Down
If you're a veteran or active military, a VA loan could allow you to purchase with no down payment and no PMI.
4. USDA Loans – 0% Down
For homes in eligible rural areas, USDA loans also offer zero down payment financing.
Why Do People Recommend 20% Down?
Putting down 20% does come with perks:
No PMI (Private Mortgage Insurance): This is an extra monthly cost for buyers who put down less than 20%.
Lower Monthly Payments: A bigger down payment means borrowing less.
Better Loan Terms: Lenders may offer more favorable interest rates.
Stronger Offers in Competitive Markets: Sellers often view higher down payments as a sign of financial strength.
But again — it’s not a requirement.
What’s the Right Down Payment for You?
The best down payment is the one that fits your budget and long-term financial goals. Sometimes it makes more sense to buy now with a lower down payment than wait years to save 20% — especially in a rising market where home prices are going up faster than you can save.
As a local real estate expert, I can help you connect with trusted lenders who offer flexible financing options — and help you understand what’s best for your unique situation.
Final Thoughts
You don’t need 20% down to buy a home. In fact, thousands of buyers are getting into homes every month with 3%, 5%, or even 0% down. If homeownership is your goal this year, don’t let the down payment myth hold you back.
📲 Ready to explore your homebuying options? Contact Allen Deaver of Asset Realty today for a personalized consultation and get connected with top local lenders.
Let’s make your dream of homeownership a reality — no matter your budget.
