Do You Really Need 20% Down Payment To Buy a Home?

By Michael Durr

Mike Durr, a devoted family man, seasoned athlete, and passionate sports fan, brings over 30 years of real estate expertise to his role at KMG Lending, where his analytical approach and industry-leading closing times have helped his team close over $60 million in property sales.

“Do I really need a 20% down payment to buy a home?” This might be something you’ve asked yourself. But, the short answer is not always. A lot of buyers are surprised to learn there are plenty of options that require much less. Today, I’ll walk you through some of those options.

With home prices and interest rates constantly changing, a lot of buyers assume they need to save for years before they can afford a home. But the truth is, some loans require as little as 3% down—or even nothing at all in some cases. So today, I’ll break down why the 20% rule exists, when it actually makes sense, and what your options are if you want to buy with less.

Why do people think 20% is required? The idea that you need to put 20% down comes from one main factor: if you put down less, most lenders will require private mortgage insurance or PMI. But that doesn’t mean you can’t buy a home with less, it just means you might have a small extra monthly cost until you build enough equity. However, there are some benefits to putting 20% down:

• No PMI, which means one less monthly expense
• Lower monthly payments since you’re borrowing less
• Better loan terms, including lower interest rates in some cases

But here’s the thing—most buyers today don’t put down 20%. In fact, the average down payment for first-time buyers is only about 6% to 7%.

What are your low down payment options? If you don’t have 20% saved—don’t worry. There are plenty of loan programs that let you buy a home with much less. Here are some common low down payment options:

• Conventional Loan – As little as 3% down if you have good credit
• FHA Loan – Just 3.5% down, ideal for buyers with lower credit scores
• VA Loan – 0% down for eligible military service members and veterans
• USDA Loan – 0% down for qualifying rural and some suburban areas

These programs make homeownership much more accessible, especially for buyers who don’t want to wait years to save up a large down payment.

When does 20% down make sense? You don’t need to put 20% down, but in some situations, it can be a smart financial move. Here are some of the situations where it makes sense to do so:

• You want the lowest possible monthly payment
• You have the funds available without draining your savings
• You’d prefer to avoid paying PMI
• You plan to stay in the home for the long haul

But for many buyers, putting less down and keeping cash in savings for emergencies or home improvements is the better choice.

The bottom line is you don’t need 20% down to buy a home. There are plenty of options that can get you into a home sooner than you think. If you want to explore your loan options and see what works best for you, you can call or text me today! I’d love to help you find the right path to homeownership.