One of the most common things buyers tell me is:
“I need to wait until I have 20% saved.”
Maybe.
But maybe not.
Twenty percent down is not a universal requirement for buying a house.
Depending on the loan program, your finances and the property, you may be able to buy with considerably less.
Where Did the 20% Number Come From?
Twenty percent matters because with many conventional mortgages, putting less than 20% down may mean paying private mortgage insurance, commonly called PMI.
PMI protects the lender if the borrower defaults.
Avoiding PMI can be one reason someone chooses to put 20% down.
But avoiding PMI is not the same thing as saying every buyer must put 20% down.
Some Loan Programs Require Much Less
FHA financing can allow qualified buyers to purchase with a down payment as low as 3.5%.
Eligible VA borrowers may be able to buy without a down payment.
USDA loans may provide 100% financing for eligible borrowers buying qualifying properties in eligible areas.
Some conventional loan programs may also allow buyers to put less than 20% down.
The exact program that makes sense depends on the buyer.
That is why this is a lender conversation, not something you should decide based on a rule you heard years ago.
Down Payment Is Not the Same as Cash to Close
This is the second misconception.
Even if your loan only requires a relatively small down payment, that does not mean the down payment is the only money you may need.
Depending on the transaction, you may also need money for:
- Closing costs
- Prepaid taxes and insurance
- Home inspections
- Appraisal-related expenses
- Deposit money
- Moving costs
- Immediate repairs or purchases
- Financial reserves
That is why I think the better question is:
How much cash do I realistically need to buy this house and still be comfortable after settlement?
Putting Less Down Has Tradeoffs
A smaller down payment may help you buy sooner or keep more money in reserve.
But it can also affect:
- Your monthly payment
- Mortgage insurance
- The amount you borrow
- Your interest costs over time
- The loan programs available to you
There is no single correct down payment for every buyer.
Start With the Numbers
If you have been waiting to buy because you think you need 20% saved, talk to a qualified lender before ruling yourself out.
I’m a Realtor, not a mortgage lender, so this is where I stay in my lane.
A lender can look at your income, credit, debts, savings and loan options and tell you what you may actually qualify for.
You can also review what it means to get financially ready before starting your home search.
You may still decide that saving more is the right move.
But make that decision based on your actual numbers, not on the assumption that every buyer needs 20% down.
The first step is understanding your options.