Spoiler Alert: You Can Buy a Home Without a Massive Down Payment

Is a 20% Down Payment Really Necessary? Let’s Talk About Your Options

One of the most common concerns I hear from clients—especially first-time buyers—is the belief that you need a 20% down payment to buy a home. And I get it! That number can feel overwhelming. But here's the good news: you probably don’t need to put that much down, and many buyers are purchasing homes with much less.

So, What’s the Typical Down Payment These Days?

According to the National Association of REALTORS®, the median down payment in 2024 was 18%, but for first-time buyers, it was only 9%. That’s a big difference—and a hopeful one!

So where does that 20% number come from? It’s largely tied to something called private mortgage insurance (PMI). When you put down less than 20% on a conventional loan, your lender may require you to carry PMI. It’s simply a way for them to protect their investment, but it’s very common and not necessarily a bad thing.

Do I Have to Put 20% Down?

Not at all. In fact, many loan programs are designed specifically to help buyers like you get into a home with a much smaller upfront investment. Here's a quick look at some common loan options:

Loan Type	Minimum Down Payment	Who It's For
Conventional Loan	As low as 3%	Great for buyers with solid credit. PMI required under 20% down.
FHA Loan	3.5%	Ideal for buyers with lower credit scores or limited savings.
VA Loan	0%	For veterans, active military, or surviving spouses.
USDA Loan	0%	Available in eligible rural and suburban areas.
Jumbo Loan	10–30%	For homes above the conventional loan limit. Higher credit usually required.

So yes—you have options. The key is finding the one that fits your financial picture best.

How Does Your Down Payment Affect Your Mortgage?

Let’s break it down: the larger your down payment, the smaller your loan—which generally means lower monthly payments and interest over time. But if putting a big chunk down isn’t realistic right now, that’s okay too. Many of our clients choose a smaller down payment so they can buy sooner and start building equity right away.

What Do Different Down Payments Look Like on a $900,000 Home?

Down Payment %	Down Payment	Loan Amount	Estimated Interest Rate	Monthly Payment (30-year fixed)
3%	$27,000	$873,000	7.01%	~$5,444
10%	$90,000	$810,000	6.84%	~$5,118
20%	$180,000	$720,000	6.78%	~$4,608
30%	$270,000	$630,000	6.55%	~$4,026

📌 Note: These are illustrative estimates, not including property taxes, home insurance or HOA fees. Rates will vary based on your credit score, lender, loan type, and market conditions.

As you can see, more down means less monthly payment—but it’s all about what makes the most sense for you.

Final Thoughts

If you’ve been holding off on buying a home because you think you need 20% down, let’s talk. Most first-time buyers are putting down less than 10%, and with the right guidance, you could be in your own home sooner than you think.

We’d love to help you explore financing options and connect you with a trusted mortgage advisor who can run real numbers based on your situation. Let’s find out what’s possible—your dream home might be closer than you think!