No. Most first-time buyers put down much less than 20%. Several loan types allow 3.5% down or less, and some allow 0%. The tradeoff is usually mortgage insurance.
Low down payment options
| Loan type | Minimum down | Good to know |
|---|---|---|
| Conventional (first-time buyer programs) | 3% | Requires PMI below 20% down |
| FHA | 3.5% (with a 580+ credit score) | More flexible credit rules; mortgage insurance often lasts the life of the loan |
| VA | 0% | For eligible veterans and service members |
| USDA | 0% | For eligible rural and suburban areas, with income limits |
Where the 20% myth comes from
Putting 20% down on a conventional loan means you skip private mortgage insurance (PMI). PMI protects the lender, not you, and adds to your monthly payment. It isn’t permanent, though: on a conventional loan you can ask to remove it once you reach 20% equity, and it ends automatically at 22% based on the original value.
Is waiting to save 20% worth it?
It depends on prices where you’re buying and how long it would take you to save. 20% on a $300,000 home is $60,000. If that takes years and prices rise in the meantime, a smaller down payment plus PMI can work out cheaper overall.
Whatever you put down, keep an emergency fund. A buyer with 5% down and 3 months of savings is often safer than one with 20% down and nothing left.
Check for down payment assistance
Most states have a housing finance agency with grants or low-interest second loans for first-time buyers. Search “[your state] housing finance agency first-time buyer.”
See your real monthly cost at different down payments: Module 3 of the HomeLooker course includes a payment calculator with PMI built in. See the course.
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Down payments, the real monthly cost, inspections and closing day, explained simply. You’ll also get occasional emails about buying a home and the course. No spam, unsubscribe anytime.