Do you need 20% down to buy a home? No—not for every mortgage. Twenty percent can be a strong financial choice in some situations, but it is not a universal homebuying requirement. Believing the 20% myth can keep renters on the sidelines long after they are ready to explore ownership.
What a 20% down payment can do
A larger down payment reduces the amount you borrow and can lower the monthly mortgage payment. On many conventional loans, reaching 20% equity at purchase can eliminate private mortgage insurance. It can also create immediate equity. Those benefits are worth considering, but they need to be weighed against the time required to save that much cash.
Lower-down-payment mortgage options exist
Qualified buyers may have access to conventional programs with smaller down payments, FHA financing, VA loans for eligible veterans and service members, and down payment assistance. Each option has different qualification standards, mortgage-insurance rules, fees, and property requirements.
Down payment is only part of your cash requirement
Buyers may also need money for closing costs, prepaid taxes and insurance, inspections, moving, and reserves. Using every dollar to reach a larger down payment can leave you financially exposed after closing. Compare the payment savings with the value of keeping an emergency cushion.
The best decision is usually made by comparing multiple scenarios using the same home price: minimum down, a moderate down payment, and 20% down.
Stop using 20% as the reason you cannot buy.
See what low down payment options may be available based on your credit, income, state, and goals.
Before you decide, review our Homebuyer FAQ for answers about qualification, closing costs, credit, inspections, and the steps between pre-qualification and getting the keys.
Educational information only. Mortgage eligibility, loan terms, rates, down payments, assistance programs, and closing costs vary by borrower, property, lender, location, and market conditions. Pre-qualification is not a commitment to lend.