Can I Buy a Home With Less Than 20% Down?

Chrissy Peterson
Jun 3
3 min read

One of the biggest myths in real estate is that you need a 20% down payment to buy a home.

The truth? Many buyers purchase homes with far less than 20% down—and some qualify for programs that require little to no down payment at all.

If you've been putting your homeownership dreams on hold because you think you need tens of thousands of dollars saved up, this might be the encouragement you've been waiting for.

Where Did the 20% Rule Come From?

The 20% down payment guideline became popular because it allows buyers to avoid Private Mortgage Insurance (PMI) on conventional loans. PMI is an additional monthly cost that protects the lender if a borrower defaults on the loan.

While avoiding PMI can save money, it's important to remember that waiting years to save a full 20% may not always be the best financial move.

Home prices and interest rates can change over time, and many buyers discover that purchasing sooner with a smaller down payment helps them begin building equity earlier.

How Much Do You Actually Need?

Depending on your situation and the loan program you qualify for, your down payment could be much lower than you think.

Conventional Loans

Many conventional loan programs allow qualified buyers to put down as little as 3%.

FHA Loans

FHA loans typically require just 3.5% down and are often a great option for first-time buyers.

VA Loans

Eligible veterans, active-duty military members, and qualifying spouses may be able to purchase a home with 0% down through a VA loan.

USDA Loans

Certain rural and suburban areas qualify for USDA financing, which may also offer 0% down payment options for eligible buyers.

What About PMI?

Many buyers hear the term PMI and immediately assume it's a deal breaker.

In reality, PMI is often much more affordable than people expect. Depending on the loan amount, credit score, and down payment, the monthly cost may be relatively small compared to the benefits of becoming a homeowner sooner.

Additionally, PMI is not always permanent. Once sufficient equity is built in the home, it can often be removed.

Don't Forget About Closing Costs

While the down payment is an important piece of the puzzle, it's not the only expense to plan for.

Buyers should also budget for closing costs, which can include lender fees, title fees, prepaid taxes, insurance, and other transaction-related expenses.

The good news is that there may be options to help offset some of these costs through seller concessions, lender programs, or down payment assistance programs.

Down Payment Assistance Programs May Help

Many buyers are surprised to learn there are programs available that provide grants, forgivable loans, or other forms of assistance to help with down payments and closing costs.

These programs vary by location and eligibility requirements, but they can make homeownership much more attainable than many people realize.

The Bigger Question: Are You Ready?

Instead of focusing solely on whether you've saved 20%, consider asking:

Is my income stable?
Is my credit in a healthy place?
Do I have some savings set aside?
Am I ready for the responsibilities of homeownership?

The right time to buy isn't always when you've reached an arbitrary savings goal. It's when your overall financial picture supports your long-term goals.

Final Thoughts

If you've been waiting to buy because you thought you needed a 20% down payment, don't count yourself out just yet.

There are more financing options available today than many people realize, and every buyer's situation is unique. The best first step is having a conversation with a trusted real estate professional and lender who can help you understand what's possible.

At the Chrissy J Homes Team, we're here to educate, encourage, and guide you through every step of the home buying journey. Whether you're ready to buy now or simply exploring your options, we'd love to help you create a plan that fits your goals and timeline.

Homeownership may be closer than you think. #mnrealtor #minnesotarealtor #mnrealty #mnrealestate #ChrissyJHomes