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Do Homebuyers Have To Put 20% Down When You Buy a Home?
- Eva Swersey
- May 5
- 3 min read
Updated: May 6
If you're a first-time homebuyer, you’ve probably heard the 20% down payment myth floating around. It can feel like a major roadblock, right? But here's the thing: you don’t need to put down 20% to buy your first home. In fact, for many buyers, it’s a lot less than that. Let’s take a closer look at what’s really going on.
Let’s Bust the 20% Down Payment Myth
The idea that you need a huge 20% down payment to buy a home is more fiction than fact. While it’s true that putting more down can help you with things like lower monthly payments, it’s not essential for every buyer. There are plenty of options out there that allow you to get your foot in the door with much smaller down payments.
For example, FHA loans only require 3.5% down, and if you're a veteran, VA loans don’t even require a down payment! USDA loans also offer zero down payment options for those in qualifying rural areas. And let’s be real—most first-time buyers don’t even know these options are available.
As The Mortgage Reports puts it:
“Many homebuyers are able to secure a home with as little as 3% or even no down payment at all... the 20 percent down rule is really a myth.”
And here's the real kicker: first-time homebuyers are putting down an average of only 9%, according to the National Association of Realtors (NAR). Yep, you read that right—9%! So, if you've been stressing about saving up for 20%, it’s time to rethink that strategy.
Missed Opportunities: Why First-Time Buyers Aren’t Using Down Payment Assistance
Now, here's something that’s truly eye-opening. Nearly 80% of first-time buyers qualify for down payment assistance (DPA)—but only 13% actually take advantage of it. That’s a massive opportunity being left on the table!
Some of these assistance programs offer thousands of dollars that go directly toward your down payment. On average, homebuyers receive about $17,000 in down payment assistance. Just imagine what that could do for your savings, helping you cover your down payment and some additional costs of homeownership.
As Rob Chrane, CEO of Down Payment Resource, shares:
“Our data shows the average DPA benefit is roughly $17,000. That can be a nice jump-start for saving for a down payment and other costs of homeownership.”
And the best part? In some cases, you may even be able to stack multiple programs, making that $17,000 stretch even further. That’s a game-changer.
While your down payment is a big focus, there are a few other costs you’ll want to plan for as you navigate the homebuying process. These aren’t necessarily deal-breakers, but they’re important to keep in mind:
Home Inspections: A must to ensure your dream home doesn’t come with a hidden list of problems. It’s an investment in your peace of mind.
Title and Legal Fees: These cover the paperwork and legalities that protect you in the deal, so you don’t end up in a messy situation later on.
Property Taxes: These vary depending on where you live, but they’re something you’ll need to budget for annually.
HOA/Condo Fees: If you're buying in a neighborhood with a homeowners association or a condo building, these fees can add up, so make sure you account for them.
Real Estate Brokerage Fees: While many buyers may not be aware, real estate brokers are compensated through commissions paid by the seller. However, it's still important to budget for potential closing costs, which may include some brokerage-related fees, particularly in specific transactions.
The Bottom Line?
Forget the 20% down myth. There are plenty of loan programs that allow you to put down a lot less, and there’s down payment assistance out there to give your savings a serious boost.
So, if you're thinking that buying a home is out of reach because of that 20% rule, think again! Start by talking to a trusted lender who can help you explore all the available options—and find the one that’s right for you. And as always, feel free to reach out to us, we're here to help!
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