How to Buy a Home Without 20% Down

Lynn Martin
Jun 30
2 min read

One of the biggest myths in real estate is that you need a 20% down payment to buy a home. While putting 20% down can help you avoid extra fees like private mortgage insurance (PMI), it’s far from a requirement.

In fact, many buyers—especially first-timers—purchase homes with as little as 3%, 0%, or even no down payment at all.

Let’s explore your options.

Why 20% Isn’t Always Necessary

Historically, 20% was the gold standard to secure a conventional loan. But in today’s housing market, lenders offer more flexible programs to make homeownership accessible—even if you don’t have a large savings account.

Loan Options With Low or No Down Payment

Here are some popular loan programs that require less than 20% down:

Loan Type	Minimum Down Payment	Who It’s For
Conventional Loan	3%	Good credit, first-time buyers
FHA Loan	3.5%	Low to moderate credit scores
VA Loan	0%	Active military, veterans, spouses
USDA Loan	0%	Rural/suburban buyers meeting income guidelines

What About PMI?

If you put less than 20% down, you’ll likely pay private mortgage insurance (PMI)—an added cost that protects the lender. But:

FHA loans include MIP, similar to PMI.
VA loans don’t require PMI.
You can cancel PMI on a conventional loan once you reach 20% equity.

So even with PMI, buying sooner might still make financial sense—especially if home prices are rising.

Other Ways to Lower Your Upfront Costs

Down Payment Assistance Programs (DPA): Local/state grants or loans to help cover your down payment.
Gift Funds: Many programs allow family gifts to cover some or all of the down payment.
Seller Concessions: Sellers may agree to pay part of your closing costs.

Real Example

If you're buying a $300,000 home:

20% down = $60,000
3.5% down (FHA) = $10,500
0% down (VA/USDA) = $0

That’s a huge difference—and for many, it’s the difference between waiting years and owning now.

Final Thought

You don’t need to wait until you’ve saved 20% to become a homeowner. With the right loan program, support, and guidance, you can get the keys to your new home sooner than you think.