Think You Need 20% Down to Buy a Home? Think Again.

Think You Need 20% Down to Buy a Home? Think Again.

Over the past couple of weeks, we’ve been talking about ways buyers may be able to make homeownership work—even when they’re not sure they have enough cash saved.

This week, let’s tackle one of the biggest myths in real estate:

“I need 20% down to buy a house.”

Not necessarily.

Putting 20% down can have benefits, but it is absolutely NOT the only way to purchase a home.

Depending on your qualifications, there may be several options available.

Conventional Loans — Possibly as Little as 3% Down

Some conventional loan programs allow qualified buyers to purchase with as little as 3% down.

On a $250,000 home, that would be about $7,500 instead of $50,000 for a 20% down payment.

That’s quite a difference!

FHA Loans — As Little as 3.5% Down

FHA financing can allow qualified buyers to purchase with a 3.5% minimum down payment.

On that same $250,000 home, 3.5% would be about $8,750.

FHA loans can also be attractive for buyers who may not fit perfectly into conventional loan guidelines.

USDA — Possibly NO Down Payment

USDA loans can offer 100% financing for qualified buyers purchasing eligible properties.

And before you picture a farmhouse surrounded by 200 acres of corn, you might be surprised by the areas that can qualify!

Income limits, property eligibility and other requirements apply, but USDA financing can be a great option worth exploring.

VA Loans — One of the Best Benefits Available

For eligible veterans, active-duty service members and certain surviving spouses, a VA loan may allow you to purchase with no down payment.

VA financing also generally does not require monthly private mortgage insurance.

If you have earned this benefit, we strongly encourage you to at least explore whether it makes sense for you.

So Why Does Everyone Talk About 20%?

Because putting 20% down on a conventional loan can eliminate private mortgage insurance and lower your monthly payment.

That can certainly be a good strategy.

But there’s a big difference between:

“20% down may be beneficial”

and

“I have to save 20% before I can buy.”

That second statement could keep someone renting for years when they may already have other options.

Don't Count Yourself Out

That continues to be the theme of this series.

You may talk with a lender and discover you need more time to prepare.

And that’s okay.

But you may also discover that you’re much closer to buying than you thought.

Before you spend another year waiting because you think you need tens of thousands of dollars saved, talk with a good lender and find out what options actually apply to you.

Karin and I are happy to help you get started and connect you with lenders who can explain the programs available based on your particular situation.

Want to Learn More?

Our FREE Homebuyers Success Academy walks you through the buying process at your own pace.

👉 Homebuyers Success Academy:
https://www.youtube.com/playlist?list=PLU-DcNzz_A94

And if you’re wondering whether buying might be possible for you, reach out.

No pressure. No obligation. Let’s just find out what’s possible.

Ed & Karin
At Home with Ed & Karin

With HEART and a bit of HUMOR, you will feel At Home with Ed & Karin.

Loan programs, down-payment requirements, mortgage insurance, eligibility standards and other terms vary by borrower, lender and loan program. Consult a qualified mortgage professional for advice regarding your specific situation.