Saving for your first home can feel like a big job. You are thinking about the costs involved, deciding what you can set aside, and trying to figure out when you will be ready to buy.
The down payment is often the number that gets the most attention. If you believe you must save 20% of a home's price before you can buy, that goal may feel far away.
Here is the important distinction: a 20% down payment is not always required. Unless your loan type or lender specifies otherwise, you may have options that require less. Before you build your savings plan around an assumption, find out what applies to you.
Separate the 20% Myth From Your Loan Requirements
The idea that every buyer needs 20% down is a common misunderstanding. The National Association of Realtors, or NAR, describes it this way:
“One of the biggest misconceptions among housing consumers is what the typical down payment is and what amount is needed to enter homeownership.”
A Freddie Mac survey cited in the original article found that nearly a third of prospective homebuyers thought they needed a down payment of 20% or more. Freddie Mac described that belief as one of the largest perceived barriers to achieving homeownership.
If you have been working toward that number, you are not alone. But a widely held belief is not the same thing as a requirement for your loan.
That does not mean you should assume you qualify for a smaller down payment. It means your next move should be to ask what is required, rather than automatically treating 20% as the starting line.
Understand What Down Payment Figures Tell You
The NAR figures cited in the original article reported a median down payment of 14% for all homebuyers and 6% for first-time buyers. That research also noted that the median down payment had not been above 20% for an extended period.
These are historical figures, not a statement about the market at the time you read this. They illustrate the original article's central point: buyers have purchased homes without putting 20% down.
Keep those figures separate from your own loan requirements. The reported 14% and 6% medians describe buyers in that research. They are not instructions for how much you personally must save.
The useful question is not, “How do I match what other buyers put down?” It is, “What down payment would be required for a loan I may qualify for?”
Depending on that answer, you could be closer to your goal than you thought. You may not need to save as much for the down payment as you originally assumed.
Explore Loan Options With Lower Down Payments
The original article identifies several loan options worth discussing with a trusted lender. These are possibilities to explore, not promises that a particular option will fit your situation.
FHA Loans
FHA loans offer down payments as low as 3.5%. If your savings goal has been based only on a 20% requirement, ask your lender whether an FHA loan is an option for you.
Use that conversation to understand the requirements before changing your target. “As low as” is an important part of the description.
VA and USDA Loans
VA and USDA loans offer options with no down payment requirement for qualified applicants.
The key words are qualified applicants. Ask whether you qualify rather than assuming that a no down payment option is available to every buyer.
Also, remember where this conversation began: buying a home involves costs beyond the down payment. Keep asking about the full purchase picture, not just this one expense.
Do Not Overlook Down Payment Assistance
Loan requirements are only part of the conversation. Down payment assistance programs are another area where misunderstandings can get in the way.
One common belief is that assistance is available only to first-time homebuyers. First-time buyers have many options to explore, but repeat buyers have options, too.
Down Payment Resource reported more than 2,000 homebuyer assistance programs in the United States in the information cited by the original article. The majority were intended to help with down payments.
The same resource reported that over 38% of programs were for repeat homebuyers who had owned a home within the previous three years.
As with the down payment medians, those program figures are part of the research cited in the original article, not a live count. The practical takeaway is to investigate assistance rather than rule yourself out simply because you have owned a home before.
You can start learning about programs through resources such as Down Payment Resource. Then bring what you find to a trusted lender and ask what you may qualify for.
Turn the Information Into a Savings Plan
You do not need to choose a loan or assistance program before starting a conversation. Start with your goal, what you have saved, and the questions you need answered.
- Review your assumption. Have you been saving toward 20% because someone told you it was required, or because a lender reviewed your situation?
- Ask about loan options. Discuss the down payment requirements for loans you may qualify for, including the options described above.
- Explore assistance. Ask about programs for your situation, whether you are a first-time or repeat buyer.
- Clarify your savings target. Ask what you should plan to save for the down payment and the other costs involved in your purchase.
The point is to replace a broad assumption with a clearer understanding of your own path. You can keep saving while you gather that information.
Your Next Step: Find Out What Applies to You
A 20% down payment is not always required, and assistance is not limited to first-time buyers. Neither fact guarantees qualification, but both are good reasons to ask questions before deciding homeownership is out of reach.
Write down your homebuying goal, your savings so far, and your biggest down payment questions. Then reach out to Ed Parcaut, NMLS 235384, to talk through your options and work toward a practical savings target.
