Do I Need 20% Down to Buy a Home?

I get this question all the time: do I need 20% down to buy a home?

For most buyers, the answer is no. In fact, most of my clients who finance their purchase do not put 20% down, and most of them have PMI.

That surprises people, but it really shouldn’t. Putting less than 20% down is a very common and very normal path to homeownership.

Why 20% Down Gets So Much Attention

The 20% number usually comes up because it allows buyers to avoid private mortgage insurance, also known as PMI. PMI protects the lender when a buyer puts less money down. It does not protect the buyer, but it does open doors.

What I see in real life is this: buyers often assume PMI is expensive and bad. In reality, PMI is usually much more affordable than people expect.

How Much Is PMI, Really?

PMI varies based on credit score, loan type, and down payment amount. For many of my buyers, PMI falls somewhere between $150 and $300 per month. When buyers compare that monthly cost to rising home prices or increasing rent, PMI often feels like a reasonable tradeoff. It allows them to buy sooner and start building equity instead of waiting years to save 20%.

PMI can be higher, so always do your due diligence and speak with a lender.

PMI on conventional loans can usually be removed once you reach enough equity. FHA loans handle mortgage insurance differently, but they still help many buyers get into a home sooner.

Putting Less Than 20% Down Is Not a Bad Idea

I want to say this clearly because it matters. Putting less than 20% down is not a bad idea at all.

It is a popular and practical way for many people to get their foot in the door with real estate. I have helped teachers, engineers, first time buyers, and repeat buyers all use low down payment options successfully.

Waiting to save 20% is not always the smartest move. Buying with less down can free up cash for reserves, repairs, or just peace of mind.

Down Payment Options by Property Type

Primary residences
This is where buyers have the most flexibility. Conventional loans can require as little as 3% down. FHA loans require 3.5% down. VA and USDA loans can offer 0% down for eligible buyers.

Second homes
Second homes usually require more down, often around 10% or more. In most cases, these homes cannot be used as rentals (check with your lender!). Rates are typically slightly higher than primary homes.

Investment properties
Most investment properties require at least 20% down, and sometimes 25%. This is where the 20% rule actually applies more often. Even here, strategy matters and timing can change what is possible.

What Matters More Than the Down Payment

The right loan depends on your credit, income, savings, and long term plans. There is no universal answer that works for everyone.

If you are not sure what your options are, the best next step is talking with a lender who can take a deeper look at your financial situation. A good lender can show you how much home you can afford right now or help you map out a realistic path to homeownership.

I am always happy to connect clients with trusted local lenders who explain things clearly and without pressure. My goal is to help you move forward with confidence, whether that means buying now or planning for later.

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