Do You Really Need 20% Down to Buy a Home?
If you’ve been putting off buying a home because you haven’t saved a 20% down payment, let’s talk.
Twenty percent can be a great option. But it isn’t the minimum required for every mortgage.
Depending on your qualifications, the property, and the loan program, you may have options with a much smaller down payment. Some eligible buyers can purchase without a down payment at all.
The first step is finding out which options actually fit your situation.
Where does the 20% number come from?
On a conventional mortgage, putting 20% down generally allows you to avoid private mortgage insurance, commonly called PMI.
That’s a benefit worth considering. But avoiding PMI and qualifying to buy a home are two different things.
A larger down payment also means borrowing less. A smaller down payment can leave more savings available for moving, repairs, and emergencies.
The right choice depends on both your monthly budget and the money you’ll have left after closing.
What are the common down payment options?
| Loan program | Down payment starting point | What to know |
|---|---|---|
| Select conventional programs | As low as 3% | Eligibility requirements apply; PMI is generally required below 20% down. |
| FHA | As low as 3.5% | Credit and lender requirements apply; FHA mortgage insurance is required. |
| VA | 0% for eligible borrowers | Entitlement, appraisal, and lender requirements apply. |
| USDA guaranteed | 0% for eligible borrowers and properties | Household income limits and property eligibility requirements apply. |
These are starting points, not approval guarantees. Your circumstances may require a different down payment.
Conventional: you may have options below 20%
Certain conventional programs allow qualified buyers to put as little as 3% down.
These programs have specific requirements. Depending on the option, those can include income limits, first-time buyer requirements, or homebuyer education.
PMI generally applies when putting less than 20% down. That adds a cost, but it’s worth comparing the full payment and cash needed before ruling out the option.
FHA: as little as 3.5% down
FHA financing offers down payments as low as 3.5% for qualified borrowers.
Credit history and lender requirements matter, and not everyone qualifies for that minimum. FHA also has its own mortgage insurance costs.
A smaller down payment is one part of the comparison. We should also look at the interest rate, insurance, closing expenses, and total monthly payment.
VA: a benefit worth exploring
Eligible veterans, service members, and certain surviving spouses may qualify for a VA purchase loan without a down payment.
VA loans don’t require monthly mortgage insurance. A VA funding fee may apply unless the borrower qualifies for an exemption.
Entitlement and appraisal results matter, too. For example, an appraisal gap or limited remaining entitlement can mean a buyer needs additional cash.
If you have military eligibility, it’s worth reviewing your benefit before assuming another loan is your best option.
USDA: check the address before assuming
USDA guaranteed loans offer no down payment financing for eligible borrowers purchasing eligible primary residences.
Household income limits apply, and the property must fall within an eligible area. Don’t assume you need to buy a farm or move hours away—check the actual address.
USDA guaranteed loans also have upfront and annual guarantee fees, which belong in the cost comparison.
What does that mean in dollars?
For a hypothetical $350,000 purchase:
| Down payment | Amount |
|---|---|
| 3% | $10,500 |
| 3.5% | $12,250 |
| 20% | $70,000 |
Eligible VA or USDA buyers may have a $0 down payment requirement.
These figures show the down payment only. They do not include closing costs, prepaid expenses, or any required reserves. They are illustrations, not loan offers.
No down payment doesn’t mean no money needed
This is an important distinction.
Even with a no down payment loan, you may still need money for closing expenses, inspections, deposits, insurance, and other items.
Negotiated seller contributions may help cover eligible closing costs. Assistance programs may also be worth exploring, depending on your qualifications and availability.
Those options need to be reviewed before writing an offer so your contract and financing work together.
Jared’s Take
Don’t let an assumed $70,000 savings requirement make the decision for you.
And don’t let a low down payment convince you to buy before your budget is ready.
Let’s look at your income, credit, savings, debts, and a monthly payment you’re comfortable with. Then we can compare what buying now would look like against continuing to save.
Whether you’re looking in Charleston, North Charleston, Summerville, or elsewhere along the South Carolina coast, you deserve a plan built around your actual numbers.
You don’t need 20% saved to start the conversation.
Jared W. Jackson
Rainbow Row Real Estate | South Carolina Lender
Mortgage Loan Originator, NMLS 2763373
Ascend Financial Group, Company NMLS 1629704
Program availability and requirements vary. All loans are subject to credit, income, asset, property, and underwriting approval. This is not a commitment to lend.