Do I Need 20% Down to Buy a House?

Someone told you that you need 20% down to buy a house.

They were wrong.

This is one of the most stubborn myths in real estate — and it has kept more people sitting on the sidelines than almost anything else. You have been doing the math on a number that was never a requirement to begin with.

Here is where the 20% figure actually comes from.

When you put down less than 20% on a conventional loan, lenders require private mortgage insurance — PMI. PMI protects the lender if you default. It adds a cost to your monthly payment. The 20% threshold eliminates that cost. So somewhere along the way, "how to avoid PMI" became "the only way to buy a house." That leap is not accurate.

What your actual options look like

FHA loans allow you to purchase with as little as 3.5% down with a credit score of 580 or above. With a score between 500 and 579, you may still qualify with 10% down. FHA is one of the most widely used loan programs for first-time buyers specifically because a large upfront savings is not required.

Conventional loans also have low down payment options. Many lenders offer conventional financing at 3% to 5% down, especially for first-time buyers. Yes, you will likely pay PMI — but PMI is not permanent. Once you build enough equity, it comes off.

VA loans, for eligible veterans and active service members, require zero down. No PMI either. This is one of the most powerful loan benefits available and it is significantly underused.

USDA loans offer zero down for buyers purchasing in eligible rural and suburban areas.

Down payment assistance programs exist in most states — including right here in Washington — specifically designed to help buyers who have steady income but have not had years to save a large lump sum.

So why does 20% myth persists?

Part of it is financial advice that made sense in a different era. Part of it is well-meaning family members passing along outdated information. And part of it is that buying with less down does involve real trade-offs — a slightly higher rate, PMI on some loan types, more careful cash flow management after closing.

But those trade-offs are manageable. What is not manageable is waiting five more years to save 20% while home prices keep moving.

The right question is not whether you have 20%. The right question is what you actually need to make this work for your situation. That number is different for everyone — and it starts with a real conversation.

Ready to find out what your actual down payment number looks like? Start your mortgage application today.