Do You Really Need 20% Down to Buy a House?

If you think you need 20% down to buy a house, I have good news:

You probably don’t.

There are mortgage options that allow qualified buyers to put down much less than 20%, and some eligible buyers may even qualify for loan programs with no down payment.

So if you’ve been waiting to start your home search in Canton, GA because you thought you needed tens of thousands of dollars saved first, it may be worth taking another look at your options.

Do You Need 20% Down to Buy a House?

No. A 20% down payment is not a universal requirement for buying a home.

The minimum down payment depends on several factors, including the type of mortgage, your financial qualifications, the property, and the specific loan program.

Some conventional loans may allow qualified buyers to put down as little as 3%. FHA loans may offer lower down payment options for qualified borrowers, while eligible VA and USDA borrowers may have access to programs that don't require a down payment.

That doesn't mean putting less down is automatically the right choice. It simply means 20% isn't your only option.

Why Does Everyone Talk About a 20% Down Payment?

Putting 20% down can have benefits.

Depending on your mortgage, it may allow you to avoid private mortgage insurance (PMI), reduce the amount you need to borrow, and lower your monthly principal and interest payment.

But there's a big difference between 20% being beneficial in certain situations and 20% being required.

For example, on a $400,000 home:

20% down = $80,000

10% down = $40,000

5% down = $20,000

3% down = $12,000

That's a pretty significant difference, especially for first-time home buyers who may have assumed homeownership was still years away.

Keep in mind that your down payment isn't the only upfront expense to plan for when buying a house. Closing costs and other expenses associated with the purchase should also be part of the conversation.

What Are the Minimum Down Payments for Different Mortgage Types?

There are several types of home loans, and each comes with its own eligibility requirements.

Conventional loans: Some programs may allow qualified buyers to put down as little as 3%.

FHA loans: Qualified buyers may be eligible for a down payment as low as 3.5%.

VA loans: Eligible veterans, active-duty service members, and certain surviving spouses may qualify for a VA loan with no down payment.

USDA loans: Eligible buyers purchasing qualifying properties may also have access to a no-down-payment option.

Loan requirements can change, and eligibility varies by borrower and property, so you'll want to speak with a qualified mortgage lender about the programs currently available to you.

How Much Should You Put Down on a House?

There isn't one percentage that's right for every buyer.

Instead of asking, “How do I get to 20%?” a better question may be:

What can I qualify for, and what makes the most sense for my finances?

A larger down payment could reduce your loan amount and monthly principal and interest payment. But putting more money down also means using more of your available cash upfront.

A lender can show you how different down payment amounts may affect your loan, mortgage insurance, estimated monthly payment, and cash needed at closing.

From there, you can make a decision based on your actual numbers rather than an old rule you've heard repeated for years.

Buying a Home in Canton, GA?

If you're thinking about buying a home in Canton or elsewhere in Cherokee County, don't automatically rule yourself out because you don't have 20% saved.

Your first step doesn't have to be touring houses. It can simply be finding out what financing options may be available to you.

I can connect you with a trusted lender who can go over your qualifications, available mortgage programs, and estimated costs. Then, when you know what you're comfortable spending and you're ready to start looking at homes, that's where I come in.

If you've been putting off buying because you thought you needed 20% down, send me a message. Let's figure out what your next step actually looks like.