"Make sure you feel comfortable of how much you want to put down on a home." - Jen Corso

One of the biggest myths about buying a home is that you need a 20% down payment. Because of this belief, many people delay buying for years while trying to save a large amount of money.

The truth is that most homebuyers today put far less down. Depending on the loan program you qualify for, you may be able to purchase a home with as little as 3% down — and sometimes even 0% down.

Understanding your options can make homeownership much more achievable than many buyers realize.

How Much Down Payment Is Required When Buying a Home?

The 20% Down Payment Myth

For years, buyers were told they needed to put 20% down when purchasing a home. While putting 20% down can have benefits, it is not required for most buyers.

A 20% down payment mainly helps avoid private mortgage insurance (PMI) on conventional loans. However, many buyers choose smaller down payments so they can buy sooner rather than spending years saving.

For example:

• $350,000 home

• 20% down payment = $70,000

For many buyers, especially first-time buyers, saving that much money can take a long time.

Fortunately, there are several loan programs designed to help buyers purchase a home with much less upfront cash.

Common Down Payment Options

Here are some of the most common mortgage options available to homebuyers.

👉 Conventional Loans (3%–5% Down)

Many conventional loan programs allow qualified buyers to purchase a home with as little as 3% down.

These programs are especially popular for:

• First-time homebuyers

• Buyers with strong credit

• Buyers who want flexible loan options

With less than 20% down, borrowers usually pay private mortgage insurance (PMI), but it can often be removed later once sufficient equity is built. PMI can also eventually be taken off your loan once there is over 20% equity. Talk to your lender on how to do that.

👉 FHA Loans (3.5% Down)

FHA loans are backed by the Federal Housing Administration and are a popular option for buyers who may not have perfect credit or large savings.

Minimum down payment:

• 3.5% of the purchase price

Example:

• $300,000 home

• 3.5% down = $10,500

FHA loans are commonly used by first-time buyers because they have more flexible qualification guidelines. When looking at homes, FHA is stricter on how the home looks and making sure all the mechanics work.

👉 VA Loans (0% Down)

Eligible military service members, veterans, and some surviving spouses may qualify for VA loans, which often require no down payment at all.

Benefits can include:

• 0% down payment

• No private mortgage insurance

• Competitive interest rates

VA loans are one of the most powerful home financing options available for those who qualify. Talk to your lender if you are a Veteran and the qualifications.

👉 USDA Loans (0% Down)

USDA loans are designed to help buyers purchase homes in eligible rural and suburban areas.

These loans may offer:

• 0% down payment

• Lower mortgage insurance costs

• Competitive interest rates

Many buyers are surprised to learn that some suburban communities qualify for these programs.

Down Payment Assistance Programs

Many states, counties, and cities offer down payment assistance programs to help buyers purchase homes.

These programs may provide:

• Grants

• Forgivable loans

• Low-interest assistance loans

In some cases, buyers can receive thousands of dollars toward their down payment or closing costs.

This is one reason it’s helpful to speak with a knowledgeable lender or real estate professional who understands the local programs available. Some of the programs are grants, which you do not need to pay back or loans, which you will pay when you sell your home.

What Buyers Also Need to Budget For

While the down payment is important, buyers should also plan for other upfront expenses, including:

• Closing costs

• Home inspection

• Appraisal fees

• Moving expenses

• Initial home maintenance

Closing costs typically range between 2% and 5% of the home’s purchase price, although some buyers may negotiate seller concessions to help cover these expenses.

The Bottom Line

The amount of money needed to buy a home may be much less than many buyers expect. While putting 20% down can have advantages, it’s far from the only option.

Many buyers successfully purchase homes with 3% to 5% down, and some loan programs allow for no down payment at all.

If you’ve been waiting to buy because you thought you needed a large down payment, it may be worth exploring your options sooner than you think.

With the right guidance and loan program, homeownership may be closer than you realize.

Check out this blog: "Pre-Qualified Vs. Pre-Approved - What Homebuyers Need to Know"

If you're considering buying a home in or around the Chicago suburbs, understanding this step can make the process far smoother.

👉 Contact me if you are ready to get pre-approved: www.jencorso.com/home-financing

The Author is Jennifer Corso - Realtor. This article is for educational purposes and based on Jennifer Corso’s professional experience.