You Don’t Need 20% Down, But How Much Do You Actually Need to Buy a Home?

If you’ve been putting off buying a home because you think you need a 20% down payment, you’re not alone. It’s one of the most common misconceptions about homeownership, and one that keeps many qualified buyers on the sidelines.

The truth is that while putting 20% down may be the right choice for some buyers, it’s far from the only option. Depending on your loan type, financial situation and the homeownership programs available where you live, you may be able to purchase a home with significantly less.

So, how much do you actually need? Let’s take a closer look.

Do You Need a 20% Down Payment?

No. A 20% down payment is not required to buy a home.

Many conventional loans allow qualified buyers to put down as little as 3%, while FHA loans require as little as 3.5% for eligible borrowers. Some government-backed loan programs, such as VA and USDA loans, may even offer qualified buyers the opportunity to purchase a home with no down payment at all.

Putting 20% down can help you avoid private mortgage insurance (PMI) on many conventional loans and reduce your monthly payment, but for many buyers, waiting years to save that much could mean missing opportunities in the housing market.

How Much Money Will You Need Upfront?

Your down payment is only one part of the equation.

When budgeting for a home purchase, you’ll also want to consider:

• Closing costs, including lender fees, title services and taxes
• Earnest money deposits, which show you’re serious about buying
• Home inspections and appraisals
• Moving expenses
• Emergency savings for unexpected repairs or expenses after you move in

These costs can add up quickly, which is why many buyers focus on more than just their down payment.

Homeownership Programs Can Help Reduce Upfront Costs

Many buyers don’t realize there are thousands of homeownership programs designed to make buying a home more affordable.

These programs may help with:

• Down payment costs
• Closing costs
• Grants that don’t require repayment (if program requirements are met)
• Deferred-payment loans
• Forgivable loans
• Affordable 1st mortgage financing

Some programs are offered by state or local housing finance agencies, while others are available through employers, nonprofits, municipalities or lenders.

Every program has its own eligibility requirements, so it’s important to understand which options may be available to you.

Who Qualifies for Homeownership Programs?

Eligibility varies by program, but many buyers are surprised to learn they may qualify.

Some programs are designed for first-time homebuyers, while others are open to repeat buyers. Eligibility may depend on factors such as:

• Household income
• Home purchase price
• Location
• Occupation
• Military service or Veteran status
• Whether you’re purchasing in a targeted area

Many buyers also assume they earn too much to qualify. In reality, 62% of homeownership programs allow household incomes above $100,000, depending on household size and local housing costs.

The only way to know what you may qualify for is to explore the programs available where you’re planning to buy.

Can You Combine Multiple Programs?

In many cases, yes.

Some homebuyers can layer multiple sources of assistance to reduce their upfront costs. Layering means combining more than one eligible source of funding as part of your home purchase.

Depending on the program requirements, you may be able to combine:

• Multiple homeownership or down payment assistance programs
• Down payment assistance with closing cost assistance
• Gift funds from family
• Seller concessions
• Affordable mortgage products

For example, a buyer might use a local grant to help cover their down payment while also receiving closing cost assistance through a state housing finance agency. Others may combine down payment assistance with an affordable 1st mortgage program that offers a lower down payment requirement.

Not every program allows layering, and some have restrictions on which types of assistance can be combined. That’s why it’s important to work with a knowledgeable mortgage professional who can help identify compatible programs and ensure they meet all program and loan requirements.

The more you know about your available options, the more opportunities you may have to reduce the amount of cash you need to bring to closing.

How Can You Find Homeownership Programs Near You?

Finding homeownership programs can feel overwhelming. Eligibility requirements, funding availability and program rules can vary by location and change over time, making it difficult to know where to start.

Fortunately, you don’t have to do the research on your own. Free online tools, like Down Payment Resource’s eligibility search, can help you explore homeownership programs that may be available based on where you’re buying and your household information.

Frequently Asked Questions

Do first-time homebuyers need a 20% down payment?

No. Many first-time homebuyers purchase a home with much less than 20% down, depending on the loan and available homeownership programs.

Can homeownership programs help with more than just the down payment?

Yes. Depending on the program, funds may be used for your down payment, closing costs, prepaid expenses, mortgage rate buydowns or other eligible home purchase expenses. Every program has its own rules, so eligible uses can vary.

What if I’ve owned a home before?

You may still qualify. While some programs are limited to first-time buyers, others are available to repeat homebuyers who meet the program requirements.

What’s the best way to find programs I may qualify for?

Start by using our free search tool to explore options based on where you’re buying and your household information. Once you have a better understanding of what’s available, a mortgage professional can help you determine which programs you’re eligible for and how they may fit into your financing.

The Bottom Line

Buying a home may not require as much upfront cash as you think.

Whether you’re just beginning your homebuying journey or actively looking for a home, understanding your financing options—and exploring available homeownership programs—can help you make more informed decisions.

Before assuming you need years to save a 20% down payment, take a few minutes to see what programs may be available. You may discover opportunities that make buying a home possible sooner than you expected.

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