Do I need 20% down to buy a home?

First-Time Homebuyer

When it comes to a down payment on a home, you may have more options than you think.

While 20% is often considered a standard down payment on a home, it's not realistic for everyone. Many homebuyers put down as little as 14%—or even 3% for many first-time buyers.

For those who qualify, there are affordable loan programs that require a low down payment. Here are some quick points about down payments to help you decide what's right for you.

Think about all your financial needs.

Keep in mind that paying less upfront can free up money for other things that come with buying a home—like inspections and moving. It can also help you build up your emergency savings, pay off student loans, or save for retirement.

Even so, there are clear benefits to putting 20% down, starting with a smaller loan and a lower monthly payment. You can also avoid paying for private mortgage insurance (PMI), which is usually required if your equity is less than 20% of the value of your home.

Consider getting help with your down payment.

There are some ways to get help with a down payment:

Assistance programs – There are more than 2,500 down payment assistance programs across the country—typically offered by state housing finance organizations and local housing authorities. They offer loans, grants, and tax credits to help cover down payments, closing costs, and other fees.

Gift money – 20% of homeowners received gifts from family or friends to help with their down payment. If this is an option for you, you'll need to make it official with a gift letter that includes:

  • The amount of the gift
  • The address of the home you want to purchase
  • The donor's name and contact information
  • Your relationship with the donor (such as a parent, grandparent, or friend) and their signature
  • A statement indicating that the money is actually a gift and not a loan

Ready to get started?

No matter how much you’ve saved for a down payment, you still may be able reach your homeownership dream. Knowing how much home you can afford is a great first step .

Let's talk about your home search and what makes sense for your situation.