Stop Waiting to Save 20%...Here’s How You Can Buy a Home with Much Less!

If you’ve been holding off on buying a home because you’re trying to save up a 20% down payment, let’s pause for a second. That 20% rule? It’s a myth that’s holding you back. The truth is, you can get the keys to your dream home with a much smaller down payment. Let’s break it all down so you can stop waiting and start packing.

Why the 20% Rule Exists (and Why You Don’t Need to Follow It)

The idea of putting 20% down comes from the old-school world of mortgages. Back in the day, it was a way to avoid private mortgage insurance (PMI) and keep monthly payments low. While that’s still true, times have changed. Today, there are so many programs designed to help buyers—especially first-timers—get into homes with far less than 20% down. In fact, most buyers are putting down way less. According to the National Association of Realtors, the average down payment for first-time buyers is just 6%.

Low Down Payment Options You Should Know About

Here are some popular loan programs that make homeownership accessible without a massive upfront cost:

• FHA Loans: These loans require as little as 3.5% down and are designed for buyers with moderate incomes and credit scores. They’re one of the most popular options for first-time homebuyers.

• Conventional Loans: Many conventional loans allow down payments as low as 3%, especially for first-time buyers. Yes, you’ll pay PMI if you put down less than 20%, but it’s a small price to pay for getting into your home sooner.

• VA Loans: If you’re a veteran or active-duty military member, you may qualify for a VA loan, which requires zero down payment and no PMI. It’s an incredible benefit that can save you thousands.

• USDA Loans: Designed for buyers in rural and suburban areas, USDA loans also require no down payment. Income limits apply, but if you qualify, this is a fantastic option.

But What About PMI?

Yes, PMI (private mortgage insurance) comes into play if you put down less than 20%, but don’t let that scare you. PMI isn’t forever. Once you’ve built up enough equity in your home (usually about 20% of the home’s value), you can cancel it. Plus, the monthly cost of PMI is often much less than what you’d spend trying to save that extra 15-17% for a down payment. Think of it as a stepping stone to owning your home sooner.

The Cost of Waiting

While you’re trying to save that 20%, home prices and interest rates could be climbing. Let’s say it takes you five years to save up—by then, the home you’re eyeing could cost significantly more. Plus, you’re missing out on the equity you could have been building as a homeowner during that time. Bottom line: waiting often costs more than just paying PMI.

Here's a story about one of my clients....

Meet Sarah. She dreamed of owning a home but thought she needed to save up $60,000 for a 20% down payment on a $300,000 house. After years of saving, she realized home prices had risen, and her $60,000 wouldn’t stretch as far. Frustrated, she spoke to a lender who showed her she could buy a home with just 5% down—a much more manageable $15,000. Sarah found a home she loved, moved in, and started building equity right away. She’s now on track to cancel her PMI in a few years and couldn’t be happier she stopped waiting.

How to Start with a Smaller Down Payment

1. Work with a Great Lender: A knowledgeable lender will walk you through your options and find the best program for your situation. They’ll also help you get pre-approved, so you know exactly how much home you can afford.

2. Get Familiar with Assistance Programs: There are countless down payment assistance programs that can help bridge the gap. Many states, counties, and even cities offer grants or low-interest loans for first-time buyers.

3. Budget for Upfront Costs: While your down payment might be smaller, you’ll still need to budget for closing costs, which are typically 2-5% of the home’s price. A good lender can help estimate these for you.

The Bottom Line

You don’t need to drain your savings or spend years trying to hit that 20% mark. With the variety of low down payment options available today, homeownership is more accessible than ever. So stop waiting, stop stressing, and start exploring your options. Your dream home could be closer than you think!

Ready to Take the First Step?

If you’re tired of sitting on the sidelines and want to explore how to buy a home with less, let’s chat! I can connect you with trusted lenders, walk you through the process, and help you find your perfect home. Contact me today, and let’s make your dream of homeownership a reality!