The internet loves to yell that you must have twenty percent down or you are not ready to buy a home. Which is wild, because the majority of first time buyers do not put twenty percent down. Not even close. Plenty of successful homeowners started with ten percent, five percent, three percent, or something in between.

Buying without twenty percent down is not only possible, it is normal. You just need to understand how the math works, what tradeoffs come with smaller down payments, and how to choose the right loan program for your situation.

Why Twenty Percent Became The “Rule”

The twenty percent idea comes from a few places. First, if you put twenty percent down on a conventional loan, you avoid mortgage insurance. That is nice, obviously. It lowers your monthly payment.

Second, bigger down payments reduce your loan amount. Smaller loan, smaller payment. Great.

But none of that means twenty percent is mandatory. It is helpful, not required. Treat it as one option, not the only option.

What Happens When You Put Less Than Twenty Percent Down

Putting less down changes a few things. None of them are scary once you understand them.

• You borrow more money
• Your monthly payment rises a bit
• You usually pay mortgage insurance for a season

That is it. The house does not explode because you put five percent down. You are not a “risk” to society. You are just making a tradeoff between paying more upfront or paying a little extra each month.

If you want a deeper look at how down payment size affects your total loan, the breakdown inside down payment requirements shows exactly how those percentages change your numbers.

How Little Can You Actually Put Down

More than you might expect.

Conventional loans: Often allow three percent down for qualified first time buyers.
FHA loans: Require around three and a half percent down.
VA loans: Zero down for eligible veterans and active duty service members.
USDA loans: Zero down for certain rural and suburban areas.

You are not locked into twenty percent or nothing. You have a menu.

Mortgage Insurance: The Thing Everybody Complains About

Mortgage insurance exists so lenders feel comfortable giving lower down payment buyers access to loans. It is not forever.

Conventional mortgage insurance often drops off once you reach a certain equity level, usually around twenty percent. Sometimes you can even request removal early if your home value climbs faster than expected.

FHA mortgage insurance sticks around longer, although refinancing into a conventional loan later can eliminate it.

Mortgage insurance is annoying, but it is a temporary cost that lets you buy sooner. For many buyers, that tradeoff is worth it.

Why Buying Sooner Sometimes Beats Saving Longer

Saving twenty percent can feel like trying to fill a bathtub with a teaspoon. If home prices are rising while you save, that goal moves farther away. What was a fifty thousand dollar down payment goal becomes fifty five thousand dollar goal next year, then sixty thousand the year after.

Buying sooner with a smaller down payment can lock in your price and payment before the next round of increases. You can always refinance later if rates drop or your equity grows.

There is no trophy for waiting until your savings feel perfect.

The Real Question: Can You Afford The Monthly Payment

The size of your down payment matters, but not as much as whether your monthly payment fits your life without making you eat beans for every meal.

Your down payment should support your budget, not wreck it.

If you want help reverse engineering the monthly payment you can comfortably handle, the walkthrough inside how much house you can afford breaks down how income, debt, insurance, taxes, and fees shape that number.

Your Loan Type Influences How Much You Need Down

Different loans treat down payments differently. Some reward higher credit scores with lower mortgage insurance costs. Others make low down payments easier but include more fees.

If you want a clear overview of what separates each loan type, the guide at understanding mortgage types gives you a simple side by side comparison.

Knowing your loan options helps you pick the down payment amount that works best for you, not someone else.

Down Payment Is Only One Piece Of Cash To Close

Even if you put five percent down, you still need to plan for closing costs. These usually land between two and five percent of the purchase price.

That money covers things like:

• Inspection
• Appraisal
• Lender fees
• Insurance
• Taxes
• Title work

When you plan your savings, think “total cash needed for closing,” not just “down payment.”

How To Strengthen Your Offer Without Twenty Percent Down

Even if you have a small down payment, you can still make a strong offer.

Here are a few strategies:

• Get a full pre approval, not just pre qualification
• Offer flexible closing dates
• Increase earnest money if you have the savings
• Provide clean, complete documentation to your lender quickly

You do not need twenty percent down to look like a serious buyer. You just need to be prepared and communicate well.

How Credit Score Plays Into Low Down Payment Loans

If you put less money down, your credit score becomes even more important. Good credit can offset a lower down payment by giving you a better interest rate and lower mortgage insurance costs.

No need for perfection. Just keep things in reasonable shape: pay on time, lower your balances, and avoid opening new accounts right before applying.

How To Decide How Much To Put Down

There is no universal answer. You have to find the sweet spot between:

• Your savings
• Your emergency fund
• Your comfort level with monthly payments
• Your loan type
• Your timeline

If putting twenty percent down empties your bank account, that is usually not a wise move. You want a cushion. A house with no emergency fund is stress waiting to happen.

Many buyers choose somewhere between five and ten percent as a balanced option. They get a reasonable payment without draining their savings.

When Twenty Percent Down Actually Makes Sense

Putting twenty percent down makes sense if:

• You already have the funds saved
• You want to avoid mortgage insurance
• You prefer a lower monthly payment
• You plan to stay in the home for a long time

If you check none of those boxes, smaller down payments are perfectly acceptable.

Common Myths About Buying Without Twenty Percent Down

A few myths need to disappear.

Myth: “You will never build equity with less than twenty percent down.”
Reality: Every payment you make builds equity, regardless of your down payment size.

Myth: “Sellers will never pick your offer.”
Reality: Sellers care about certainty. Strong pre approval and clear communication go way further than a giant down payment.

Myth: “Mortgage insurance lasts forever.”
Reality: It often drops off once you hit a certain equity level. (You may have to call them to ask them to do it… banks aren’t going to go out of their way to reduce their income. That’s what we did. They hemmed and hawed but did it eventually. However, this may have changed with FHA loans, so double check before you sign!)

The internet loves drama. The mortgage world is far more flexible.

Buying Without Twenty Percent Down Is Completely Normal

The goal is not to impress strangers on social media with your down payment percentage. The goal is to buy a home that fits your life.

If you can afford the monthly payment, have some savings left as a cushion, and understand the tradeoffs, buying with less than twenty percent is a perfectly smart, perfectly responsible move.

You get a place to call your own, you start building equity sooner, and you can always adjust your mortgage later through refinancing or extra principal payments.

Twenty percent is helpful. It is not required. Your homeownership journey does not need to wait for a mythical perfect number.