the short version
- the median first-time buyer puts down about 10% — meaning half put down even less.
- real minimums: 3% conventional (first-time programs), 3.5% FHA with a 580+ score, 0% VA for eligible service members, 0% USDA in eligible rural areas.
- 20% matters for one reason: it avoids PMI — private mortgage insurance, which protects the lender, not you.
- PMI on a conventional loan is usually temporary and can be removed at ~20% equity. FHA mortgage insurance rules differ and can last longer.
- budget 2–5% more for closing costs, and keep a cash cushion after closing. the down payment is not the whole number.
what people actually put down
The 20% figure is the most expensive piece of financial folklore in circulation, because it doesn't just cost money — it costs years.
According to the National Association of Realtors, the median down payment for first-time homebuyers is about 10% — and that's reportedly the highest it's been in nearly 40 years, meaning half of first-time buyers put down even less than that.
Repeat buyers put down more, often near 20% — but largely because they're rolling equity from a previous home, not because they saved it in cash. Comparing yourself to that number is comparing yourself to someone who already owned a house.
~10%
median first-time buyer down payment
3.5%
FHA minimum with a 580+ score
0%
VA and USDA, if you qualify
the real minimums
| loan type | minimum down | notes |
|---|---|---|
| conventional (first-time programs) | 3% | HomeReady / Home Possible; usually wants 620+, better at 680+ |
| FHA | 3.5% | with a credit score of 580 or higher |
| VA | 0% | eligible service members, veterans, some surviving spouses — no mortgage insurance |
| USDA | 0% | eligible rural and some suburban areas; income limits apply |
FHA is the most common first-time path — per HUD's FY2024 report, 82.64% of FHA purchase loans went to first-time buyers. And VA loans, when you qualify, are usually the best option available: no down payment and no mortgage insurance.
down payment assistance is real money
State and local programs can reduce or eliminate the cash you need, and some are grants that are never repaid — for example, Virginia Housing's Down Payment Assistance Grant covers 2–2.5% of the purchase price and can stack with local programs. Nearly every state has something. Search "[your state] housing finance agency first-time buyer" before you assume the number.
PMI, and why 20% exists at all
So why does 20% dominate the conversation? One reason: when you put down at least 20% you typically avoid private mortgage insurance.
PMI is insurance you pay for that protects the lender if you default. It adds to your monthly payment and buys you nothing directly. Understandably, people want to avoid it.
But two facts change the math. First, on most conventional loans PMI is temporary and can be removed once you reach 20% equity, through payments or appreciation. Second, FHA mortgage insurance follows different rules and can last much longer — sometimes the life of the loan — which is a genuine reason to compare FHA against a low-down conventional loan rather than assuming FHA is cheaper.
what waiting actually costs
While you save toward 20%, you're paying rent, home prices may be rising, and you're not building equity. Waiting to hit 20% usually costs more than it saves in appreciating markets — appreciation plus continued rent typically outpaces PMI over a few years. PMI is a real cost. It is usually a smaller cost than several more years of waiting.
the number that isn't the down payment
The most common budgeting mistake isn't the down payment percentage — it's forgetting that it's one of several numbers.
- Earnest money — a deposit at offer, typically credited toward your costs at closing.
- Closing costs — commonly 2–5% of the purchase price. Lender fees, title, appraisal, prepaid taxes and insurance.
- The cash cushion after closing — this is the one people skip. Buying a home with your last dollar means the first repair goes on a credit card.
- Ongoing costs — property taxes, insurance, HOA, and maintenance that a landlord used to absorb.
A smaller down payment that preserves an emergency fund is frequently the better financial decision than a larger one that empties it. Lenders will approve you for more than is comfortable; the monthly payment you can live with is a different number than the one you qualify for.
the bottom line
The 20% rule survives as cultural memory — repeated by parents who bought under different lending conditions — not as a requirement. Every major loan program allows substantially less.
The right down payment is the one that gets you into a home you can comfortably afford while keeping cash in the bank. Sometimes that's 20%. For half of first-time buyers, it's 10% or less.
Your next tiny step: search your state's housing finance agency for first-time buyer programs. Ten minutes, and it's the step most likely to change what's actually possible for you.
questions people actually ask
do i really not need 20% down?
Correct. Conventional loans go as low as 3% through first-time buyer programs, FHA is 3.5%, and VA and USDA can be 0% for those who qualify.
The median first-time buyer puts down about 10%.
what is pmi and how do i get rid of it?
Private mortgage insurance protects the lender if you default, and it's typically required on conventional loans with less than 20% down.
On most conventional loans it can be removed once you reach about 20% equity. FHA mortgage insurance has different rules and can last longer.
is fha always the cheapest option?
Not necessarily. FHA has low down payment requirements and more forgiving credit standards, but its mortgage insurance can be more expensive over time and harder to remove.
Compare a low-down conventional loan against FHA with total cost over your expected years in the home, not just the monthly payment.
how much do i need beyond the down payment?
Budget roughly 2–5% of the purchase price for closing costs, plus a cash cushion for repairs after you move in.
The down payment, earnest money, and closing costs are three separate amounts.
should i put down more if i can?
A larger down payment lowers your monthly payment and can avoid PMI. It also drains liquidity.
The balance point is usually keeping an intact emergency fund after closing — a paid-down mortgage doesn't help you when the water heater fails.
where these numbers come from
- National Association of Realtors data via Churchill Mortgage — median first-time buyer down payment of about 9–10%, and PMI removal at 20% equity. churchillmortgage.com
- AmeriSave — FHA 3.5% minimum at 580+, conventional 3% programs, and HUD FY2024 data showing 82.64% of FHA purchase loans went to first-time buyers. amerisave.com
- AmeriSave data-backed reality check — NAR figures and the range of low-down-payment programs. amerisave.com
- Jamil Brothers — the NAR 2025 median of 10% as a near-40-year high, state down payment assistance grants, and the cost of waiting. thejamilbrothers.com
- MaxLife Realty — the separation of down payment, earnest money, and closing costs, and the case for keeping a cash cushion. maxliferealty.com