A common myth still circulates in the world of home buying: that you must have a 20% down payment to purchase a home. This misconception is preventing many potential buyers from pursuing their homeownership dreams, especially in today’s challenging housing market. In reality, there are several options for buyers who don’t have 20% to put down.
The Myth Persists
According to the 2025 Home Buyer Report from NerdWallet, 62% of Americans still believe a 20% down payment is necessary to buy a home. Surprisingly, 60% of homeowners share this belief, which could be a major reason why so many renters are holding back. In fact, 33% of non-homeowners say that the lack of a sufficient down payment is one of the primary reasons they’re not buying right now.
But the truth is, the 20% down payment requirement is an outdated concept. The median down payment for all homebuyers is now less than 20%, with first-time homebuyers often putting down even less—around 9%. These figures have changed over the years as home prices have risen, making it more difficult for people to save large sums for a down payment.
Why Does the Myth Persist?
This myth is so ingrained in our minds that it spans across various age groups and education levels. Despite the changing landscape of home financing, it remains prevalent. Many believe that 20% is the gold standard when in fact, it’s simply not required. With home prices at an all-time high, it’s no wonder that so many buyers are stuck thinking a hefty down payment is the only path to homeownership.
Down Payments Are Still Important, But They Don’t Have to Be 20%
While it’s true that putting down more money upfront can have advantages—such as lower monthly payments and potentially a better interest rate—there are plenty of options for buyers who cannot afford to put down 20%.
Low Down Payment Options
One of the most popular options for buyers looking for a smaller down payment is conventional loans through Fannie Mae’s HomeReady or Freddie Mac’s Home Possible programs. These programs allow eligible buyers to purchase a home with as little as 3% down.
For those interested in FHA loans, these government-backed mortgages typically require a down payment of just 3.5%. There are also USDA loans for those in rural areas, as well as VA loans for veterans, which offer 0% down payments. Keep in mind, though, that while these loans require less money upfront, they often come with additional costs such as mortgage insurance or upfront fees.
Benefits of Larger Down Payments
That said, there are still significant benefits to putting down more than the minimum. A larger down payment reduces the amount you borrow, which can result in lower monthly payments and a shorter loan term. You may also qualify for a lower interest rate, saving you money over the life of the loan. Moreover, a larger down payment means you’ll own more equity in your home right away, which can be a financial asset.
Conclusion: Options Abound for Homebuyers
In conclusion, the belief that a 20% down payment is required to buy a home is simply a myth. Thanks to a variety of loan programs, potential buyers can purchase a home with much lower down payments, and in some cases, no down payment at all. While larger down payments have their benefits, they are not a requirement. If you’re considering buying a home, it’s important to explore all your financing options and know that homeownership could be more attainable than you think.