If you've been holding off on buying your first home because you don't have 20% saved for a down payment, here's some good news: most first-time buyers don't put down anywhere near that much. The "20% down" rule is one of the most persistent myths in homebuying. In reality, there are loan programs designed to get qualified buyers into a home with a fraction of that, and a range of assistance options to help cover the rest.
You probably don't need 20% down
Several loan programs were built specifically to lower the upfront cash hurdle. Which one fits you depends on your credit, income, military service, and where you want to live, so it's worth knowing the landscape before you start shopping:
- Conventional loans (as little as ~3% down): A popular choice for buyers with solid credit. You'll typically pay private mortgage insurance until you build enough equity, then it can be removed.
- FHA loans (3.5% down): Backed by the Federal Housing Administration, these are more flexible on credit and a common first-time-buyer path.
- VA loans (0% down): For eligible veterans, active-duty service members, and some surviving spouses. No down payment and no monthly mortgage insurance.
- USDA loans (0% down): For buyers purchasing in eligible rural and many suburban areas, subject to income limits.
Help with the down payment and closing costs
Beyond low-down-payment loans, there are programs designed to bridge the gap on the cash you do need:
- Down-payment assistance (DPA): Many state and local agencies offer grants or low-interest second loans to cover part of your down payment or closing costs. Availability and rules vary widely by location.
- Gift funds: Most loan programs let a family member (and sometimes others) gift money toward your down payment. You'll need a simple gift letter documenting that it isn't a loan.
- Seller concessions: In some markets, a seller may agree to contribute toward your closing costs, reducing your out-of-pocket total.
Stacking the right loan program with an assistance program can shrink the cash you need to close from "someday" to "this year."
Why a loan officer is your best first call
Every buyer's situation is different, and the program that's cheapest over the long run isn't always the one with the lowest down payment. A good loan officer compares your options side by side, factors in mortgage insurance and rate differences, and helps you find the program that actually fits your budget and goals. They can also tell you which down-payment assistance programs you may qualify for in your area, which most online calculators won't.
It also helps to know about a deal the moment it appears. With RatePlug, the payment information and finance options on the property listings you and your agent review reflect real, current numbers, and special-financing alerts can flag when a particular home qualifies for a program that makes it more affordable. That means fewer surprises and more confidence as you go from "just looking" to "we're under contract."
Your simple next steps
Start by getting pre-approved so you know your true budget. Ask your loan officer to walk through low-down-payment options and any assistance programs you might qualify for. Then shop with real payment numbers in front of you, so every home you tour is one you can actually afford.
Curious what's possible for your budget? Learn more at rateplug.com and connect with a loan officer who can map out your best path to homeownership.