Can You Buy a House With Less Than 20% Down?

Buying a home can feel out of reach when you hear that you need to save 20% of the purchase price before applying for a mortgage. For many buyers, reaching that amount could take years, especially while paying rent, managing other debts, and covering everyday expenses.

The good news is that you generally do not need a 20% down payment to buy a home in the United States. Some conventional mortgages allow down payments as low as 3%, and eligible borrowers may qualify for loans with no down payment at all.

However, a smaller down payment can mean a larger mortgage balance, higher monthly payments, or mortgage insurance.

Before deciding how much to save, it helps to understand which loan options are available and whether buying sooner makes more financial sense than waiting.

A 20% down payment is a common financial goal, not a universal mortgage requirement. Lenders offer different loan programs with different minimum down payments, credit requirements, income limits, and property rules.

For example, a buyer purchasing a $300,000 home with 5% down would contribute $15,000 toward the purchase price and finance the remaining $285,000, before any financed fees or adjustments. A buyer putting 20% down would contribute $60,000 and borrow $240,000.

Both buyers may be able to purchase the same property if they qualify for their respective loans. The smaller down payment reduces the initial savings required, but the buyer generally takes on a larger loan.

According to the Consumer Financial Protection Bureau (CFPB), buyers who put less than 20% down on a conventional mortgage typically need private mortgage insurance (PMI).

The minimum amount depends on the loan program, your financial profile, and the property you want to buy. These are common starting points, not guarantees of approval.

FHA loans can allow down payments as low as 3.5%, while VA-backed loans and USDA programs can offer no-down-payment options to eligible borrowers. Actual approval depends on the complete application and program rules.

If you are comparing loan types, review the requirements for a conventional mortgage with a low down payment, an FHA mortgage, a VA loan, and a USDA loan.

Looking at actual numbers can make the decision easier. Here is how different down payment percentages compare on a $300,000 home.

These figures show only the down payment and resulting loan amount. They do not include closing costs, prepaid property taxes and insurance, or other transaction expenses.

Use the down payment calculator to estimate how much cash you may need for a home at your target price. You can then use a mortgage payment calculator to compare potential monthly principal and interest payments.

A smaller down payment can help you buy a home earlier, but it is important to understand the trade-offs before committing.

You May Have to Pay Private Mortgage Insurance

With many conventional mortgages, putting less than 20% down means paying PMI. This insurance protects the lender if you default; it does not protect you from losing your home or falling behind on payments.

PMI increases the cost of borrowing, but it does not automatically make a low-down-payment mortgage a bad choice. Its cost depends on factors such as your credit profile, loan-to-value ratio, and lender’s terms.

For many eligible conventional mortgages, you can request PMI cancellation when your loan balance reaches 80% of the home’s original value, subject to applicable requirements. Automatic termination generally applies when the balance is scheduled to reach 78% of the original value, provided the loan is current. Different rules may apply to other mortgage types.

FHA loans have their own mortgage insurance rules, so do not assume their insurance works like conventional PMI. Compare the full cost of each loan rather than focusing only on the down payment.

Read more about how PMI works when you put less than 20% down.

When you put less money down, you generally borrow more. A larger mortgage balance usually means a higher principal-and-interest payment at the same interest rate and loan term.

You may also have a mortgage insurance payment, depending on your loan program. Property taxes, homeowners insurance, and any HOA fees add to your housing costs.

For a clearer estimate, use a mortgage calculator with taxes and insurance rather than looking at principal and interest alone.

You May Start With Less Equity

Your home equity is the difference between the home’s value and the amount you owe on the mortgage. A smaller down payment means you begin with less equity, leaving you more exposed if property values fall or you need to sell soon after buying.

This does not mean you should always wait until you have 20% saved. It means you should consider how long you plan to stay in the home, whether you can manage the payment comfortably, and whether you have enough savings for unexpected expenses.

There is no single answer that works for every buyer. Buying with 5% down may make sense if you have stable income, can comfortably afford the full housing payment, and would otherwise spend several years saving while paying rent. Waiting may be better if your current budget is tight or a larger down payment would substantially reduce your monthly costs.

Consider these factors before deciding:

• Monthly affordability: Can you pay the mortgage, taxes, insurance, utilities, and maintenance without stretching your budget?
• Emergency savings: Will you still have money available after closing for repairs, job loss, or other unexpected expenses?
• Time in the home: Would buying now fit your plans for the next several years, or might you need to move soon?
• Total loan cost: How do interest, mortgage insurance, and lender fees compare across different down payment options?

A larger down payment can reduce borrowing costs, but using every dollar of savings to reach 20% may leave you financially vulnerable. Compare the trade-offs in putting 20% down versus keeping more cash before making your decision.

You may not have to save the entire down payment yourself. State and local housing agencies, nonprofit organizations, and some mortgage programs offer assistance to eligible buyers. Depending on the program, help may come as a grant, a forgivable loan, or a repayable second loan.

Eligibility may depend on income, purchase price, location, first-time-buyer status, homebuyer education, or the type of mortgage you use. Some programs also require you to contribute a certain amount of your own money.

Ask your lender or a housing counselor whether assistance can be combined with your preferred mortgage. Also confirm whether the assistance must be repaid and whether it creates a second lien on the property.

Explore down payment and closing cost assistance before assuming you need to postpone buying until you have saved more.

Even if a lender approves a low down payment, you still need to plan for the rest of the purchase. Closing costs can include lender fees, appraisal charges, title services, and other expenses. You may also need to pay prepaid property taxes, homeowners insurance, moving costs, and immediate repairs.

For this reason, a buyer who has enough saved for a 3% down payment may not yet have enough cash to complete the purchase safely.

Estimate your full cash requirement using this guide to down payment versus closing costs. The goal is not just to get approved; it is to move into the home without leaving yourself short of money.

You can buy a house with less than 20% down, and for many buyers, doing so is a practical way to become a homeowner without waiting years to build a larger savings balance. The important question is whether the mortgage remains affordable after accounting for insurance, taxes, closing costs, maintenance, and other expenses.

Compare several loan options, check whether you qualify for assistance, and calculate your full monthly payment before making an offer. A smaller down payment can be a useful starting point—but the right mortgage is one you can comfortably afford after you move in.