Do you really need 20% down to buy a home?

Most buyers assume they need 20% down before they can even think about buying a home — but that hasn’t been the reality of mortgage lending for decades. Whether you’re a first-time buyer in McKinney or a veteran relocating to Prosper, there are loan options designed to get you into a home with far less upfront. Here’s what the 20% rule actually means, where it came from, and why waiting to hit that number may cost you more than it saves.

Quick answer: How much do you actually need to put down?

The short answer is: probably less than you think. Here’s a snapshot of the minimum down payment requirements for the most common loan types:

• Conventional loans: as little as 3% down for qualifying first-time buyers
• FHA loans: 3.5% down with a qualifying credit score
• VA loans: 0% down for eligible veterans, active-duty servicemembers, and surviving spouses
• USDA loans: 0% down for eligible buyers in qualifying rural and suburban areas

These aren’t obscure workarounds — they’re mainstream loan programs used by hundreds of thousands of buyers every year. You can learn more about how each one works on the loan programs page.

Where did the 20% number come from?

The 20% figure has a real origin, and it isn’t meaningless — it just doesn’t apply to everyone the way people assume. Historically, 20% was the standard underwriting threshold before government-backed loan programs became widely available. Lenders required it because they were taking on more risk without a federal guarantee behind the loan.

The number also has ongoing relevance for one specific reason: on a conventional loan, putting down 20% or more means you avoid private mortgage insurance (PMI). PMI is a monthly cost that protects the lender (not you) if you default, and it applies when your down payment is below 20%. It’s a real cost worth understanding — but it’s also not permanent, and it’s not a reason on its own to delay buying.

What are the actual tradeoffs of putting less down?

Putting down less than 20% means you’re borrowing more, which affects your monthly payment. On a conventional loan, you’ll also carry PMI until you’ve built enough equity — typically 20% of the home’s value. On an FHA loan, mortgage insurance takes the form of MIP (mortgage insurance premium), which has slightly different rules around how long it stays on the loan depending on your down payment and loan term.

None of this is inherently bad. These costs are real, and they’re worth factoring into your budget. The Consumer Financial Protection Bureau has a helpful overview of down payment basics if you want to dig into the mechanics.

What does waiting actually cost in a market like DFW?

This is where the math gets interesting — and where the “just save more” advice can quietly backfire. In fast-growing DFW suburbs like Prosper, Celina, and McKinney, home prices have climbed meaningfully over the years. Waiting an extra year or two to accumulate a larger down payment can mean the home you have your eye on now costs significantly more by the time you’re ready to buy.

The down payment you saved might be larger in dollar terms, but the target has moved. You could end up needing more than you saved just to keep pace — and you’ll have spent additional years paying rent rather than building equity. Buying sooner with a smaller down payment, when your budget and credit profile support it, is a legitimate financial strategy that many buyers use successfully.

Are there programs to help with down payment costs in Texas?

Yes, and they’re worth exploring before you assume you have to come up with everything on your own. Texas has state-level programs designed to assist buyers — particularly first-time buyers — with down payment and closing cost needs. These programs change periodically in terms of availability and structure, so the best approach is to check with the Texas Department of Housing and Community Affairs for current offerings, and to talk with a licensed mortgage loan officer who works in Texas regularly and knows what’s active right now.

Down payment assistance can come in different forms — some as grants, some as deferred loans, some layered on top of specific first mortgage products. An MLO can help you figure out whether you qualify and how to stack these options effectively for your situation.

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Talk it through with someone who knows the DFW market

Mortgages aren’t one-size-fits-all, and the right path depends on your specific situation. If you have questions about anything in this post — or want to map out what your options actually look like — here are two easy next steps:

• Schedule a 15-minute call — no pressure, just answers
• Send a message — I’ll get back to you within one business day

Kristin Boyd - LenderLady TX | NMLS# 957495 | Licensed in Texas