How Much Down Payment Do You Really Need?
If you're waiting until you've saved 20% down, you may be waiting years longer than you need to. The truth is that most buyers put down far less — and plenty put down nothing at all. Here's what a down payment really needs to be in 2026, and how to bridge the gap.
By Jodie Barber, NMLS #76185 · 6 min read · Updated July 2026
- ✦You do not need 20% down — that only lets conventional buyers skip PMI.
- ✦VA and USDA offer $0 down for eligible buyers; conventional starts at 3%, FHA at 3.5%.
- ✦PMI on conventional loans drops at 20% equity; FHA MIP usually stays for the loan's life.
- ✦Down-payment assistance can cover much of the cash and stacks with most loan types.
The 20% myth, busted
Somewhere along the way, '20% down' became gospel. It isn't a requirement — it's a threshold. Putting 20% down on a conventional loan lets you skip private mortgage insurance (PMI), which is a nice perk, but it has never been the price of admission.
Waiting to hit 20% often costs more than it saves: you keep paying rent, and in many markets home prices don't sit still while you save. For most first-time buyers, getting in sooner with a smaller down payment is the smarter move.
0% down: VA and USDA loans
Two programs let eligible buyers purchase with no down payment at all.
If you qualify for either, $0 down can be a genuine path to ownership — not a gimmick. Eligibility is the catch, so it's worth checking early.
- ✦VA loans: for eligible veterans, service members, and surviving spouses — $0 down and no monthly mortgage insurance.
- ✦USDA loans: $0 down for buyers in eligible rural and small-town areas, within income limits of $119,850 for 1 to 4-person households and $158,250 for 5 to 8-person households in 2026.
3% down: conventional loans
For buyers with solid credit, conventional loans can go as low as 3% down. That means a $400,000 home might need around $12,000 down — a far cry from $80,000.
You'll carry PMI until you reach 20% equity, and then it drops off automatically and your payment falls. Conventional generally rewards stronger credit with better pricing, so it's often the lowest long-term cost for buyers who qualify.
3.5% down: FHA loans
FHA asks for just 3.5% down with a 580 credit score, and it's more forgiving on credit and debt than conventional. That flexibility is why it's such a common first-time-buyer choice.
The trade-off is mortgage insurance (MIP) that usually stays for the life of a low-down FHA loan. Many buyers use FHA to get in the door, then refinance into a conventional loan later to shed the insurance once they've built equity and credit.
Down-payment assistance can shrink it further
Even 3% or 3.5% can be a hurdle — and that's exactly what down-payment assistance (DPA) is for. State housing agencies offer grants and second loans that cover part or all of your down payment and closing costs.
In Jodie's states, that includes Washington (WSHFC), Idaho (Idaho Housing / IHFA), Virginia (Virginia Housing), and Texas (TDHCA and TSAHC). Assistance typically layers on top of an FHA, VA, USDA, or conventional loan, so you can combine a low-down loan with help on the cash you bring.
Frequently asked questions
- Do I really need 20% down to buy a home?
- No. Twenty percent only lets conventional buyers avoid PMI. Real minimums are 0% for VA and USDA, 3% for conventional, and 3.5% for FHA.
- What is the lowest down payment I can make?
- $0, if you qualify for a VA or USDA loan. Otherwise, 3% down on a conventional loan or 3.5% on an FHA loan are the common low-down options.
- Is it better to wait and save 20%?
- Usually not. Waiting means more rent paid and the risk of rising prices. For most buyers, getting in sooner with a smaller down payment plus assistance is the stronger move.
- Can assistance cover my entire down payment?
- Often, yes. State down-payment assistance programs can cover much or all of your down payment and some closing costs, and they layer on top of most loan types.
Keep reading
State down-payment assistance can cover much of your cash to close. Here's how WSHFC, Idaho Housing, Virginia Housing, and Texas TDHCA and TSAHC work in 2026.
FHA and conventional loans both help you buy with less than 20% down. Here's how they compare in 2026 on credit, down payment, mortgage insurance, and total cost.
FHA loans open the door with as little as 3.5% down and a 580 credit score. Here are the full 2026 FHA requirements — credit, down payment, DTI, MIP, and limits.