How to Buy a Home with Less Than 20% Down

Think you need 20% down to buy a home? Think again. At Rapid Home Loan, we help buyers every day who purchase homes with 10%, 5%, or even as little as 3% down. In today’s market, there are more flexible financing options than ever—especially for first-time buyers or those with solid credit but modest savings.

🏡 The 20% Down Payment Myth

Many buyers believe they need to save up 20% of the purchase price before they can buy a home. While a 20% down payment helps you avoid private mortgage insurance (PMI) and can reduce your monthly payment, it’s not required for most loan programs.

In fact, the average down payment for first-time homebuyers in the U.S. is around 6-7%, not 20%.

💰 Low Down Payment Loan Options

Here are some common mortgage programs that allow you to buy a home with less than 20% down:

1. Conventional Loan (3–5% Down)

Minimum 3% down for qualified buyers
PMI is required with less than 20% down, but it can be canceled once equity reaches 20%
Strong credit and steady income help you qualify

2. FHA Loan (3.5% Down)

Designed for buyers with lower credit scores
Requires mortgage insurance, but offers flexible approval terms
Great for first-time buyers or those with limited savings

3. VA Loan (0% Down)

For eligible veterans, active-duty service members, and certain military spouses
No down payment or PMI required
Backed by the Department of Veterans Affairs

4. USDA Loan (0% Down)

For buyers purchasing in designated rural or suburban areas
Income restrictions apply
No down payment required

🧮 What About Mortgage Insurance?

When you put less than 20% down, most lenders require private mortgage insurance (PMI) or a similar fee (like FHA’s mortgage insurance premium). This protects the lender—but it’s not permanent.

👉 At Rapid Home Loan, we’ll help you calculate how PMI affects your payment and strategize how to remove it as quickly as possible.

📈 Building Equity Without Waiting

A smaller down payment lets you get into the market sooner—so you can start building equity instead of paying rent. Even if you start with 5% down, home appreciation and regular payments can grow your equity faster than you think.

Plus, many local and state programs offer down payment assistance, grants, or forgivable second loans. We’ll help you explore every option you qualify for.

🛠️ Real Example: 5% Down, Big Wins

A recent client came to Rapid Home Loan thinking they’d need $60,000 to buy their first home. We qualified them for a 5% down conventional loan—cutting their required upfront cash in half. They closed on their new home with confidence and are already building wealth through homeownership.

✅ You Don’t Need 20%—You Just Need a Plan

If saving for 20% feels out of reach, don’t give up. There are real, affordable paths to homeownership available right now. Our mortgage experts at Rapid Home Loan specialize in helping buyers find low-down-payment solutions that work for their budget.