The Truth About Down Payments — What You Really Need to Buy a Home

Information provided by our Affiliate Partner, Mortgage America

When it comes to buying a home, one of the biggest misconceptions out there is that you must have 20% saved for a down payment. While that’s often the number people hear, the truth is that many buyers, especially first-timers, purchase homes with far less upfront. There are several affordable and flexible loan options available today and understanding them can help you move toward homeownership sooner than you might think.

What Is a Down Payment and Why It Matters

A down payment is the portion of your home’s price you pay upfront, while the rest is financed through your mortgage. The size of your down payment can affect your monthly payments and whether you’ll need private mortgage insurance (PMI). In short, a larger down payment means a smaller loan and lower monthly payments, but smaller down payments can make homeownership more accessible for qualified buyers ready to take the leap.

Common Down Payment Options

You don’t have to wait years to save up for a home. Here are a few of the most common loan programs and their down payment requirements:

• FHA Loans: Require as little as 3.5% down, making them a popular option for first-time buyers.

• Conventional Loans: Qualified borrowers can put down as little as 3%.

• VA Loans: Available to eligible veterans and active-duty military with 0% down and no PMI.

• USDA Loans: Offer 0% down for eligible borrowers purchasing in rural areas.

  
  

“Every buyer’s situation is unique,” says Tracy Schruck at Mortgage America. “Our goal is to find the loan program that fits each client’s needs and budget while helping them feel confident in their path to homeownership.”

Down Payment Assistance and Grants

Down payment assistance programs can make a huge difference for buyers who are financially ready to own but lack savings for upfront costs. These programs may come in the form of grants, forgivable loans, or matching funds—and there are even local options available. For example, the Baldwin REALTORS® Foundation offers a First-Time Homebuyer Grant for qualifying applicants purchasing in Baldwin County. Talk to your REALTOR® or lender about available local and state programs to see if you qualify.

Tips to Save for a Down Payment

If you’re just starting your homebuying journey, small, consistent steps can help you reach your goal:

• Automate savings into a dedicated account each month.

• Use tax refunds or bonuses to boost your home fund.

• Pay down high-interest debt to strengthen your credit and improve loan eligibility.

Even a few hundred dollars a month can make a big difference over time.

The Bottom Line

You don’t need 20% down to buy a home, and you don’t have to go through the process alone. With the right REALTOR® and a trusted lender like Mortgage America, you can explore your options, learn about available assistance, and find a plan that works for you.

Ready to start your journey? Contact Mortgage America today to learn how much home you can afford and take the first step toward turning your homeownership goals into reality.