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Do I really need to save 20% for a down payment? Spoiler: you can pay less

The down payment is a question that worries many. This is a large part of the purchase of real estate, which you pay upfront. And there is no hope for a mortgage loan to help. A common belief is that the typical payment amount for a house is 20% of its value. Of course, this scares many people because not everyone is ready to pay such a large sum at once. We are happy to inform you that this should not scare you. Do I really need to save 20% for a down payment? The answer is no; you can pay less or remove the down payment altogether. And that’s why.

Down payment to buy a house

The more expensive the house, the more you pay; this is logical. Although a 20% down payment is a standard payment, it is not mandatory. After all, according to the National Association of Realtors for 2023, the down payment for housing in the United States is about 14%. For FHA loans, this is generally 3.5%, subject to compliance with credit requirements.

It’s always better to pay more

This is a thesis that needs to be understood. The more you can pay right away, the less credit you will have to take out. Also, thanks to the high down payment, you can reduce the loan repayment period and the cost of monthly expenses. It is in your interest to pay more, but again, this is optional.

Payment Terms for the Down Payment

Remember that there are many loan programs, so you can see which loan conditions you meet in advance.

Do I really need to save 20% for a down payment? Try to get help

If you want to buy a house but saving up for a down payment is difficult, try getting help. There are special programs to offset the down payment for future homeowners. With this option, you can receive assistance in paying the down payment or closing costs.

Here are some basic options you can try to consider:

  • Local programs from the US Department of Housing and Urban Development
  • Assistance with the purchase of housing from the Housing Finance Agency operates in many states
  • Municipality programs offer advance payments. You can find more information on the website of the city where you live.

What are the benefits of a 20% down payment?

However, you should be aware of the benefits of a larger down payment. In the future, this will affect many of the terms of your loan.


As we wrote above, the more you pay right away, the less you will have to pay later. Also, it will help reduce the amount of the entire loan.


Lenders are more confident in borrowers willing to pay a lot at once. This shows them your financial stability.


The more equity you have in the value of your home, the better you can withstand market fluctuations.

No need to pay private insurance

This rule applies to all borrowers who pay more than 20%.

What are the disadvantages of a down payment of less than 20%?

  • Big loan — because you pay a smaller advance and will owe the lender more.
  • Monthly payments — With a lower down payment, you get a high mortgage rate.
  • Private insurance that is added to your monthly payments.

Do I really need to save 20% for a down payment? Conclusion

Do I really need to save 20% for a down payment? Of course not. But you should think about a smaller amount of risks in advance. If a high down payment stops you from buying your home, looking elsewhere is best.

Contact LBC Mortgage for a consultation to explore different home financing options. And choose the very ideal option together with a team of experts.

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