“What Every First-Time Buyer Should Know About Down Payments”

For most first-time homebuyers, the down payment is the biggest hurdle to homeownership. But there’s a lot of confusion around how much you actually need to save, what your options are, and how your down payment affects your mortgage.

If you’re getting ready to buy your first home, here’s what you need to know before you start saving — or stressing.

1. You Don’t Always Need 20% Down

The “20% rule” is one of the biggest myths in real estate. While putting down 20% can help you avoid private mortgage insurance (PMI), many loan programs require much less:

• FHA loans: As low as 3.5% down

• Conventional loans: As low as 3% down

• VA loans (for veterans): 0% down

• USDA loans (for rural areas): 0% down

That means a $300,000 home could be yours with as little as $9,000 down — not $60,000.

2. Your Down Payment Affects More Than Just Your Loan Amount

A larger down payment means:

• Lower monthly mortgage payments

• Less interest paid over time

• A stronger offer in competitive markets

But don’t empty your savings account just to increase your down payment. You’ll still need money for closing costs, moving expenses, and an emergency fund.

3. Understand Private Mortgage Insurance (PMI)

If your down payment is under 20% on a conventional loan, you’ll likely need to pay PMI — a small monthly fee added to your mortgage.The good news? PMI isn’t forever. Once you’ve built up 20% equity in your home, you can request to have it removed.

4. Down Payment Assistance May Be Available

Many first-time buyers don’t realize there are local, state, and federal programs designed to help. These can include:

• Grants that don’t need to be repaid

• Low-interest loans for down payment or closing costs

• Employer or community programs for first-time buyers

Your realtor or lender can help you find out which programs you qualify for in your area.

5. Start Saving Early and Smart

Set up a separate savings account dedicated to your down payment so you’re not tempted to touch it. Automate transfers each payday, and look into high-yield savings accounts to help your money grow faster.

You can also boost your savings by:

• Cutting recurring subscriptions you don’t use

• Directing tax refunds or bonuses into your fund

• Avoiding new debt that could affect loan approval

💡 Final Thought

Your first home is closer than you think. Understanding how down payments work — and what options are available — can make the process less intimidating and more achievable.

If you’re ready to start your homeownership journey, talk to a trusted real estate agent and lender who can walk you through the best programs, loan types, and strategies for your budget.