Do you really need 20% down? Let's break that myth!

The short answer: No, you do not need a 20% down payment to get into a house. Many loan programs have a down payment minimum under 10% or don’t have a minimum at all.

Below are the minimum down payment requirements for commonly used loan programs, assuming the borrower meets eligibility and underwriting guidelines.

• Conventional loans (standard): 5%

• Conventional loans for first-time buyers: 3 %

• FHA minimum: 3.5%

• USDA minimum: 0% (for eligible rural areas and income-qualified buyers)

• VA minimum: 0% (for eligible veterans and service members)

If your down payment is less than 20%, you will pay private mortgage insurance (PMI).

• PMI does not protect the borrower. It protects the lender.

• It is required because the loan carries a higher risk with lower equity

• It shouldn't keep you from purchasing. PMI costs $25 to $200 monthly.

For conventional loans, PMI can be removed.

• At 80% loan-to-value (20% equity), you can request the removal of PMI.

• It will automatically fall off payments once the loan-to-value hits 78% (22% equity).

The only exception is FHA loans. FHA loans use Mortgage Insurance Premiums (MIP).

MIP follows these rules:

• If the down payment is less than 10%, MIP is required for the life of the loan

• If the down payment is 10% or more, MIP is required for 11 years.

This is an important distinction when comparing FHA loans to conventional financing.

The bottom line is you do not need 20% down payment to purchase a house. It’s important to understand that each loan program is tailored to your goals, financial profile, and eligibility.