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If you look around the internet you’ll see “20% down payment” mentioned a lot. That must be the standard amount of money you need to save up in order to buy a house then, right? Your bank account and savings plan may be relieved to learn that there are plenty of down payment options, and yes, you can absolutely buy a home with less than a 20% down payment.

Well then, why is everybody obsessed with 20%? The quick answer is that it’s simpler to use as an example than mortgage options with a lower down payment. 20% down payment is the typically accepted level where you can get a mortgage without needing to purchase mortgage insurance. Mortgage insurance can be paid up front and/or spread out in monthly payments, so for the sake of showing a more attractive monthly payment and lower closing costs, or just keeping things simple on a mortgage calculator, 20% tends to be a default. That’s all. Just an easier set of numbers to start with.

“What does this mean for me?”

Don’t count yourself out because your savings account isn’t close to 20% of the price tag on the home you want. Conventional mortgage loans offer 3% down payment options. Government programs like FHA, USDA-RD and VA mortgage loans allow for low down payments and in some cases, depending on eligibility factors, no down payments. You have plenty of options.

This is where it makes sense to speak with a mortgage loan officer to take a look at your options. Bring your questions and talk about your goals. Is a low down payment the most important factor or are you able to put a little more money down up front in the interest of having lower monthly payments? How do these figures line up when you add closing costs to your considerations? There is no single right answer, but once you take a look at your options you may see the solution that works best for you.