Can we buy a home if we don’t have 20% down?
Yes. Twenty percent was never a rule. It’s the point where a conventional lender stops requiring mortgage insurance, and nothing more.
Loans a first-time buyer can qualify for start at 3 percent down, FHA starts at 3.5 percent with qualifying credit, and eligible Veterans can put nothing down. What you pay for the gap is mortgage insurance and a bigger monthly payment.
How Small Can a Down Payment Be?
The real minimum depends on the loan type. For two of them it also depends on being a first-time buyer or under an income cap.
- Conventional: 3 percent down, with at least one first-time buyer on the loan, or through HomeReady if your income is under the program’s cap
- FHA: 3.5 percent down with qualifying credit
- VA: Nothing down for eligible Veterans and service members, as long as the price isn’t above the appraised value
- ONE Mortgage: 3 percent down, through participating lenders listed at mhp.net
Real buyers fall between the floor and the myth. NAR’s 2025 Profile of Home Buyers and Sellers put the median first-time down payment at 10 percent, the highest since 1989. Repeat buyers put down a median of 23 percent, and they bring it from the last house. Most “save 20 percent” advice is talking to them. Under both conventional and FHA rules, family can gift money toward the down payment, as long as nobody expects it back.
Why Is 20 Percent the Number Everyone Repeats?
On a conventional loan, the lender has to carry private mortgage insurance, PMI, whenever the loan is more than 80 percent of the home’s value. The number came from that one guideline. Put less down and you pay for that insurance each month, or for FHA’s premiums. You also borrow more, so the payment is bigger.
You’ve probably heard that “PMI is forever.” On a conventional loan it isn’t, and federal law says so. You can ask in writing to cancel it once your balance is scheduled to reach 80 percent of the home’s original value, if your payments are in good standing and the value hasn’t dropped. The servicer has to end it on its own when the balance is scheduled to reach 78 percent, as long as you’re current. It has to end after the midpoint of the loan no matter what. Our article on getting rid of PMI has the mechanics.
The fear is right about FHA. With 3.5 percent down, FHA’s mortgage insurance lasts the life of the loan, and you get out by paying it off or refinancing. That’s the trade for the lower entry. The number you’ve been saving toward was never the price of getting in. It was the price of skipping an insurance bill, and spending years to skip it has a cost of its own.
What Does Massachusetts Add for a First-Time Buyer?
Two programs, both for first-time buyers, and both with income limits. MassHousing Down Payment Assistance is up to $30,000. It’s a second mortgage loan, paired with a MassHousing Mortgage, and it requires a homebuyer education class. The deferred version has no monthly payment, and the full balance comes due when you sell, refinance or pay off the first mortgage. Our page on down payment assistance in Massachusetts covers who qualifies.
ONE Mortgage, from the Massachusetts Housing Partnership, is 3 percent down on a 30-year fixed conventional loan with no private mortgage insurance, for first-time buyers within 100 percent of area median income. Participating lenders listed at mhp.net offer it, so ask us how it compares with what we can arrange.
A pre-qualification is free and commits you to nothing. It tells you the payment at 3, 5 or 10 percent down on a house you’d buy, with the insurance line included. GoldCoast is a broker, so which programs are open to you depends on the lenders we work with, and we’ll tell you where you stand either way.