The 20% Myth
The idea that you need 20% down to buy a home is one of the most persistent myths in real estate. It's not true, and it's keeping buyers on the sidelines longer than necessary.
Here's where it comes from: putting 20% down avoids private mortgage insurance (PMI) on conventional loans. That's a real benefit. But it's not a requirement, and for many buyers, waiting to save 20% costs more than the PMI would have.
What the Actual Options Look Like
Conventional loans — as low as 3% down for qualifying buyers. PMI applies until you reach 20% equity, then it drops off automatically.
FHA loans — 3.5% down with a credit score of 580+. More flexible credit guidelines than conventional. Mortgage insurance is for the life of the loan (or until you refinance).
VA loans — 0% down for eligible veterans and service members. No mortgage insurance. One of the strongest financing tools available.
USDA loans — 0% down for properties in qualifying rural and suburban areas. Some Monroe County locations qualify.
The PMI Math
PMI on a conventional loan typically runs 0.5%–1.5% of the loan amount annually, depending on your credit score and down payment.
On a $250,000 loan, that's roughly $100–$300/month. That's real money — but so is the opportunity cost of sitting in rent while you save toward 20%.
The breakeven calculation depends on your specific situation: rent vs. buy costs, how fast you'd save the additional down payment, and what home prices do in the meantime.
What Actually Matters
Down payment is one variable in a larger equation. The things that matter more:
- Your credit score — this drives your rate more than almost anything else
- Your debt-to-income ratio — determines how much house you can qualify for
- Your reserves — lenders want to see you have money left after closing
- The loan program — different programs have different tradeoffs
The right down payment amount depends on your cash position, your goals, and what makes sense for your specific scenario. There's no universal answer.
The Conversation Worth Having
If you've been waiting to save 20% before buying, it's worth running the actual numbers. In some cases, buying sooner with less down makes more financial sense. In others, waiting is the right call.
That's the kind of analysis we do upfront — before you're under contract and the clock is ticking.