You’ve probably heard it a hundred times: “You need 20% down to buy a house.” For many people, that number feels like a wall—too high, too out of reach, and definitely not happening anytime soon. But here’s the truth: that’s not just outdated advice… it’s a flat-out myth.

The reality is, there are several low- and even no-down-payment mortgage options available today and they’re not just for special cases. They’re for real people, right now, looking to buy homes in competitive markets like Los Angeles and throughout California.

Let’s break down where the 20% rule came from, why it doesn’t apply anymore, and what real financing options you can use to get into a home without draining your life savings.

Where Did the 20% Myth Come From?

The idea of putting 20% down started as a way for buyers to avoid private mortgage insurance (PMI)—which protects lenders, not borrowers. If you put less than 20% down, most conventional loans require PMI until you build enough equity.

Somewhere along the line, this turned into a blanket belief that 20% is required to buy. It’s not. In fact, most buyers today put down far less.

What’s the Average Down Payment Today?

According to the National Association of Realtors, the average first-time buyer puts down just 6–7%. Repeat buyers put down around 17% on average, still less than 20%. So let’s talk about your actual options.

Low and No-Down-Payment Loan Programs

1. FHA Loans – As Low as 3.5% Down

Backed by the Federal Housing Administration, FHA loans are one of the most common paths to homeownership—especially for first-time buyers or those with moderate credit.

• Only 3.5% down required
• Flexible credit score requirements
• Can use gift funds or grants for down payment

Consider for: First-time buyers, renters ready to own, or anyone with limited savings.

2. VA Loans – 0% Down

If you’re a veteran, active duty, or an eligible spouse, the VA loan is a game-changer.

• No down payment required
• No PMI
• Competitive interest rates

Consider for: Veterans, military families, and surviving spouses. (And yes, Shannon specializes in these!)

3. Conventional Loans – As Low as 3% Down

Many people don’t realize that even conventional loans can require as little as 3% down, depending on income and eligibility.

Programs like HomeReady or Home Possible are designed to help buyers get in the door sooner.

• 3–5% down
• Lower PMI rates than FHA in some cases
• Can use gift funds

Consider for: Buyers with solid credit but limited liquid savings.

4. Down Payment Assistance Programs (DPAs)

California has several state and local DPA programs that can provide grants or second loans to cover your down payment and/or closing costs.

• Often paired with FHA or conventional loans
• Income and purchase price limits apply
• Some don’t require repayment if you stay in the home long enough

Consider for: First-time and low-to-moderate income buyers.

But Don’t You End Up Paying More With Less Down?

Maybe. But here’s what most people don’t consider:

• Home prices are rising. Waiting to save 20% can mean paying more later.
• You build equity by owning, not saving. Renting keeps you on the sidelines.
• PMI isn’t forever. For many loans, PMI falls off once you hit 20% equity.

Bottom line: Getting in the game earlier often builds wealth faster than waiting for perfect conditions.

Myth-Busting Recap

MYTH	TRUTH
You need 20% down payment to buy	Most loans allow for 3-5% and some need 0%
PMI is a dealbreaker	It’s temporary and manageable
Lower down payment means higher risk	Not if budget smart and work with a trusted professional
You have to save for years first	Down payment assistance can speed things up

Stop Letting Old Rules Hold You Back

You don’t need 20% down. You need the right strategy, the right lender, and the right loan program for your situation. Whether you’re buying your first home, returning to the market, or navigating self-employment or unique income, there are options and I can help you find them. Let’s explore your low or no-down-payment path together. You might be closer to owning a home than you think.