Is a 20 Percent Down Payment Really Necessary To Purchase a Home?

Is a 20% Down Payment Really Necessary To Purchase a Home? | Alpha Charlie Realtor

A common misconception is that as a homebuyer, you must come up with 20% of the total sale price as a down payment. In fact, a recent Lending Tree survey inquires as to what is preventing consumers from purchasing a home. The ability to afford a down payment is the most difficult part of home-buying for more than half of those polled.

This could be because those people believe a 20% down payment is required. While putting down more money if you can help buyers, putting down 20% is not required. According to Freddie Mac:

The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”

If the prospect of saving that much money seems daunting, you may feel ready to abandon your dream of homeownership before you even begin – but you don’t have to. According to the National Association of Realtors (NAR) Profile of Home Buyers and Sellers, the median payment put down hasn’t been more than 20% since 2005. It may come as a surprise, but today’s average down payment is only 12%. This figure is even lower for first-time homebuyers, who make an average down payment of only 7%.

The graph below, based on the NAR Home Buyers and Sellers Generational Trends Report, takes a closer look at the down payment percentages that various age groups pay:

Is a 20% Down Payment Really Necessary To Purchase a Home? | MyKCM

As the graph shows, the only groups that put down 20% or more on average are older. They can likely use the proceeds from the sale of their current home to put more down on their next home.

What Does This Mean For You and Your Down Payments?

If you’re thinking about buying a home, you should know that you don’t have to put down the full 20%. While saving for any down payment amount may seem difficult, keep in mind that there are programs for qualified buyers that allow them to purchase a home with as little as 3.5 percent down. For qualified applicants, there are also no-down-payment options such as VA loans and USDA loans.

You must do your homework in order to understand your options. Sites like provide information on down payment assistance programs if you’re interested in learning more. Work with a real estate advisor from the beginning to learn what you may qualify for in the home-buying process.

The Bottom Line?

Don’t let the myth of the 20% down payment put a halt to your home-buying process before it even begins. If you want to buy a home this year, let’s get in touch to start the conversation and discuss your options. Not have 20% is not a dream crusher.