Home Down Payment Myths—Debunked! What You Really Need to Know

When it comes to buying a home, one topic that causes a lot of confusion (and unnecessary stress) is the down payment. You've probably heard that you need to save 20% or that buying without a huge nest egg is impossible. But are those things true?

Let’s clear the air by debunking some of the most common down payment myths—and giving you the real facts so you can move forward with confidence.

Myth #1: You Need 20% Down to Buy a Home

The Truth: While putting 20% down can help you avoid private mortgage insurance (PMI), it’s not a requirement.
Many lenders offer conventional loans with as little as 3–5% down, and government-backed loans like FHA loans require just 3.5% down for qualified buyers. VA and USDA loans may even offer zero-down options for eligible buyers.

Bottom Line: Don't let the 20% myth delay your homeownership dreams.

Myth #2: A Bigger Down Payment Is Always Better

The Truth: While a larger down payment can lower your monthly mortgage payment and reduce interest over time, it’s not always the smartest move.
Tying up too much cash in your home can leave you “house poor,” without enough savings for emergencies, repairs, or other financial goals.

Bottom Line: Strive for balance—put down what makes financial sense for your budget and lifestyle.

Myth #3: You Can’t Use Gift Money for a Down Payment

The Truth: You can use gift money for a down payment—as long as it’s properly documented.
Lenders typically require a gift letter stating that the money isn’t a loan and won’t need to be repaid. There may be limits on how much can be gifted depending on the loan type.

Bottom Line: Family support can be a huge help—just make sure it’s all recorded correctly.

Myth #4: You Don’t Need to Save Anything with Zero-Down Loans

The Truth: Even with no down payment, there are still upfront costs to buying a home—like closing costs, inspections, and moving expenses.
Closing costs typically range from 2–5% of the loan amount, and you’ll want some cushion after closing for peace of mind.

Bottom Line: Zero-down doesn’t mean zero-cost. Have a savings plan in place.

Myth #5: Down Payment Assistance Programs Are Only for Low-Income Buyers

The Truth: There are hundreds of state and local assistance programs available—and many are open to moderate-income earners, first-time buyers, and even repeat buyers.
Some offer grants, forgivable loans, or matching savings programs to make your purchase more affordable.

Bottom Line: Don’t assume you won’t qualify. It’s worth exploring your options.

Final Thoughts

Believing these myths could cost you time, money, or the chance to buy a home when you’re actually ready. The truth is, down payments are more flexible than many people think—and with the right guidance, homeownership might be closer than you realize.

Thinking about buying a home? Talk to a lender or real estate professional to explore your options. You might be surprised at what’s possible!