How much you actually need for a down payment

Surveys consistently find that most renters believe they need 20% down to buy a house. It is the single most expensive misconception in housing, because it convinces people to keep renting for years while prices move away from them.

The real floors

• Conventional: 3% down for qualifying first-time buyers, 5% otherwise.
• FHA: 3.5% down with a 580 score, 10% below that.
• VA: nothing down, for eligible veterans and service members.
• USDA: nothing down, for eligible properties and household incomes.

On a $300,000 house, 3% is $9,000 — not $60,000. And down payment assistance programs in North Carolina can reduce even that, though they come with their own conditions worth reading closely.

So what does 20% actually get you?

Three things: no private mortgage insurance, a smaller loan and therefore a smaller payment, and a marginally stronger offer in a competitive situation. Those are real benefits. They are not requirements, and waiting four years to save for them has a cost of its own — in rent paid and in appreciation missed.

The number people forget

Down payment is not your only cash requirement. You also need closing costs, prepaid taxes and insurance, and an earnest money deposit — and you should not arrive at closing with your account at zero. When we run your pre-approval, I will give you a single total-cash-to-close figure so you are budgeting against something real.