How much should I save for a down payment on a house? Most first-time buyers put down far less than 20% — conventional loans allow as little as 3% down, FHA loans allow 3.5%, and VA and USDA loans can require no down payment at all, though a larger down payment can lower your monthly payment and eliminate mortgage insurance.
The 20% Myth
If you’ve held off on buying a home because you think you need a 20% down payment, you’re not alone — it’s one of the most common misconceptions among first-time buyers. In reality, most first-time buyers put down significantly less, and there are several loan programs specifically designed around lower down payments.
What Different Loan Types Actually Require
Conventional loans: As low as 3% down for qualified first-time buyers, though private mortgage insurance (PMI) applies until you reach 20% equity.
FHA loans: 3.5% down with a credit score of 580 or higher; more flexible on credit and debt-to-income than conventional loans.
VA loans: Available to eligible veterans and service members, often with no down payment required.
USDA loans: No down payment required for eligible rural and some suburban properties, based on location and income limits.
The Tradeoff: Lower Down Payment vs. Monthly Cost
Putting down less money upfront generally means:
A higher monthly payment, since you’re financing more of the purchase price
Mortgage insurance (PMI on conventional loans, MIP on FHA loans) until you build enough equity
Potentially less competitive terms if you’re up against buyers offering a larger down payment in a multiple-offer situation
None of this means a smaller down payment is a bad choice — it just means it’s a tradeoff worth understanding rather than a compromise you should feel bad about.
Texas Down Payment Assistance Can Close the Gap
Texas offers real, statewide programs that can meaningfully reduce what you need to bring to closing:
TDHCA’s My First Texas Home program combines a competitive fixed-rate mortgage with down payment assistance of up to 5% of your loan amount, structured as a deferred, zero-interest second loan.
TSAHC’s Home Sweet Texas and Homes for Texas Heroes programs offer similar down payment assistance, with the Heroes program specifically for teachers, firefighters, healthcare workers, and other public servants.
The Texas Mortgage Credit Certificate (MCC) can be paired with these programs, converting a portion of your annual mortgage interest into a direct federal tax credit.
These programs have income and purchase-price limits that vary by county, so it’s worth checking your specific eligibility rather than assuming you don’t qualify.
How to Build Your Down Payment Savings
Set a specific target based on your realistic price range and chosen loan program, rather than defaulting to 20%.
Automate transfers to a dedicated savings account so the money isn’t accessible for everyday spending.
Ask about gift funds — most loan programs allow down payment funds to come from family, with proper documentation.
Ask your lender about combining a lower down payment with a down payment assistance program rather than delaying your purchase to save more.
FAQ
Do I really need 20% down to buy a house? No — most first-time buyers put down far less. Conventional loans allow as little as 3% down, and FHA loans allow 3.5%, though you’ll typically pay mortgage insurance until you build more equity.
What is PMI and when does it go away? Private mortgage insurance protects the lender when your down payment is below 20%. On conventional loans, it typically drops off automatically once you reach 22% equity, or you can request removal at 20% equity.
Can I use gift money for my down payment? Yes, in most cases — but the funds need to be properly documented with a gift letter, so talk to your lender before the money changes hands.
Let’s Find the Right Path for Your Budget
Whether you’re saving up or exploring down payment assistance programs, I can connect you with lenders who specialize in first-time buyer programs here in Texas. Call or text Ashley at 817-791-5574.
Ashley Galica, Realtor, DFW’s Finest Real Estate Group at ARC Realty DFW.
