Real Estate Myth vs. Fact: You Need 20% Down to Buy a Home
For many people, the idea of buying a home feels out of reach before they ever look at a listing. I’ve heard and seen people look at another buying a home as this super grand “ you actually did the impossible” act. Between consultations and conversations, I have come to find that one of the biggest reasons behind this myth is the belief that you need a massive down payment to get started.
Let’s clear this up.
The Myth
You must have 20% saved to buy a home.
This myth stops countless would be buyers from even exploring homeownership. People assume that without tens of thousands of dollars saved, buying simply isn’t an option
The Fact
Many buyers purchase homes with far less than 20% down.
In reality, there are multiple loan programs designed to make homeownership more accessible and they are commonly used. In my real estate career, I’ve only had one client use the 20% down option. ONE. The 3-5% down is the go to option for most. and some programs offer even lower options for qualified buyers.
For first time buyers especially, there are often state and local assistance programs that help with down payments and closing costs. Baltimore and Maryland has a plethora of assistance programs that generally leave buyers paying far less than they originally imagined.
Why This Myth Persists
The 20% number comes from the idea that putting that amount down helps buyers avoid private mortgage insurance (PMI). While that can be a benefit, it is not a requirement for buying a home. Also, the PMI option 1. Isn’t a major expense and 2. can be dropped at an early stage of mortgage payments.
Waiting to save 20% can actually delay homeownership for years during a time when home prices and rents often continue to rise.
What Matters More Than 20% Down
Lenders focus on several factors beyond your down payment, including:
Your overall financial picture
Credit history (not perfection)
Income stability
Debt to income ratio
FACT: A buyer with a smaller down payment and a solid plan can be just as strong as someone putting down more.
What This Means for Buyers
If you’ve been telling yourself that homeownership “isn’t in your cards right now,” it may be worth revisiting that assumption. Many buyers are surprised to learn they’re closer than they thought. I have lost count on the amount of times someone called me for a consultation assuming they were making a plan to purchase in the next five years because thats when they “may be finally financially ready by then”, only to find out that they are right then and there in the perfect financial position to purchase.
Know This: The first step isn’t saving 20%.
Education opens doors. Once you understand what’s truly required and what isn’t, homeownership often feels far more attainable.
If you’re curious about what programs or options might be available to you, having a conversation can be eye opening, even if you’re not ready to buy today.
Give me a call, we will discuss your personal plan to get you to the door of your new home.
Erika Walker Realty One Group Excellence 443.468.0757 (c) (443.233.6156 (o)