The 20% down payment myth keeps more people renting than almost any other misconception. The median down payment for first-time buyers is just 6–8%. And with down payment assistance programs, you might need even less.
Every state has a housing finance agency (HFA) that offers below-market-rate mortgages and down payment assistance to qualifying buyers. Most programs target first-time buyers with income below 115–150% of area median income. Some are grants (free money), others are forgivable loans or deferred second mortgages.
FHA loans require just 3.5% down with a 580+ credit score. Conventional loans through Fannie Mae (HomeReady) and Freddie Mac (Home Possible) go as low as 3% down. VA loans offer 0% down for eligible veterans. USDA loans offer 0% down in qualifying rural areas.
The tradeoff for low down payments: mortgage insurance. FHA charges 0.85% annually for the life of the loan (until you refinance). Conventional PMI runs 0.5–1.5% annually but cancels automatically at 80% loan-to-value. On a $300,000 loan, that's $125–$375/month extra.
How to find your state's programs: visit your state housing finance agency website (we list them all on our state pages), call a HUD-approved housing counselor (free), or ask your lender — many are approved to originate state DPA loans directly.
Pro tip: many programs can be combined. A state DPA grant can cover your FHA 3.5% down payment, and the seller can pay closing costs. This means you could buy a home with nearly zero out of pocket — though you'll have a higher monthly payment.