What If I Don't Have Enough for a Down Payment? Your Options Explained

The 20% Myth Is Holding a Lot of People Back

If you've been putting off buying a home because you don't have 20% saved, you're not alone — and you may be waiting for a finish line that doesn't have to exist. The idea that you need 20% down is one of the most persistent misconceptions in homeownership, and it keeps a lot of people on the sidelines longer than necessary.

The truth is that 20% down became a cultural norm because it lets you avoid private mortgage insurance and results in a lower monthly payment. Both are real benefits. But they're not the only path to owning a home — not even close.

Nikki Lemon's story captures this well. In the episode "Stop Waiting for Perfect — Make the Next Chess Move," she talks about the mindset shift that comes with realizing homeownership is less about perfect timing and more about taking the next logical step forward. That philosophy applies directly here.

Low Down Payment Loan Programs Worth Knowing

Several loan programs are specifically designed to help buyers who haven't saved a large down payment. Each has its own eligibility guidelines, and not everyone will qualify for every option — but the range of choices is wider than most people expect.

FHA Loans — 3.5% Down

The FHA Loan is one of the most commonly used options for first-time and lower-savings buyers. Backed by the Federal Housing Administration, it generally allows down payments as low as 3.5% for borrowers who meet credit requirements. Many programs commonly look for a 580+ credit score at that threshold, though guidelines vary by lender.

FHA loans do include a mortgage insurance premium (MIP), which is similar in concept to PMI. It adds to your monthly payment, but it also makes homeownership accessible years sooner for many buyers.

VA Loans — 0% Down

If you're an active-duty service member, veteran, or eligible surviving spouse, the VA Loan may be the most powerful tool available to you. VA loans commonly require no down payment and no monthly mortgage insurance. Eligibility is based on service history, and program guidelines vary, but for those who qualify, it's often the most favorable loan structure available.

USDA Loans — 0% Down in Eligible Areas

The USDA Loan is another zero-down option, but it's tied to property location. Homes in designated rural or suburban areas may be eligible, and income limits apply. If you're open to living outside a major metro area — or already are — this program is worth exploring.

Conventional Loans — As Low as 3% Down

Not all Conventional Loans require 20%. Some conventional programs allow down payments as low as 3%, particularly for first-time buyers or those who meet certain income guidelines. You'll generally need a stronger credit profile than FHA requires, and PMI will likely apply until your loan-to-value ratio drops to 80%.

Down Payment Assistance: It May Cover More Than You Think

Down Payment Assistance (DPA) programs exist at the federal, state, and local levels. Some are grants that don't need to be repaid. Others are second loans with deferred payments or forgiveness provisions after a set period.

Utah has its own set of homebuyer resources through Utah Housing Programs, which may help with both down payment and closing costs for qualifying buyers. These programs often have income caps and purchase price limits, but for buyers who fall within those guidelines, the support can be meaningful.

Ammon Childs, a Utah real estate veteran with 17 years of experience, made a point in his episode "Buy the Real Estate" that resonates here: most buyers underestimate what's available to them locally. Assistance programs exist because the state has a real interest in expanding homeownership — and many buyers leave that money on the table simply because they didn't know to ask.

What About Closing Costs?

Even if a loan program covers your down payment, closing costs are a separate line item. These typically range from 2–5% of the loan amount and include things like the origination fee, title insurance, appraisal, and escrow fees.

Some DPA programs are designed specifically to cover closing costs rather than the down payment. In other cases, sellers can be asked to contribute through seller concessions — this is something a good real estate agent can negotiate on your behalf. Lender credits are another option, though they typically involve accepting a slightly higher interest rate in exchange for reduced upfront costs.

A Practical Checklist Before You Apply

Before you start comparing programs, it helps to have a clear picture of where you stand. Work through this checklist:

• Know your credit score. Your credit score is one of the first things lenders look at. Pull your free report and review it for accuracy.
• Calculate your savings. How much do you have available right now? Include any gift funds from family, which are allowed under many loan programs.
• Understand your income stability. Most programs want to see consistent employment history, typically two years.
• Research your target area. If USDA is on the table, verify property eligibility. If you're in Utah, check Utah Housing income and purchase limits.
• Get pre-approved. A pre-approval gives you a real number to work with and shows sellers you're a serious buyer.
• Ask about assistance programs explicitly. Not every lender proactively mentions DPA options. Ask directly.

What Getting In Sooner Can Mean for Your Wealth

Mike O'Day and Scott Clark titled their episode "Get Rich Slowly" — and the concept applies directly to this decision. Every month you wait to buy is another month you're not building equity. In most markets, home values tend to appreciate over time, which means buyers who get in earlier — even with less down — often find themselves in a stronger financial position than those who waited.

That's not a guarantee, and real estate markets do fluctuate. But the long-term pattern of homeownership as a wealth-building tool is well-documented, and the cost of waiting is rarely zero.

Wylene Benson's episode "Security Is Something You Build" explores this from a deeply personal angle — the idea that stability doesn't just appear, it's constructed decision by decision. A lower down payment loan, used wisely, can be one of those foundational decisions.

Next Steps

You don't need a perfect savings account to start exploring your options. The right loan program depends on your credit, income, location, military status, and goals — and there may be more available to you than you realize.

Get Your Personalized Roadmap

Ask Mia a Question