Buying your first home is an exciting milestone, but one of the biggest questions new buyers have is simple: How much money do I actually need to buy a house?

The answer may surprise you. While many people believe they need a 20% down payment, several mortgage programs allow qualified buyers to purchase a home with considerably less upfront.

The amount you need depends on the home’s price, mortgage program, closing costs, available assistance, and your financial situation.

Do You Really Need 20% Down to Buy a House?

No. A 20% down payment is not required for many mortgage programs.

Although putting 20% down may help you avoid private mortgage insurance on certain conventional loans, eligible borrowers may qualify with much smaller down payments.

Common Mortgage Down Payment Options

• Conventional loans: Some programs allow eligible borrowers to purchase with as little as 3% down.
• FHA loans: Qualified borrowers with credit scores of 580 or higher may be eligible for a minimum 3.5% down payment. Borrowers with scores between 500 and 579 may qualify under FHA guidelines with at least 10% down, subject to lender requirements.
• VA loans: Eligible veterans, service members, and certain surviving spouses may qualify for zero down payment financing.
• USDA loans: Eligible borrowers purchasing qualifying properties in designated areas may qualify for no-down-payment financing.

Each mortgage program has its own credit, income, property, and underwriting requirements.

Explore your options through iLoan’s Mortgage Loan Programs page.

Example: Buying a $300,000 Home

Let’s look at how different down payment percentages affect the upfront amount needed for a hypothetical $300,000 home purchase.

These figures illustrate down payments only. They do not include closing costs, prepaid expenses, mortgage insurance, or other homebuying costs. Zero-down-payment financing is available only to eligible borrowers and properties under applicable programs.

What Are Mortgage Closing Costs?

Your down payment is only one part of the money you may need to purchase a home.

Closing costs are expenses associated with originating, processing, and completing your mortgage transaction.

Depending on your loan and location, closing costs may include:

• Mortgage lender and origination fees
• Appraisal fees
• Title services and title insurance
• Recording and settlement fees
• Prepaid homeowners insurance
• Prepaid property taxes
• Initial escrow account deposits
• Applicable discount points

Closing costs are often estimated at approximately 2% to 5% of the purchase price, although actual costs can fall outside this range depending on the loan and transaction.

For a $300,000 home, that illustrative range would equal $6,000 to $15,000.

Your actual Loan Estimate will provide more specific information about anticipated mortgage costs.

Can First-Time Homebuyers Receive Down Payment Assistance?

Yes. Depending on your state, location, income, and mortgage program, you may qualify for homebuyer assistance that helps cover eligible down payment or closing costs.

Assistance may be offered through state housing finance agencies, local governments, nonprofit organizations, and other approved programs.

Common assistance structures include:

• Grants: Assistance that may not require repayment if program conditions are satisfied.
• Forgivable loans: Assistance that may be forgiven after meeting occupancy or other requirements.
• Deferred-payment loans: Financing with repayment postponed until a specified event, such as selling or refinancing the property.
• Repayable second mortgages: Assistance loans with repayment obligations under their specific terms.

Not every assistance program is a grant, and some programs require repayment.

Visit the iLoan Homebuyer Grants and Down Payment Assistance Finder to explore potential options in the states we serve.

What About Mortgage Insurance?

Mortgage insurance is another expense buyers should consider when estimating the cost of homeownership.

On many conventional mortgages, private mortgage insurance (PMI) is required when the borrower makes a down payment of less than 20%.

FHA loans generally require mortgage insurance premiums under FHA program rules.

VA loans generally do not require monthly mortgage insurance, although a VA funding fee may apply unless the borrower qualifies for an exemption.

Mortgage insurance requirements and costs vary by program and individual loan characteristics.

Should You Keep Money in Savings After Closing?

Yes, whenever possible.

Purchasing a home can introduce expenses that renters may not have previously encountered, including maintenance, repairs, utilities, and property-related emergencies.

Consider maintaining savings for:

• Unexpected home repairs
• Moving expenses
• Utility deposits and setup costs
• Furniture and household essentials
• Emergency living expenses

Some mortgage programs also require borrowers to demonstrate sufficient financial reserves.

Rather than using every available dollar toward your down payment, consider the benefits of maintaining a financial cushion after closing.

Can Seller Concessions Reduce Your Upfront Costs?

In some transactions, a home seller may agree to contribute toward certain eligible closing costs.

These contributions are often called seller concessions or interested-party contributions.

Permitted amounts and uses vary depending on the mortgage program, property, and loan terms.

Buyers may also want to compare eligible seller concessions with other financing strategies, including temporary mortgage payment buydowns.

Learn more about how a 2-1 Buydown Mortgage works.

How Can You Find Out What You Can Afford?

Before beginning your home search, it’s helpful to understand both the estimated monthly payment and the total cash needed to complete the purchase.

Consider reviewing:

• Your household income and monthly debts
• Your available down payment funds
• Your estimated closing costs
• Your credit profile
• Your expected property taxes and homeowners insurance
• Potential mortgage insurance costs
• Available down payment assistance programs

Use the iLoan Mortgage Calculators to explore hypothetical financing scenarios.

Take the First Step Toward Homeownership With iLoan

You may not need as much money upfront as you originally thought. The key is understanding which mortgage programs fit your circumstances and what your complete homebuying costs may look like.

iLoan helps eligible borrowers explore mortgage financing options in Illinois, Indiana, Iowa, Wisconsin, Minnesota, and Florida.

Whether you’re considering conventional financing, an FHA loan, VA financing, USDA eligibility, or homebuyer assistance, understanding your options is an important first step.

Explore Your Mortgage Options and Get Pre-Approved with iLoan →

Important disclosure: This article is provided for general educational purposes and is not a commitment to lend or a guarantee of financing. Mortgage rates, annual percentage rates (APR), loan terms, program availability, assistance funding, and qualification requirements vary. All loans are subject to applicable underwriting and approval requirements.