Do You Have To Put The Full 20% Down On The Down Payment To Be Able To Get a Mortgage? No, But If You Don’t It’s Going To Cost You…

image_thumb38There’s nothing worse than finding a great deal on a house, but not being able to come up with a large enough down payment. However..this is where so many prospective homebuyers get confused. Putting 20% down on a home is a general rule of thumb..not necessarily a requirement. In fact, people only use this rule in order to avoid paying a monthly private mortgage insurance (commonly referred to as PMI). PMI is an added monthly fee to the mortgage that you must pay if you do not put down the full twenty percent down on a homeimage57

Many people that it would be irresponsible to buy a house without putting down 20% for the down payment. Sometimes, the opposite is true. If you have enough money in your savings to put down that amount on the house, but will have absolutely no money left over for anything else, that is actually irresponsible.

When you deplete your life savings to buy a house, you’re running the inevitable risk of becoming “house poor.” This is when you are able to afford your home, but not able to do anything else. For example, if your car breaks you can’t fix it. If you want to go on vacation, you can’t. If you want to go to a concert next month, you can’t. That’s not a way to live.

It is actually wiser to put less money down on the home, pay private mortgage insurance, and leave some money in your savings, rather than empty the bank. Here are a couple of alternative mortgage routes you can go besides the conventional mortgage.

imagesA VA loan is a veteran/military loan available to military member sand their respective spouses. A few great things about this type of loan are that you cannot be immediately denied based on bad credit history, and you also are not required to pay PMI.

usda-300x129A USDA loan is a loan that is aimed toward homebuyers earning lower incomes. It is often referred to as a rural housing loan. A great advantage to this type of loan is that you can include repairs in the loan term amount.

logoAn FHA loan is a government loan, generally granted to people with low credit who have probably gone through bankruptcy or foreclosure. This type of loan is usually directed at people who have gone through life changes which disrupted their credit histories, and have had to work their way back up. A perk of this type of loan is that the down payment requirement is 3.5%.

So you see, there are loan options out there for people who are wanting to buy a house but don’t have the 20% down payment. While the prospect of buying a home is exciting, just be sure that you can fully afford to own a home before going through the process.


  1. I would put down 20% if you can on a house. Your mortgage will be much lower. A friend of mine couldn’t afford to, and so she went with an FHA loan. She had to pay a lot in PMI too.

    • Hi Rod! Like the article says, it is always better to put 20% down if you can. This is a great lesson to readers..UNLESS, you are not going to be flat broke and not have to empty out every dime of your savings to do so, you should possibly buy a house. Always be sure that you are being financially responsible, and be honest with yourself about if you can afford to buy a house right now. Even though you want to, it may be better to keep renting.

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