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Do You Need 20% Down to Buy a House? Plan Your Cash to Close

Eric challenges the idea that every buyer must save 20% before exploring a purchase. The useful next step is to compare a smaller down payment with waiting, using actual loan costs and the savings you would have left.

By Eric Hamilton · Published October 6, 2026

Originally uploaded March 29, 2026 · 10:11 · Watch on YouTube

Written companion added October 6, 2026. Adapted from Eric’s video captions with source checks; not a word for word transcript. The recording retains its original date.

Find the program before setting the target

Some eligible conventional borrowers can buy with 3% down, and FHA allows as little as 3.5% for qualifying borrowers. Other programs may offer eligible buyers no down payment. These are program possibilities, not automatic approvals. Ask which choices fit your income, credit, property and available funds. Also ask whether assistance must be repaid and what restrictions apply.

Separate the down payment from the cash you need

For a hypothetical $400,000 home, 3% is $12,000, 10% is $40,000 and 20% is $80,000. None includes closing costs, moving or savings after closing. If you already have $30,000 and choose an $80,000 down payment target, the gap is $50,000 before those other costs. At $1,000 saved monthly, that takes 50 months if the target stays unchanged. The example is arithmetic, not a price forecast.

Compare mortgage insurance with the whole alternative

A smaller conventional down payment often means PMI. Obtain an actual premium estimate instead of assuming the video's example applies to you. Compare total ownership costs with rent, savings retained and your expected time in the home. Rent buys housing and flexibility; interest, taxes, insurance and repairs are ownership costs too. Neither appreciation nor a particular date for ending PMI is guaranteed.

Choose a reserve you can live with

A larger down payment reduces borrowing, but using nearly every available dollar can make the first repair stressful. Ask for two or three options showing cash to close, payment and cash left afterward. The right choice might be buying sooner with less down, or waiting to strengthen your finances.

Is 20% down required for every mortgage?

No. Eligibility and minimum down payment depend on the program and transaction. A low down payment still leaves other purchase costs to fund.

Does reaching 20% equity automatically remove PMI?

No. Borrower-requested cancellation and automatic termination follow different rules. Payment history, valuation and other conditions can apply.

Sources and scope

Adapted from the March 29, 2026 video. Historical survey percentages, typical PMI prices and assumed future appreciation are not current facts or promised outcomes here.

  1. CFPB: Figure out how much you want to spend Accessed October 6, 2026
  2. Fannie Mae: Conventional mortgage insurance termination Accessed October 6, 2026
  3. Freddie Mac: Rent or buy Accessed October 6, 2026

General education, not a loan quote, approval or an individual recommendation. Ask the appropriate professional about your situation.

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