The "20% down payment" rule is well-known but misleading. It's not a requirement, it's a threshold. The National Association of Realtors reports the median first-time buyer puts down just 6–7%. Several loan programs allow much less.

Conventional loans accept as little as 3% down for first-time buyers with good credit. FHA loans require 3.5% down with a 580+ credit score. VA loans (military) and USDA loans (rural areas) require zero down payment.

The trade-off is PMI. With less than 20% down on a conventional loan, you'll pay 0.5–1.5% of the loan amount annually in private mortgage insurance. On a $350,000 loan, that's $145–$437 per month. But here's the math most people miss: waiting 3 more years to save from 5% to 20% means 36 more months of rent, potential home price appreciation (which raises your target), and 3 years of missed equity building.

Automate first.Set up an automatic transfer to a dedicated savings account on payday. Treat it like a bill that can't be skipped. People who automate savings consistently save 2–3x more than those who transfer whatever is left at the end of the month.

Use a high-yield savings account.At 4.5% APY (common for online banks in 2026), a $50,000 balance earns $2,250 per year in interest. That's money working for your down payment while you sleep. Keep your down payment fund in FDIC-insured accounts. Stocks are too volatile for a 1–3 year timeline.

Stack windfalls. Tax refunds, bonuses, cash gifts, and side hustle income should go straight to the down payment fund. A single $5,000 tax refund can shave 3+ months off your timeline.

Cut the big three.Housing, transportation, and food typically account for 60–70% of spending. Moving to a cheaper apartment for 18 months, driving a paid-off car, or meal-prepping can free up $500–$1,500/month. That's $9,000–$27,000 in a year and a half.

Over 2,000 down payment assistance (DPA) programs exist across the U.S. Most are state or county-level, and many first-time buyers don't know they exist. Common types include forgivable grants (free money if you stay in the home for 5+ years), deferred second mortgages (0% interest, repaid when you sell), and matched savings programs (the state matches your savings 2:1 or 3:1).

Check your state's housing finance agency website for available programs. Income limits typically range from $60,000–$120,000 depending on the area. Some programs are also available to repeat buyers, not just first-time purchasers.

• Home Affordability Calculator to see what home price you can afford once you know your down payment.
• Mortgage Payment Calculator to estimate your monthly payment based on home price and down payment.
• PMI Removal Calculator to see when PMI goes away if you buy with less than 20% down.