Do I need 20% down to buy a home?

No. The average first-time buyer puts down about 6-7%. Programs exist for 0% (VA, USDA), 3% (conventional), and 3.5% (FHA) down payments.

What is PMI and how long do I pay it?

PMI (Private Mortgage Insurance) is required on conventional loans when you put less than 20% down. It typically costs 0.5-1% of the loan amount per year and drops off automatically when you reach 78% loan-to-value.

What is the difference between FHA MIP and conventional PMI?

Conventional PMI can be removed once you reach 20% equity. FHA MIP (Mortgage Insurance Premium) stays for the life of the loan if you put less than 10% down, and for 11 years if you put 10% or more down.

Can I use gift money for my down payment?

Yes, most loan programs allow gift funds for down payment. FHA allows 100% of the down payment to come from gift funds. Conventional loans may require some borrower funds depending on the loan-to-value ratio.

What is down payment assistance?

Down payment assistance (DPA) programs are offered by state and local housing agencies. They provide grants or deferred loans to help cover your down payment and closing costs. Every AMLO market state has DPA programs available.

Free Calculator

Down Payment Calculator

You probably don't need 20% down. See how different down payment amounts affect your monthly cost, when PMI drops off, and how much cash you actually need to close.

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Home Purchase Price

$250,000

$50K$1M

Interest Rate

6.50%

3%10%

Loan Term

Down Payment Comparison

Click any row to see full details. All amounts are principal & interest + PMI only (taxes and insurance are the same regardless of down payment).

Down Payment	Cash Down	Loan Amount	P&I/mo	PMI/mo	Total/mo
0% (VA / USDA)	$0	$250,000	$1,580.17	$0	$1,580.17
3%	$7,500	$242,500	$1,532.76	$141.46	$1,674.22
3.5% (FHA)	$8,750	$241,250	$1,524.86	$170.89	$1,695.75
5%	$12,500	$237,500	$1,501.16	$138.54	$1,639.70
10%	$25,000	$225,000	$1,422.15	$131.25	$1,553.40
15%	$37,500	$212,500	$1,343.14	$123.96	$1,467.10
20%No PMI	$50,000	$200,000	$1,264.14	$0	$1,264.14

Savings Timeline

See when you could reach each down payment milestone based on your current savings rate.

How much do you have saved?

How much can you save per month?

3% down($7,500)

5 months

3.5% down (FHA)($8,750)

8 months

5% down($12,500)

15 months

10% down($25,000)

40 months

20% down($50,000)

90 months

Remember: Down payment assistance programs can reduce or eliminate what you need to save. Check your DPA eligibility — you may qualify for thousands in free assistance.

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You May Not Need to Save It All Yourself

Down payment assistance programs exist in every AMLO market. Some are grants you never repay. Others are deferred loans you pay back when you sell.

Pennsylvania

PHFA Keystone Advantage -- up to $6,000 assistance
K-FIT -- up to 5% of purchase price or appraised value

Ohio

OHFA -- grants up to 5% of purchase price
Multiple county-level assistance programs

Indiana

IHCDA Next Home -- up to 3.5% assistance
My Home with mortgage credit certificate

Michigan

MSHDA MI 10K DPA -- up to $10,000
Step Forward program for additional assistance

North Carolina

NC Housing Finance Agency programs
NC Home Advantage Mortgage with DPA

South Carolina

SC Housing Palmetto Heroes
SC Housing Homebuyer Program with DPA

Check Your DPA Eligibility

Gift Fund Rules You Should Know

Money from family members can count toward your down payment on most programs. Here's what you need to know.

FHA Loans

100% of the down payment can come from gift funds. Gifts must be from a family member, employer, or approved organization.

Conventional Loans

Gift funds are allowed but the borrower may need to contribute some of their own funds depending on the loan-to-value ratio and program.

Gift Letter Required

All gifts require a signed letter confirming the funds are a gift with no expectation of repayment.

Who Can Gift?

Family members are always eligible. FHA also allows gifts from employers and certain organizations. Conventional loans are more restrictive on the source.

Down Payment Myths vs. Reality

Myth: You need 20% down to buy a home.

Reality: The average first-time buyer puts down about 6-7%. Programs are available starting at 0% down for eligible buyers.

Myth: PMI is forever.

Reality: Conventional PMI drops off automatically once you reach 78% loan-to-value. You can also request removal at 80% with a good payment history.

Myth: A lower down payment is always a bad deal.

Reality: It depends on your full financial picture. Keeping cash in reserves, investing the difference, or buying sooner in a rising market can all make a smaller down payment the smarter move.

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A quick conversation with a loan officer in the AMLO network can turn these numbers into a real plan.

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Calculations are estimates for educational purposes only. PMI rates vary by credit score, loan-to-value ratio, and lender. FHA MIP rates are set by HUD and may change. Actual closing costs, prepaid items, and monthly payments will depend on your specific loan terms and property. Down payment assistance program availability, terms, and eligibility are subject to change. Contact a licensed mortgage professional for an accurate quote.