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Affordability

The 20% Down Payment Myth, Debunked

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Saving up to buy a home can feel a little intimidating, especially right now. And for many first-time buyers, the idea that you have to put 20% down can feel like a major roadblock.

But that’s actually a common misconception. Here’s the truth.

Do You Really Have To Put 20% Down When You Buy a Home?

Unless your specific loan type or lender requires it, odds are you won’t have to put 20% down. There are loan options out there designed to help first-time buyers like you get in the door with a much smaller down payment.

For example, FHA loans offer down payments as low as 3.5%, while VA and USDA loans have no down payment requirements for qualified applicants, like Veterans. So, while putting down more money does have its benefits, it’s not essential. As The Mortgage Reports says:

“. . . many homebuyers are able to secure a home with as little as 3% or even no down payment at all . . . the 20 percent down rule is really a myth.”

According to the National Association of Realtors (NAR), the median down payment is a lot lower for first-time homebuyers at just 9% (see chart below):

The takeaway? You may not need to save as much as you originally thought.  

And the best part is, there are also a lot of programs out there designed to give your down payment savings a boost. And chances are, you’re not even aware they’re an option.

Why You Should Look into Down Payment Assistance Programs

Believe it or not, almost 80% of first-time homebuyers qualify for down payment assistance (DPA), but only 13% actually use it (see chart below):

a blue and orange pie chartThat’s a lot of missed opportunity. These programs aren’t small-scale help, either. Some offer thousands of dollars that can go directly toward your down payment. As Rob Chrane, Founder and CEO of Down Payment Resource, shares:

“Our data shows the average DPA benefit is roughly $17,000. That can be a nice jump-start for saving for a down payment and other costs of homeownership.”

Imagine how much further your homebuying savings would go if you were able to qualify for $17,000 worth of help. In some cases, you may even be able to stack multiple programs at once, giving what you’ve saved an even bigger lift. These are the type of benefits you don’t want to leave on the table. 

Bottom Line

Saving up for your first home can feel like a lot, especially if you’re still thinking you have to put 20% down. The truth is that’s a common myth. Many loan options require much less, and there are even programs out there designed to boost your savings too.

To learn more about what’s available and if you’d qualify for any down payment assistance programs, talk to a trusted lender.

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Affordability

Two Moves That Can Get You Into Your First Home Sooner

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For a lot of first-time buyers, owning a home can feel perpetually a few years out of reach. Saving for a down payment takes time, and each year you spend renting can make owning feel further off.

But buying your first home doesn’t have to happen to feel like a far away goal. Two choices you control can bring your first home years closer, even with affordability as tight as it is right now.

How Long Buying Really Takes

First, one quick definition. “Breaking even” is the point where owning has cost you about the same as renting would have over the same period. And after that point, owning starts to cost less than renting. Kara Ng, Senior Economist at Zillow, puts it this way:

“Buyers should think about not just when they can afford to buy, but how long they’d need to stay before owning makes more financial sense than renting.“

So how long does reaching that point usually take? And what are the shortcuts? Let’s do the math.

According to Zillow, it usually takes about 8.5 years to save for a 20% down payment, then roughly 6.2 more years before owning costs the same as renting. Together, that’s just under 15 years. But that math relies on two assumptions: that you’re buying a mid-priced home, and that you’re putting 20% down. 

Change either one and your timeline gets shorter. Change both and it can shrink fast. It also varies widely by market, since local prices and rents are different depending on where you live. 

A Starter Home Can Get You There Twice as Fast

A starter home usually means a home in the lower third of local prices. They’re often condos, townhomes, or single-family homes a little smaller or older than others in the area. 

Choosing one over a mid-priced home can cut your wait down by a lot. And while that might sound obvious, you may not realize just how much it shortens your timeline. Because if you’re buying a more affordable home, you don’t have to save up as much or as long.

Zillow found that nationwide, a starter home takes half the time – about 7.2 years – to save for and come out ahead on, compared with renting (see graph below):

a graph of a number of squares

That works out to about 4.6 years to save and 2.6 years to break even. It won’t erase every affordability challenge, but it can take years off the wait. And if you’ve already been saving for a while, it could get you closer to making it a reality.

You Usually Don’t Need To Put 20% Down

You, like many first-time homebuyers, might assume you need a 20% down payment to even consider buying. But a lot of the time, you don’t. 

Most first-time buyers don’t put down anywhere near that. The National Association of Realtors shows the median down payment for first-time buyers is 10% (see graph below):

a graph of a sales report

And the minimums go lower still. Some buyers put down as little as 3% on a conventional loan or 3.5% on an FHA loan, and eligible veterans or buyers in certain rural areas can put down nothing at all.

There’s help with the upfront costs of buying, too. Down Payment Resource counts 2,746 assistance programs nationwide, and some are even stackable:

“Some homebuyers can layer multiple sources of assistance to reduce their upfront costs. Layering means combining more than one eligible source of funding as part of your home purchase.”

Put those together – a lower price point, a smaller down payment, and help covering it – and the years you thought you needed start to come down.

Bottom Line

Your first home may not be as far off as it feels. When the numbers make sense for you, buying a starter home and putting down less than 20% can get you there years sooner. 

Want to see which starter homes in your area could fit your budget? A local real estate agent can show you.

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Affordability

The Mortgage Rate You See Online Isn’t Necessarily the One You’d Get.

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You may have seen the headlines saying mortgage rates have climbed to the highest point since January 2025. And if that’s left you reluctant to buy a home, here’s what you need to remember… 

That’s not necessarily the number you’d get. 

It’s a common misconception that the rate you see in the headlines is the same one you’d get when you buy. The truth is, mortgage rates shift often, and the rate you actually end up with can vary a lot from what you may see or hear about. 

What Determines Your Real Rate? 

Advertised rates and “real rates” aren’t always the same. That’s because real rates are based on your specific situation, which includes your overall finances and goals. The rates you see in the headlines can’t possibly reflect that. 

That’s why only a lender can tell you what your real rate will be. To figure out your unique number, they’ll look at:

  • Your credit score: Your credit score includes your payment history (if you’ve made late payments – and how often), credit utilization (are your accounts maxed out, or do you have available credit?), and the length of your credit history (how long have your accounts been open?). For example, someone with an exceptional credit score may qualify for a better rate.

  • Your debt-to-income ratio (DTI): This is calculated by dividing your monthly debt payments by your monthly income before taxes to come up with a percentage. The higher your DTI, the higher your rate could be.

  • The down payment size and Loan-to-Value (LTV): Your down payment is the percentage of the home’s price you will put down. The LTV is the percentage of a home’s sales price that equals your mortgage. 

  • The type and term of loan program options: Your loan officer will walk you through different loan options based on what you qualify for. Mortgage rates can vary between different loan products and programs. 

Even after you find a home you love, other things can have an impact too. For example:

  • A mortgage rate buydown: This helps you get a lower mortgage rate, and by extension, a lower monthly payment, by paying an upfront cost. Sometimes a seller, builder, or another party may even offer to cover that cost themselves as an incentive for you to buy.

  • Seller concessions: Sellers are allowed to pay buyer closing costs according to most loan program guidelines. Seller-paid closing costs can add up to thousands of dollars, which can free up some cash for you to increase your down payment, pay down debt, or make other financial adjustments to try to get a better rate. 

There’s a lot that can ultimately have an impact on your actual rate. 

Your First Step? Getting Pre-Approved.

If you want to know if your number could be higher or lower than the headlines on social, you need to talk to an expert. A simple conversation with a loan officer can help you determine when you’ll be ready to buy, how much you can borrow, and of course, what your real rate will be. 

Your lender may recommend a pre-qualification and pre-approval:

  • Pre-qualification is a general estimate of what you might be able to borrow based on self-reported information. 

  • On the flip side, pre-approval is actually a conditional commitment from a lender based on verified information. 

Just know that, of the two, the pre-approval process gives you a more accurate picture of your options than pre-qualification. Bankrate gives a quick comparison so you can see why:

a blue and white chart with white text

How To Get Ready for the Conversation

Ask your lender what documents you’ll need to gather for that conversation. And keep these questions in your pocket too. They’re good things to go over when you talk: 

  • What will I gain or lose by waiting to buy a home for 3, 6, or 12 months? 

  • Will I get any tax advantages by buying a home – and what are they? 

  • What’s the benefit of buying a home and starting to build equity now versus waiting? And how does that impact my finances in the long run?

  • How will rate changes in either direction affect me?

Once you find out your rate, maybe you can buy now. Or maybe you still need to wait. But at least you’d know your options and can make an informed decision.  

Bottom Line

Headlines and social media make today’s rates sound high. But you have to remember, the rate you’re seeing online and your actual rate could be different. The only way to know what your rate could be is to talk to a trusted lender. 

With the right help, you can find out what your real rate is – and where it can take you.

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Affordability

Why So Many Sellers Are Cutting Their Price Right Now

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Price cuts are turning up everywhere right now, and they read very differently depending on which side of the deal you’re on.

Sellers tend to worry a cut means walking away with less than they hoped. Sometimes that’s true, but more often it just means the market moved faster than the listing did.

Buyers, for their part, often assume a cut means something’s wrong with the house. Most of the time, that’s not it.

This is what’s actually driving all those price cuts, and why it matters no matter which side of the deal you’re on.

42% of Homes for Sale Are Now Carrying a Price Cut

According to HousingWire Data, the share of sellers cutting their asking price has climbed every month for 7 straight months (see chart below):

a graph showing the growth of a straight month 

Today, more than 4 in 10 active listings have had at least 1 price cut, and the typical seller is cutting about $17,560 off their original number. 

Here’s why that’s happening. With rates still elevated and more homes to choose from, buyers can afford to wait for the right number. So, sellers who don’t start there often end up adjusting anyway.

What does that mean for you?

  • If you’re selling, this isn’t a red flag. But it is a sign that pricing it right from day 1 is your best bet. Just know that the market’s been shifting fast enough this year that sometimes even a well-priced house can fall behind within a matter of weeks. If that happens to you, dropping your price to catch up to where pricing actually stands today tends to bring in more buyers and helps you sell closer to true market value.

  • If you’re buying, it’s easy to assume a price cut means something’s wrong with the house. But with cuts happening on more than 4 in 10 homes right now, the reality is sellers are just catching up to where the market already is. And with affordability still tight, that’s exactly the kind of opening you need to get a better deal.

Why Sellers Are Adjusting Faster than Before

HousingWire Data also shows list prices are trending down nationally. That’s often a sign sellers are pricing more realistically from the start instead of listing high and getting stuck cutting later. List prices have fallen about $26,000 from last year’s peak.

Some of that decline is seasonal, since list prices typically soften each winter before rebounding in the spring. So, expect asking prices to keep drifting a little lower before turning back around (see chart below):

a graph of a number of people 

Jake Krimmel, Senior Economist at Realtor.com, explains: 

“That is good news for buyers, who are seeing lower asking prices and more room to negotiate, but it is also good news for sellers: Pricing to today’s demand is helping homes move and keeping more transactions alive in a high-rate environment.”

Translation – with rates still elevated, buyers can only stretch so far. Sellers who meet them where they are instead of holding out for unrealistic prices are the ones actually getting to closing. And doing that up front is always better than chasing the market later.

Buyers, You’ve Got Room To Negotiate Again

At the same time, Redfin data shows sellers now outnumber buyers by about 58%, the widest gap on record (see chart below):

a graph of sales 

That changes the power dynamics of the market – and impacts how homeowners should price their house. Nationally, about 7 in 10 markets now favor buyers or are trending that way.

  • For sellers, that means standing out matters as much as pricing. With more homes to choose from, buyers are comparing you directly against the competition. So, a little flexibility, like covering closing costs or being open on timing, can be what gets your house picked over another.

  • For buyers, it means more room to ask for a lower price, help with closing costs, repairs after inspection, or some combination of all 3. That’s especially true for homes that have already sat for weeks, where sellers are often the most willing to talk.

Bottom Line

Price cuts are a normal part of today’s housing market, and both buyers and sellers can use them to their advantage. Connect with a local real estate agent to look at what’s actually happening with prices in your neighborhood, so you know exactly where you stand before you list or make an offer.

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Copyright © 2020-2025 Mark Sincavage. All rights reserved.  
The information contained, and the opinions expressed, in these article are not intended to be construed as investment advice. Let's Talk Real Estate, Mark Sincavage, and Keeping Current Matters, Inc. do not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Let's Talk Real Estate, Mark Sincavage and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.