First-Time Homebuyer Guide: How Much Cash You Actually Need
Twenty percent down is a myth for most first purchases. Here are the four sources that get buyers to the closing table.
The single biggest misconception in home buying is that a first purchase requires 20% down. It does not, and never has for most buyers. Here is what the money actually looks like.
Source one: low down payment loans
Conventional programs go to 3% down for qualified first-time buyers. FHA sits at 3.5% with more forgiving credit requirements. VA and USDA reach zero down for eligible buyers. On a $600,000 home, 3% is $18,000, not $120,000.
Source two: down payment assistance
Most states, and many counties and cities, run down payment assistance programs. Availability, income limits, purchase price caps and funding cycles vary by area and change through the year. Many provide a second loan covering some or all of the down payment, with repayment often deferred until you sell or refinance, so eligibility is worth checking even if you assume you earn too much.
Source three and four: gifts and seller credits
Gift funds from family are permitted on nearly every program with a simple gift letter and a paper trail. Separately, a seller credit toward closing costs is negotiable in most transactions and can cover several thousand dollars of prepaid taxes, insurance, and fees, which is often the real barrier rather than the down payment itself.
If your income is self-employed
Being a first-time buyer and self-employed is not a dead end. Bank statement and 1099 programs are available on a first purchase, and combining one with a modest down payment works. Get pre-approved before you shop so you know which lane you are in.
Does this apply to your situation?
Twelve questions, no credit check, and no email required. See which programs are commonly used for situations like yours.
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