--- title: "First-Time Homebuyer Myths: You Need 20% Down to Finance a Home" description: The truth is, you do not always need 20% down payment to sign the papers on your dream home. In fact, the average down payment is about half that amount at 11%. image: https://rmcu.net/hubfs/Campaigns/MORTGAGE/iStock-653883836.jpg --- [![RMCULogoColor.jpg](https://rmcu.net/hubfs/RMCU-logo.svg "RMCULogoColor.jpg")](https://rmcu.net) [Online Banking Login](https://banking.rmcu.net/auth/signin) [Online Banking Login](https://banking.rmcu.net/auth/signin) [![RMCULogoColor.jpg](https://rmcu.net/hubfs/RMCU-logo.svg "RMCULogoColor.jpg")](https://rmcu.net) - - [Home Loans](https://rmcu.net/home-loans) - [Personal](https://rmcu.net/personal) - [Business](https://rmcu.net/business) - [Membership](https://rmcu.net/membership) - [Careers](https://rmcu.net/membership/about-rmcu/careers) - [Contact Us](https://rmcu.net/contact-us) - Search - [Financial Education ▾](https://rmcu.net/blog/first-time-homebuyer-myths-you-need-20-down-to-finance-a-home#financial-education-nav) - [About RMCU ▾](https://rmcu.net/blog/first-time-homebuyer-myths-you-need-20-down-to-finance-a-home#about-rmcu-nav) - [Security](https://rmcu.net/membership/security) - [TruStage: Security Alert](https://rmcu.net/trustage-security-alert) - [Money Mastermind](https://rmcu.net/money-mastermind-lessons) - [Financial Counseling](https://rmcu.net/financial-counseling) - [Savvy Money](https://rmcu.net/membership/financial-education/savvy-money) - [Blog](https://rmcu.net/blog) - [Resources](https://rmcu.net/resources) - [RMCU Team](https://rmcu.net/membership/about-rmcu/rmcu-team) - [Member Information](https://rmcu.net/membership/about-rmcu/member-information) - [Annual Meeting](https://rmcu.net/membership/about-rmcu/annual-meeting) - [Community](https://rmcu.net/membership/about-rmcu/community) - [Our History](https://rmcu.net/membership/about-rmcu/history) [back to blog](https://rmcu.net/blog) [Home and Mortgage](https://rmcu.net/blog/topic/home-and-mortgage) # First-Time Homebuyer Myths: You Need 20% Down to Finance a Home Read Time **5 mins** | Written by: Rocky Mountain Credit Union [mailto:?subject=First-Time%20Homebuyer%20Myths%3A%20You%20Need%2020%25%20Down%20to%20Finance%20a%20Home&body=https%3A%2F%2Frmcu.net%2Fblog%2Ffirst-time-homebuyer-myths-you-need-20-down-to-finance-a-home](mailto:?subject=First-Time%20Homebuyer%20Myths%3A%20You%20Need%2020%25%20Down%20to%20Finance%20a%20Home&body=https%3A%2F%2Frmcu.net%2Fblog%2Ffirst-time-homebuyer-myths-you-need-20-down-to-finance-a-home) ## Exploring Your Mortgage Options Now that you know 20% down is one of many homebuyer myths, you will probably be able to get into your first home for much less than you thought. So it's time to consider your options and crunch some numbers. First, let's look at the down payment for other first-time buyers. In 2016, buyers under 35 years old put down an average of 8% on their first home, according to NAR's report. This means you might be able to get into your home for much less than you thought. But still, there's a lot to consider before making the decision that is best for you, your family and your finances. ## Benefits of a Small Down Payment Buying a home is one of the biggest investments you'll ever make, which is why it's so vital to understanding all the fine details involved with such a big purchase. And as like with any investment, there's a certain amount of risk and reward. #### It Saves Your Savings Account One of the best parts of making a small down payment is the fact it won't completely drain your savings account. Many first-time home-buyers struggle to pay for all the additional fees and extras because they put all of their money towards a down payment. When you reduce your down payment, you increase your ability to meet the other responsibilities you have as a homeowner. This can give first-time buyers a huge advantage when they're just starting out their new life in their new home. #### Supply and Demand Offering low down payments to new investors helps the entire real estate market thrive because it increases the supply and demand chain. If more people are able to buy a home, that means more people will be able to sell their homes as well. This creates a competitive marketplace with lots of options for both buyers and sellers. ## The Risks While small down payment programs certainly have their advantages, there are also some downsides to them. So it's important to weigh these pros and cons carefully before making your decision. #### Increased Interest Rates One of the most important aspects of any investment is the interest rate you'll be paying. But because a mortgage is typically one of the largest loans a person ever signs off on, it's especially critical to consider the interest rate on this agreement. If you put down a small payment on a house, that means the lender is taking more risk with the loan. And because of this risk, low down payment mortgages often result in higher interest rates. However, if you shop around and talk to the right financial institutions, you might be able to get a fair interest rate despite making a lower down payment. #### Mortgage Insurance Anyone who is putting down less than 20% will be required to pay for mortgage insurance each month. This insurance only offers the lender protection in case the buyer defaults on their payments. But the good news is, once you have some equity built up in your home, you might be able to eliminate this monthly fee. ## Dispelling Homebuyer Myths The world of real estate has undergone some serious changes in recent decades, and the 20% rule has been all but eliminated in most cases. So if you've always dreamed of owning a home but thought you couldn't save up enough to get one, it might be time to consider a low down payment program with reasonable terms and rates. With a little bit of effort and know-how, you'll be signing the closing papers before you know it! ***If you enjoyed this blog, take a look at some of our other related articles:*** - [Mortgage Program Basics](https://blog.rmcu.net/blog/mortgage-program-basics) - [Benefits Of Owning A Home: Tax Deductions for Homeowners](https://blog.rmcu.net/blog/benefits-of-owning-a-home-tax-deductions-for-homeowners) - [3 Common Mortgage Misconceptions](https://blog.rmcu.net/blog/3-common-mortgage-misconceptions) ##### Rocky Mountain Credit Union Share the Love [mailto:?subject=First-Time%20Homebuyer%20Myths%3A%20You%20Need%2020%25%20Down%20to%20Finance%20a%20Home&body=https%3A%2F%2Frmcu.net%2Fblog%2Ffirst-time-homebuyer-myths-you-need-20-down-to-finance-a-home](mailto:?subject=First-Time%20Homebuyer%20Myths%3A%20You%20Need%2020%25%20Down%20to%20Finance%20a%20Home&body=https%3A%2F%2Frmcu.net%2Fblog%2Ffirst-time-homebuyer-myths-you-need-20-down-to-finance-a-home) You May Like These ## Related Articles ![](https://rmcu.net/hs-fs/hubfs/car-loan.jpg?width=700&name=car-loan.jpg) Loans ### [How Much Money Should You Put Down on a New Car?](https://rmcu.net/blog/how-much-money-should-you-put-down-on-a-new-car) You are finally ready to buy a new car. You have searched and researched, and saved some money for a... Keep Reading ![](https://rmcu.net/hs-fs/hubfs/Campaigns/MORTGAGE/low-down-payment-options.jpg?width=700&name=low-down-payment-options.jpg) Home and Mortgage ### [Get the Low Down on Low Down Payment Options](https://rmcu.net/blog/get-the-low-down-on-low-down-payment-options) Finding the right mortgage program to fit your needs is crucial when buying a home. Here are some lo... Keep Reading ![](https://rmcu.net/hs-fs/hubfs/first-home-2026.jpg?width=700&name=first-home-2026.jpg) Home and Mortgage ### [A First-Time Homebuyer’s Guide to Low Down Payment Options in Montana](https://rmcu.net/blog/first-time-homebuyer-montana) Learn how first-time homebuyers in Montana can navigate down payments and loan options. Discover FHA... 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