Plenty of buyers believe a mortgage requires 20% down, look at the $70,000 that implies on a $350,000 home, and stop searching. The 20% figure is a way to avoid mortgage insurance, not a requirement. Many loan programs accept far less, and several accept nothing at all for eligible buyers.
Duane Buziak, NMLS #1110647, works with buyers across Virginia, Florida, Tennessee, and Georgia who are short on cash but have steady income. The seven strategies below cover loan programs, assistance, gifts, concessions, and a savings plan. They are not mutually exclusive, and the right combination depends on your credit, income, location, and military status. All rules and figures are stated as of 2026 and can change, so confirm them before you rely on them.
1. Use a Low-Down-Payment Conventional Loan
Start with a number. Suppose you buy a $350,000 home. At 20% down you bring $70,000 and borrow $280,000. At 3% down you bring $10,500 and borrow $339,500. This is an illustration, not a quote, and it assumes a 6.5% rate on a 30-year fixed loan and private mortgage insurance (PMI) at 0.6% of the loan per year.
- 20% down: principal and interest of about $1,770 a month, with no PMI.
- 3% down: principal and interest of about $2,146, plus roughly $170 a month in PMI, for about $2,316 before taxes and insurance.
You pay about $546 more per month, but you keep $59,500 in cash. Programs such as Fannie Mae’s HomeReady and Freddie Mac’s Home Possible allow 3% down. Both tie eligibility to income limits based on area median income, and HomeReady is not limited to first-time buyers.
PMI is the insurance that protects the lender on loans with under 20% down. Unlike FHA mortgage insurance, it can come off. Under federal law you can generally request cancellation once your balance reaches 80% of the home’s original value, and it terminates automatically at 78%. The CFPB explains the rules.
How to put it into practice:
- Check the program’s income limit and property rules against your household.
- Get a credit-safe pre-approval so your score is not dinged while you compare.
- Compare PMI pricing across multiple lenders, since it varies with score and lender.
- Note the equity level at which you can request PMI removal, and set a reminder.
The common mistake is assuming 3% down is only for first-time buyers, or accepting the first PMI quote without comparing. PMI is priced by risk, and two lenders can quote different monthly costs on the same file. Measure cash needed at closing and the total monthly payment including PMI, then set both against the FHA option in the next strategy.
2. Choose an FHA Loan With 3.5% Down
FHA loans are insured by the Federal Housing Administration and allow 3.5% down with a credit score of 580 or higher, with more tolerance for thin credit and higher debt-to-income (DTI) ratios than most conventional loans. The cost is mortgage insurance premium (MIP): an upfront premium, currently 1.75% of the loan amount and usually financed, plus an annual premium billed monthly. HUD describes the FHA program and its requirements.
Take the same $350,000 home. Using illustrative numbers, 3.5% down is $12,250, the base loan is $337,750, and the financed upfront premium of about $5,911 brings the loan to roughly $343,660. At a 6.5% example rate, principal and interest is about $2,172. An annual MIP of 0.55% adds about $158, for roughly $2,330 a month.
Now compare a conventional loan for a borrower with a 640 score. If PMI were priced at 1.5% a year on the $339,500 loan from strategy 1, it would add about $424, for roughly $2,570. In this illustration FHA is cheaper by about $240 a month. For a borrower with a 740 score, PMI might be a fraction of that, and conventional would likely win. Credit score decides this comparison.
The pitfall is lifetime MIP. With under 10% down on a 30-year FHA loan, the annual premium generally stays for the life of the loan. The usual exit is a refinance into a conventional loan once you have equity and improved credit, so plan for that from the start.
Steps: confirm your score and DTI, verify the FHA loan limit for your county, request FHA and conventional quotes side by side, and decide when a refinance would make sense. Measure the total monthly payment and the five-year cost, including all mortgage insurance, against conventional.
3. Use VA or USDA Loans for Zero Down
Two government-backed programs let eligible buyers finance 100% of the purchase price. VA loans serve eligible veterans, service members, and some surviving spouses. USDA loans serve buyers in eligible rural and suburban areas whose household income falls within program limits. Neither requires monthly mortgage insurance in the way FHA and conventional do, but each charges a financed fee.
Suppose a veteran buys a $300,000 home. On a conventional 3% loan, the cash down payment is $9,000. On a VA loan it is $0. The VA funding fee for a first-time use with no down payment is 2.15% as of 2026, according to VA.gov, which would be $6,450 if financed. That raises the loan to $306,450 and adds about $41 a month at an example 6.5% rate. Veterans receiving VA disability compensation are generally exempt from the fee.
USDA charges a guarantee fee instead: an upfront fee and an annual fee, both set by USDA and subject to change. Check current figures with your loan officer.
How to proceed:
- Veterans: obtain a Certificate of Eligibility through VA.gov or have your lender pull it.
- USDA buyers: check the property on the USDA eligibility site and confirm your household income against the limit for your county and household size.
- Work with a lender experienced in the program’s appraisal and property rules.
The mistake is skipping eligibility checks until you have already made an offer, or forgetting that the financed fee raises the balance you owe. A property that fails USDA mapping or appraisal standards can derail a contract. Measure the cash saved at closing against the larger loan balance and the monthly payment increase from the financed fee. For many buyers the cash saved is worth it, but you should see both numbers.
4. Layer State and Local Down Payment Assistance
Down payment assistance (DPA) is money from a housing finance agency, city, or county that covers part of your down payment and closing costs. It usually arrives as a grant, a forgivable loan, or a deferred second mortgage repaid when you sell or refinance. A common misconception is that DPA exists only for buyers at the bottom of the income range. Eligibility limits vary widely, and many programs have limits that reach middle-income households.
Georgia’s housing agency, for example, runs the Georgia Dream Homeownership Program through participating lenders. It carries income and purchase price limits and requires homebuyer education. Tennessee Housing Development Agency, Virginia Housing, and Florida Housing Finance Corporation run comparable programs with their own terms. Amounts, interest rates, and forgiveness schedules change, so verify current terms on the agency page before you plan around them.
The sequence matters:
- Identify the program for your state and your target county.
- Confirm income and purchase price limits against your household and your price range.
- Complete the required homebuyer education course.
- Use a lender approved to originate that program.
- Read the repayment or forgiveness terms before you sign.
The common mistake is house shopping first and discovering later that the program requires a specific lender, a class completed before contract, or a price below your offer. Programs also often limit combining with other assistance, so ask what can and cannot be paired. This is where a broker’s access matters: only some lenders participate in a given state program, and Duane Buziak can compare which participating lender fits your file.
Measure the dollars of assistance you receive against the rate and repayment terms attached. A $10,000 forgivable loan at no interest is a different deal from a $10,000 second mortgage that comes with a higher first-mortgage rate.
5. Accept Gift Funds From Family
Conventional, FHA, and VA rules all permit gift funds toward a down payment, provided the gift is documented. The mechanism is simple: underwriters need to know that the money is a true gift with no repayment expected, and that it is not an undisclosed loan. Eligible donors are typically relatives, and some programs allow others, such as an employer or a charitable organization. The specifics vary by loan type, so confirm with your lender before the donor moves money.
Suppose a buyer’s parents gift $10,000 toward a 3.5% FHA down payment on a $350,000 home, which requires $12,250. The buyer covers the remaining $2,250 from savings. The file contains a signed gift letter stating the amount, the donor’s relationship, and that no repayment is expected, along with the donor’s bank statement showing the withdrawal and the buyer’s statement showing the deposit.
A workable order of operations:
- Confirm with your lender that the donor qualifies under your loan type.
- Get the lender’s gift letter template and have the donor complete it.
- Have the donor transfer funds by wire or check well before underwriting.
- Keep statements from both accounts showing the transfer.
The common mistake is a cash deposit with no paper trail, or a gift that shows up as a large unexplained deposit in the middle of underwriting. Either one triggers conditions, and a late-stage documentation request can threaten a closing date. A gift letter and a transfer record answer the question before it is asked. Also remember that a gift is a one-time cash source, not income, so it does not help you qualify for a larger payment.
Measure whether the gift is fully documented and sourced before the file goes to underwriting, with no conditions raised against it.
6. Negotiate Seller Concessions and Lender Credits
This strategy reduces cash to close rather than the down payment itself, which frees your savings for the down payment. A seller concession is an agreement in the purchase contract that the seller pays part of your closing costs. A lender credit is money the lender applies to your costs in exchange for a higher interest rate.
Each loan type caps what the seller can contribute. As of 2026, conventional loans with under 10% down generally cap concessions at 3% of the price, FHA at 6%, and VA at 4% for certain costs beyond customary closing fees. Confirm the cap for your exact scenario. On a $350,000 offer with a conventional 3% down loan, a 3% concession equals $10,500 toward closing costs, which is the maximum allowed.
Lender credits need a trade-off check. In an illustration, suppose a credit of 1% of the $339,500 loan, or $3,395, comes with a rate 0.25 percentage points higher, moving from 6.5% to 6.75%. The monthly principal and interest rises from about $2,146 to about $2,202, a difference of roughly $56. The credit takes about 60 months to be paid back through the higher payment. If you expect to keep the loan longer than five years, the credit costs more than it saves.
Steps: confirm the cap for your loan type and down payment, write the concession request into the offer, and compare rate-versus-credit trade-offs across several quotes. The mistake is exceeding the cap, which forces a renegotiation, or taking credits without weighing the higher rate over time. Measure cash to close after concessions against the total cost of any rate increase over your expected ownership period.
Pricing comparisons are where lender structure shows up. Duane Buziak is a broker and lender who shops hundreds of wholesale lenders, so one file can be priced against many rate sheets rather than one.
| Feature | Duane Buziak (Broker+Lender) | Typical Direct Lender | Why It Matters |
|---|---|---|---|
| Rate sheets | Hundreds of wholesale lenders compared per file | One internal rate sheet | Rate and PMI pricing differ by lender, so more options allow a closer program fit |
| Credit pull | NoTouch Credit Pull soft-pull pre-approval | Often a hard inquiry at application | A soft pull lets you plan without affecting your score |
| Program fit | FHA, conventional, VA, USDA, and DPA-participating lenders compared | Programs offered by that lender only | Some assistance programs require a specific approved lender |
| Existing quotes | Dare to Compare: bring your quote for a head-to-head check | Quote reflects its own pricing | Side-by-side numbers show what a rate or credit really costs |
7. Build the Gap With a Short Savings and Credit Plan
If no program closes the gap today, a defined plan can close it in months rather than years. The mechanism is that two things move together: your savings grow, and your credit profile improves, which lowers PMI or mortgage insurance pricing and widens your program options.
Suppose you want a $300,000 home with a 3% down program, which is $9,000 down, before closing costs. Saving $600 a month for 12 months builds $7,200. That falls short on its own, but paired with a modest gift or a down payment assistance program, the remaining balance becomes manageable. The point is to know your target before you start saving.
A simple plan:
- Start with a NoTouch Credit Pull review, a soft-pull look at your credit that does not affect your score.
- Set a target cash-to-close figure that covers the down payment, closing costs, and a reserve.
- Automate the monthly transfer so saving does not depend on willpower.
- Pay down revolving balances, which can raise your score and lower your DTI.
- Review progress every quarter and adjust the target if rates or prices move.
The common mistake is opening new credit or making a large purchase while saving. A new car loan or store card can lower your score and raise your DTI right before you apply, which undoes months of progress. Hold off on new debt until after closing.
Measure two things each quarter: progress toward the cash-to-close target, and the trend in your credit score and DTI. If both are moving in the right direction, you are on schedule. Duane Buziak can re-run the numbers at any point without a hard inquiry.
Frequently Asked Questions About Buying Without 20% Down
Can I buy a house without 20% down?
Yes. Conventional loans can start at 3% down, FHA at 3.5%, and VA and USDA loans can finance the full price for eligible buyers. The 20% figure only avoids PMI on conventional loans.
What is PMI and when can I remove it?
PMI is private mortgage insurance on conventional loans with under 20% down. You can generally request removal at 80% of the original home value, and it ends automatically at 78%, per the CFPB.
What is the difference between PMI and MIP?
PMI applies to conventional loans and can be cancelled. MIP applies to FHA loans, and with under 10% down it generally lasts for the life of the loan unless you refinance.
Is down payment assistance only for low-income buyers?
No. Eligibility depends on each program’s income and purchase price limits, which vary by state and county. Many are open to a broad range of households.
What is a funding fee?
It is a one-time fee on VA loans, which can be financed into the loan. Veterans receiving VA disability compensation are generally exempt. See VA.gov for current rates.
What is a seller concession?
It is an agreement in your purchase contract for the seller to pay part of your closing costs. Each loan type sets a cap, so check yours before you write the offer.
What is a gift letter?
It is a signed statement from the donor confirming the amount, their relationship to you, and that no repayment is expected. Lenders require it along with a transfer record.
Is Mortgage Mastermind by Duane Buziak a broker or a direct lender?
Duane Buziak operates as a broker and lender, licensed in VA, FL, TN, GA, DC, NC, SC, and MD, and SC is broker-only. That means your file can be compared across hundreds of wholesale lenders instead of a single rate sheet.
Where to Start: A Credit-Safe Look at Strategies 1 Through 3
Begin with the loan itself. Find out which of the conventional, FHA, and VA or USDA routes you qualify for, because that sets your minimum cash requirement. A soft-pull review lets you see that without a hard inquiry. Then layer in the extras: state assistance if a program fits your county and price range, a gift if family is able to help, and seller concessions to trim closing costs. Rules on combining these differ by program, so confirm them before you commit. If the numbers still do not work, strategy 7 turns the gap into a timeline.
Skip the temptation to compare only monthly payments. Compare cash to close, mortgage insurance over five years, and the terms on any assistance together.
Ready to experience the award-winning service that earned us VA Broker of the Year and recognition as a top 1% nationwide mortgage broker? Schedule your no-pressure consultation today and discover how our customized financing strategies across VA, FL, TN, and GA can help you achieve your homeownership or investment goals with credit-safe inquiries and expert guidance every step of the way.
