“We need 20% down before we can buy.” After 30+ years in the mortgage business here in Central Indiana, I still hear this every single week — and it stops good people from buying years before they need to.
So let’s clear it up: 20% down has never been a requirement to buy a home. Not now, not ever. Here’s where that number really comes from, what you actually need, and how to figure out the right answer for your situation.
Where the 20% myth comes from
Twenty percent is simply the point where conventional loans no longer require mortgage insurance. That’s it. It’s a pricing threshold, not an entry ticket. Somewhere along the way, “you can skip mortgage insurance at 20%” got shortened to “you need 20%” — and a generation of renters has been waiting on the sidelines because of it.
What you actually need
- Conventional loans — as little as 3% down for qualified buyers.
- FHA loans — 3.5% down, with more flexible credit guidelines.
- VA loans — $0 down for veterans and eligible service members.
- USDA loans — $0 down in eligible areas, and more of Central Indiana qualifies than people expect.
- Down payment assistance — state, regional, and lender-based programs can put thousands toward your down payment, sometimes as forgivable second mortgages or grants. Funding and terms change year to year, so ask before you assume anything.
On a $250,000 home, the difference between 20% down ($50,000) and 3% down ($7,500) is the difference between buying someday and buying this year.
What about mortgage insurance?
Mortgage insurance gets treated like a four-letter word, and it shouldn’t be. It’s the fee that makes low-down-payment loans possible. On a conventional loan it drops off once you reach 20% equity — and your equity grows from both your payments and your home’s appreciation. Many of my clients reach that point faster than they expected.
The real cost of waiting
While you’re saving toward 20%, two things usually keep moving: home prices and rent. Every year you wait, the target gets bigger — and every rent check builds your landlord’s equity instead of yours. Waiting isn’t automatically wrong, but it isn’t automatically safe either. It’s a math problem, and it deserves real numbers instead of a rule of thumb.
So what’s the right answer for you?
It depends on your credit, your savings, your monthly comfort zone, and how long you plan to stay. That’s exactly the kind of thing we can sort out in a five-minute conversation — no pressure, no obligation, just a straight answer about what you’d actually need to buy in Indianapolis, Fishers, Carmel, Noblesville, or anywhere across Central Indiana.
Curious what your number really is? Reach out anytime. I’ll give it to you straight.
Greg Rank
Senior Mortgage Consultant & Indiana Mortgage Broker
Channelwood Mortgage — NMLS #138276
Call or text: (317) 603-0912
Email: gregrank@mortgagebrokerindy.com
This article is for general educational purposes and is not a commitment to lend. Loan programs and eligibility requirements are subject to change.