The truth about down payments

The 20% figure is the single most expensive misunderstanding in American homebuying. Here's what buyers actually put down, what mortgage insurance actually costs, and how Minnesota can hand you five figures of help.

What the minimums really are

Mortgage insurance is a tool, not a punishment

Yes, putting down less than 20% on a conventional loan usually means mortgage insurance — often somewhere in the low hundreds per month depending on your loan size and credit. Now compare that to the alternative: spending five more years renting while you save the other 17%, during which prices and rents both typically climb. For many buyers, mortgage insurance is the fee that makes owning possible now — and on conventional loans it goes away as your equity grows.

Minnesota will actually help you

Minnesota Housing pairs its first-mortgage programs with down payment and closing cost loans that can reshape your entire cash picture (figures reviewed July 2026):

• Monthly Payment Loan — up to $18,000, repaid in small monthly payments alongside your mortgage.
• Deferred Payment Loan — up to $16,500 with no monthly payment; repaid when you sell or refinance.
• Deferred Payment Loan Plus — up to $18,000, deferred, for buyers meeting certain criteria.
• First-Generation Homebuyer Loan — up to $35,000, forgivable over time, for eligible buyers whose parents never owned. Full guide here.

See the complete program breakdown for eligibility details, and Wisconsin buyers — WHEDA has parallel help; ask Spencer.

Where down payment money can come from

• Your savings — including money you moved from a brokerage or savings account (paper trail matters; don't shuffle money randomly before applying).
• Gift funds — family can contribute with a simple gift letter; this is extremely common.
• Assistance programs — the state and local programs above.
• Retirement accounts — some plans allow loans or first-home withdrawals; weigh the tradeoffs with a tax professional first.

You

You

Real talk: we have about $12,000 saved. Is that enough?

Spencer

Very possibly, yes. $12,000 of your own money plus a deferred assistance loan can cover a 3% down payment and a healthy share of closing costs on a mid-$200s to low-$300s home. The only way to know precisely is to run your scenario — fifteen minutes, and you'll have the number.

This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Fairway Independent Mortgage Corporation is not affiliated with any government agencies. These materials were not approved by HUD, FHA, VA, USDA, Minnesota Housing, or any other government agency.