The Down Payment Path: What You Actually Need (It's Not 20%)

Path 4 of 5 in the Your Way In series.

Ask ten renters what's stopping them from buying, and eight will say the down payment. Ask them where the 20% number came from, and nobody knows. Because the 20% rule isn't a rule — it's a rumor, and it costs people years.

Twenty percent avoids PMI. That's all it does. It is not the price of admission. Cash-to-close is a strategy problem, not a savings problem, and here are the four levers:

Lever 1: Loan programs

VA loans: potentially 0% down. FHA: 3.5%. CalHFA and first-time buyer programs: down payment and closing-cost assistance for qualifying California buyers. Conventional loans exist at 3–5% down. Which ones fit you is a one-call question with a local lender — programs change and eligibility varies, so we confirm everything current before we count on it.

Lever 2: The PMI math nobody runs

Private mortgage insurance is the boogeyman that keeps people saving for years. So run the actual number: on many loans it's a few hundred dollars a month — often less than a single year of Bay Area rent increases — and unlike rent, it falls off once you reach the equity threshold. Paying PMI while building equity frequently beats paying rent while saving toward a 20% target that keeps moving as prices do.

Lever 3: Gift funds

Family help is common, legitimate, and lenders have a clean process for it (the gift letter). If it's available to you, it's the fastest lever there is.

Lever 4: Seller credits

In the right negotiation — especially on dated homes and longer days-on-market listings — sellers contribute toward closing costs or rate buydowns. That's cash-to-close shrinking at the negotiating table instead of in your savings account.

The finish line

Pick the path first, then shop. Down payment is a strategy, not a barrier — and the strategy conversation takes about thirty minutes.

Get all 5 path charts free: text PLAN to 415-246-4346 or visit nmcrealestate.com/BuyerSolutionsRequestForm

Final path: The One-Move Sequence — for everyone who has to sell first.

Nick McNaboe | REALTOR® | DRE #02106027 | COMPASS | 415-246-4346 | nmcrealestate.com. Compass is a real estate broker licensed by the State of California and abides by Equal Housing Opportunity laws. License Number 01527235. Informational only; loan programs and eligibility vary — confirm current terms with your lender.