Ask ten people how much you need for a down payment and most will say 20%. A NerdWallet survey found 62% of Americans believe it, including 60% of people who already own homes. The belief survives even buying a house.
It’s wrong. The median first-time buyer in America puts down 10%, per the National Association of Realtors’ 2025 buyer profile. Nearly three quarters of all buyers put down 10% or less.
What the programs require
The minimums, as of 2026:
- Conventional loans go down to 3% through Fannie Mae’s first-time program, or through HomeReady and Home Possible if your income is under your area’s limit. You’ll want a credit score around 620.
- FHA asks 3.5% down with a score of 580 or higher. Many big banks quietly require 620 to 640 on FHA loans anyway, even though the guideline says 580. Brokers and credit unions are likelier to honor the real floor.
- VA loans need nothing down for eligible veterans and service members, and carry no monthly mortgage insurance. Veterans receiving disability compensation skip the funding fee too.
- USDA loans also need nothing down in eligible rural and suburban areas, which cover more of Michigan than people expect. Income caps apply, around $122,800 for a household of up to four in standard areas.
The Michigan math
Michigan’s median sale price was $293,956 in May 2026, per Redfin. Run the numbers on that house:
| Down payment | Cash needed |
|---|---|
| 3% conventional | about $8,800 |
| 3.5% FHA | about $10,300 |
| 10% | about $29,400 |
| 20% | about $58,800 |
The gap between what people believe they need and what FHA requires is roughly $48,500. In Wayne County, where the median runs near $232,000, the FHA minimum is around $8,100. That’s a used-car budget, not a half-a-decade-of-saving budget.
For what it’s worth, ATTOM’s data puts Michigan’s actual median down payment at $33,000, one of the lowest figures in the Midwest.
The PMI trade-off, honestly
Putting down less than 20% on a conventional loan means private mortgage insurance, usually 0.5% to 1.5% of the loan per year. On a $280,000 loan that’s roughly $115 to $350 a month. Two things soften it. Your credit score drives the rate, so a 760 score can pay a third of what a 630 score pays. And it ends: you can request cancellation once you reach 20% equity, and the lender must drop it at 22%.
FHA works differently, and this is the part most articles skip. FHA charges 1.75% upfront plus 0.55% a year, and if you put down less than 10%, that annual charge lasts the life of the loan. The only exit is refinancing into a conventional loan later. So the real decision for many buyers isn’t “3% versus 20%.” It’s FHA at 3.5% versus conventional at 3%, and which insurance structure costs less for your credit profile. That’s a fifteen-minute conversation with someone who can price both.
Where the money comes from
You don’t have to save every dollar yourself. Among first-time buyers, 59% used personal savings, 26% tapped financial assets like a 401(k) or stocks, and 22% got help from family. FHA allows the entire down payment to be a gift. Michigan also runs down payment assistance through MSHDA, the state housing authority; amounts and funding come and go, so check the current programs or ask us what’s open this month before counting on a specific number.
The bottom line
Down payments in the headlines are rising, but that’s because higher prices have shifted who is buying, not what’s required. The program minimums haven’t moved. If the 20% assumption is the thing keeping you renting, it deserves sixty seconds of checking before it costs you another year.
Sources: NAR 2025 Profile of Home Buyers and Sellers · NerdWallet 2025 Home Buyer Report · Redfin Michigan Housing Market, May 2026 · Bankrate / ATTOM down payment data · HomeGuide PMI cost data · Veterans United VA funding fee guide · USDA income limits 2026 · Homeowners Protection Act PMI cancellation rules