One of the biggest myths about buying a home is that you need 20% down.
You do not.
But you do need to understand what money is actually required, because your down payment is only one part of the picture.
When buyers ask me, “How much money do I need saved to buy a home?” what they’re usually really asking is:
Can I afford this?
Am I even close?
What surprise costs should I know about before I fall in love with a house?
So let’s break it down in a way that actually makes sense.
First, your down payment
Your down payment depends on the type of loan you use, your credit, your income, your debt, and the property itself.
A few common examples:
- Conventional loans may allow as little as 3% down for eligible buyers.
- FHA loans may allow as little as 3.5% down.
- VA loans may offer 0% down for eligible veterans, active-duty service members, and qualifying buyers.
- USDA loans may offer 0% down for eligible rural properties and qualified buyers.
This is why it is so important to talk to a lender before assuming you need tens of thousands of dollars saved.
For example, on a $400,000 home:
- 3% down would be $12,000.
- 3.5% down would be $14,000.
- 5% down would be $20,000.
- 20% down would be $80,000.
A bigger down payment can lower your monthly payment and may help you avoid mortgage insurance, but it is not the only path to homeownership.
Next, closing costs
Closing costs are the fees and prepaid expenses involved in actually purchasing the home. These are typically due at close of escrow.
These may include things like:
- Loan fees
- Title and escrow fees
- Appraisal
- Credit report
- Recording fees
- Prepaid property taxes
- Homeowners insurance
- Prepaid interest
- HOA transfer fees, if applicable
A safe general estimate is often around 2% of the loan amount, but the actual number depends on your lender, loan type, purchase price, property taxes, insurance, and whether the seller is contributing toward your costs.
This is also where negotiating matters. In some markets, buyers may be able to ask the seller for a credit toward closing costs. In other situations, a builder may offer incentives that help reduce the amount you need out of pocket.
Can down payment assistance help?
Yes, depending on your eligibility.
Nevada has several buyer assistance programs that may help with down payment and/or closing costs. Some are designed for first-time buyers, some are income-based, some are profession-based, and some are location-based.
The key is that these programs are not all the same. Some are grants. Some are forgivable loans. Some are second mortgages. Some must be repaid later. Your lender will be able to help you navigate the grant programs. There are options for as little as $5,000-$20,000 for assistance programs for qualifying buyers.
Budget for inspections
Your home inspection is usually paid for out of pocket during escrow.
A general home inspection is one of the most important expenses in the entire process because it helps you understand the condition of the home before you fully commit. This will run you anywhere from $300-1,000 depending on the size of the property, if its a smart home and the systems covered.
Depending on the property, you may also want additional inspections such as:
- Sewer scope
- Roof inspection
- HVAC inspection
- Pest inspection
- Pool/spa inspection
- Septic inspection
- Well inspection
Whenever you are purchasing a home it is imperative that you have a home inspection done. Whether you are buying a new build in the Las Vegas Valley, an older home tucked away against the Truckee River, a cabin in Incline Village, and a rural 5 acre parcel of land you should always have an inspection done to know what you're getting into.
Do not forget appraisal and upfront lender costs
If you are getting a loan, your lender will usually order an appraisal to confirm the home’s value. This can range from $600-1,000 depending on the market and if it needs to be ordered with a rush.
The appraisal may be paid upfront or rolled into your closing costs depending on the lender. Either way, you should know it is part of the buying process.
Keep reserves after closing
This is the part buyers do not always want to hear, but it matters.
If you can avoid it, do not spend every dollar you have just to get the keys.
I always want buyers to think beyond “Can I close?” and ask, “Will I still feel stable after closing?”
Keeping a small nest egg will help you feel prepared in case an emergency pops up after closing.
So, how much should you have saved?
There is no one-size-fits-all number, but a realistic buyer savings plan should include:
- Down payment
- Closing costs
- Earnest money deposit
- Inspection costs
- Appraisal
- Moving expenses
- Emergency reserves
For some buyers, that may mean $10,000 to $20,000.
For others, it may mean $30,000, $50,000, or more.
It depends on the home price, loan type, seller credits, assistance programs, and your comfort level.
The bottom line
You definitely do not need 20% down to buy a home.
But you do need a clear plan.
The best first step is to build your numbers before you start seriously shopping. That way, you know what you can afford, what cash you need, and what programs may help you get there.
Thinking about buying a home, but not sure what you need saved? Reach out and I’ll help you map out the first steps, connect you with trusted lender options, and figure out what actually makes sense for your timeline.