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One of the biggest myths holding back home buyers in the Minneapolis Saint Paul metro area (especially the south metro: Lakeville, Apple Valley, Eagan, Burnsville, Bloomington) is the belief that you must put 20% down to buy a home. That’s simply not true anymore. The Evolution of Down Payment Requirements
- Early 1900s: Buyers often put 50% down and financed the rest for short terms.
- Post-World War II: 20% down became the norm.
- Today (2026): Low-down-payment options make homeownership accessible without draining your savings.
You can still put 20% down (or more) if you want to—it lowers your monthly payment, builds equity faster, and acts like a forced savings plan. But the most important benefit for many buyers is avoiding PMI (private mortgage insurance).What Is PMI and How Much Does It Cost? If your down payment is less than 20% (or you have less than 20% equity), most lenders require PMI to protect their investment. After the 2008 crash, PMI was expensive—often hundreds per month. That’s changed significantly. Today, PMI can be as low as $30–$100/month on many loans, depending on your credit, loan size, and lender. Always talk to your loan officer for exact numbers—don’t assume it’s a deal-breaker. The Benefits of 20% Down (Even If It’s Not Required)
- You look stronger in a multiple-offer situation (especially on foreclosures or competitive listings).
- Lower monthly payments and faster equity build-up.
- No PMI = more money in your pocket every month.
Low-Down-Payment Options Available in 2026You don’t need to drain your savings to buy a home. Here are the most common programs:
- Conventional loans: As low as 3% down if you qualify.
- FHA loans: 3.5% down (great for first-time buyers).
- VA loans: 0% down for eligible veterans.
- USDA/Rural loans: 0% down in qualifying areas.
The key is affordability. Know your comfortable monthly payment, factor in taxes, insurance, utilities, maintenance, and PMI (if applicable), and choose the down payment that fits your budget and goals. The Bottom Line Don’t let outdated myths stop you from buying. You can enter the market with a low down payment and still position yourself as a strong buyer. The right loan officer and real estate agent will guide you through the numbers so you buy confidently. If you’re ready to buy a home in Lakeville, Apple Valley, Eagan, Burnsville, Bloomington, or the south metro, let’s talk. As a real estate agent in Lakeville MN with over 20 years of experience helping buyers navigate the Minnesota home buying process, I’ll connect you with trusted lenders and make sure you understand every cost and option. Ready to crack the down payment code and buy smart in 2026? Text or call me today, Tom Sommers with Coldwell Banker Realty, for a free, no-obligation consultation. Let’s get you pre-approved and prepared.
