“You need 20% down to buy a house.” It’s the most persistent myth in home buying — and for most buyers, it simply isn’t true. In Wake County in 2026 you can buy with far less, and many people do. This guide lays out the real minimum down payments by loan type, what putting 20% down actually gets you, the honest trade-offs of a small versus large down payment, and the North Carolina programs that can help cover it — so you can decide what fits your situation. We don’t sell loans or recommend a lender, and no one will contact you for reading this.
The short answer
You do not need 20% down to buy a home in Wake County. Common loan programs start at 3% down (conventional), 3.5% (FHA), and even 0% down (VA and USDA, if you qualify). Nationally, the typical first-time buyer puts down about 10% — not 20%. The 20% figure isn’t a requirement; it’s the point at which you avoid private mortgage insurance (PMI) on a conventional loan. Putting less down gets you into a home sooner but costs more each month; putting more down lowers the payment but ties up cash. Neither is “right” — it depends on your goals.
Real minimum down payments by loan type (2026)
Here’s what the major loan programs actually require. Exact eligibility (credit score, income, location, and whether you’re a first-time buyer) varies by program and lender — these are the published minimums, not a promise you’ll qualify.
| Loan type | Minimum down | Mortgage insurance? | Who it’s for |
|---|---|---|---|
| Conventional 97 / HomeReady / Home Possible | 3% | PMI until ~20% equity, then it drops | Most buyers; income limits on HomeReady/Home Possible |
| FHA | 3.5% (580+ credit score) | MIP, usually for the life of the loan | Lower credit scores or higher debt ratios |
| VA | 0% | No monthly MI (one-time funding fee) | Eligible veterans, active duty, some spouses |
| USDA | 0% | Guarantee fee (lower than PMI) | Eligible rural/edge areas + income limits |
| Conventional 20%+ | 20% | None | Buyers with more cash who want the lowest payment |
VA and USDA are veteran/location-and-income gated; parts of eastern and southern Wake County and the surrounding counties can fall in USDA-eligible zones, but you must check a specific address.
What 20% down actually buys you
The 20% number isn’t a gate you have to clear — it’s a threshold with three real benefits on a conventional loan:
- No PMI. Private mortgage insurance protects the lender, not you, and typically runs a few tenths of a percent to ~1.5% of the loan per year. Putting 20% down means you skip it entirely. (Put less down and PMI is added — but on a conventional loan it automatically cancels once you reach about 20% equity, and by law at 78% loan-to-value.)
- A lower monthly payment. Borrowing less means a smaller principal-and-interest payment and no PMI line — often a few hundred dollars a month less than a 3–5%-down version of the same home.
- A stronger offer. In a competitive situation, more money down can read as a lower-risk buyer. (It does not change the home’s price or appraisal.)
What 20% down does not do: it isn’t required to get approved, and it won’t help if it drains every dollar you have. A smaller down payment that leaves you with cash reserves is often the safer move.
A worked example: the same $425,000 home at 5%, 10%, and 20% down
To show the mechanics, here’s the same illustrative home used in our cash-to-close and monthly-payment (PITI) guides: a $425,000 house at an illustrative 6.5% rate. These are illustrative figures to show how down payment moves the numbers — not a quote, and not today’s exact rate (check the live market report for current pricing).
| Down payment | Cash for down payment | Loan amount | PMI? | P&I per month* |
|---|---|---|---|---|
| 3.5% (FHA min) | $14,875 | $410,125 | MIP (FHA) | ~$2,592 |
| 5% | $21,250 | $403,750 | Yes, until ~20% equity | ~$2,552 |
| 10% | $42,500 | $382,500 | Yes, until ~20% equity | ~$2,418 |
| 20% | $85,000 | $340,000 | None | ~$2,149 |
*Principal & interest only, computed at an illustrative 6.5% over 30 years; excludes escrowed taxes, insurance, and PMI/MIP, which add several hundred dollars more (see the PITI guide). The gap between 5% and 20% down is about $400/month in P&I plus the PMI you avoid — in exchange for roughly $64,000 more cash up front.
Small vs. large down payment: the honest trade-offs
There’s no universally correct answer. The real question is what you do with your money.
A smaller down payment (3–10%)
- Upside: you buy sooner, keep more cash for reserves/repairs/moving, and start building equity now instead of renting. With low-down programs you can stop waiting for a 20% pile that may take years to save while prices and rents move.
- Downside: a higher monthly payment, PMI/MIP for a while (or, on FHA, the life of the loan), more interest over time, and less of a cushion if values dip.
A larger down payment (20%+)
- Upside: no PMI, a lower payment, less lifetime interest, and instant equity.
- Downside: a large amount of cash tied up in the home (illiquid), the opportunity cost of not investing it, and the risk of buying “house-poor” with no emergency fund. More down does not get you a better price on the home.
Help covering the down payment in North Carolina
If cash is the obstacle, you may not have to come up with it all yourself. North Carolina runs down-payment-assistance programs for eligible buyers — notably the NC Home Advantage Mortgage (up to 3% of the loan in assistance) and the $15,000 NC 1st Home Advantage Down Payment for eligible first-time buyers. Eligibility depends on income, home price, and credit, and you apply through a participating lender — we don’t administer these programs or refer you to anyone. Full current details are in our NC first-time-buyer programs guide. Gift funds from family and certain employer/closing-cost-assistance programs can also reduce the cash you bring.
So how much should you put down?
A reasonable way to think about it: put down enough to get a payment you’re comfortable with, without emptying your savings. For many buyers that lands somewhere between the 3–5% minimum and 20% — keeping a healthy emergency fund matters more than hitting any particular percentage. If you can reach 20% comfortably and value the lowest payment, great; if not, low-down loans and NC assistance exist precisely so you don’t have to wait. The right number is the one that fits your finances and timeline — not a rule of thumb. Run your own figures with the cash-to-close and monthly-payment guides, and see whether buying even beats renting for your timeline in our buy vs. rent breakdown.
Not sure your credit is ready? See what credit score you need to buy a home in Wake County — the real minimums by loan type, how your score changes your rate, and how to raise it before you buy.
Veteran or service member? A VA loan can mean $0 down and no monthly mortgage insurance in Wake County — here is how the benefit really works in 2026, including who pays a $0 funding fee: VA Home Loans in Wake County.
Buying in eastern or outer Wake County? A USDA loan can mean $0 down in places like Zebulon and Wendell — here is how the program really works in 2026, including the income limit and which areas qualify: USDA Loans in Wake County.
Wake Market Watch is an independent real-estate information and technology platform for Wake County, NC. We are not a real-estate brokerage, a mortgage lender or broker, a closing attorney, or a settlement-service provider; we do not list or sell homes, originate loans, or take commissions or referral fees, and we do not steer you toward any loan type, lender, or down-payment amount. Nothing here is legal, tax, or financial advice; every figure on this page is a cited average or a clearly-labeled illustrative example that changes over time and varies by home, loan, and borrower — confirm your own numbers before deciding. No agent or lender will contact you as a result of using this page — you choose who, if anyone, you reach out to. Some links on this site are affiliate links; see our affiliate disclosure.
Working out your budget before you shop? See our guide to how much house you can afford in Wake County, which covers what lenders will actually approve versus what is comfortable to carry.
Considering a two-unit property instead of a single-family home? Our guide to duplex investing in Raleigh works the numbers at current rates, including the owner-occupied financing rules that apply to two-to-four-unit purchases.