The Truth About Down Payments: You Might Not Need 20%

Elizabethtown, KY Real Estate Insights (2025)

For decades, a 20% down payment has been treated like a golden rule of homebuying. You’ve probably heard it from parents, financial “gurus,” or even casual online advice. But in 2025, that old standard doesn’t tell the whole story—especially here in Elizabethtown.

Let’s break down the real truth.

Why People Think You Need 20%

The 20% number traditionally helped buyers avoid Private Mortgage Insurance (PMI), a monthly fee lenders charge when your down payment is smaller. Plus, putting down more lowers your monthly mortgage payment and can secure better interest rates.

But while that’s ideal, it’s not always realistic—or necessary.

The Real Numbers: How Little You May Need

Depending on the loan program, many buyers can put down much less:

• Conventional loans: As low as 3% down for qualified buyers

• FHA loans: 3.5% down

• VA loans (for veterans and active-duty military): 0% down

• USDA loans (for rural and some suburban areas, including parts of Hardin County): 0% down

That means if you’re buying a $250,000 home, you might only need $7,500—or even nothing at all.

What’s the Catch?

Putting down less often means:

✅ You’ll pay PMI (until you reach 20% equity)
✅ Slightly higher monthly payments
✅ A bit more long-term interest

But many buyers find that manageable, especially when renting costs are sky-high and saving 20% would take years.

Why Waiting for 20% Could Cost You

Home prices in Elizabethtown have continued to rise steadily, even as interest rates fluctuate. Waiting to save a larger down payment could mean:

🚫 Paying more later as prices climb
🚫 Missing out on low-down-payment programs
🚫 Delaying building equity while paying rent

Bottom Line

The 20% down rule is optional, not mandatory. With the right financing options and a smart strategy, you could become a homeowner sooner than you think.

If you’re wondering what your down payment really needs to be—or which loan fits your situation—let’s talk. 🏡