The down payment truth

Where "20%" came from

Twenty percent was never the ticket price of a mortgage. It's the equity level where conventional loans stop requiring private mortgage insurance (PMI). Somewhere along the way, "the point where an extra fee drops off" got retold as "the minimum to play," and an entire generation heard that homeownership costs $60–80k in cash up front. It doesn't.

What entry actually costs

• Conventional first-time buyer loans: from 3% down. On $300,000 → $9,000.
• FHA: 3.5% down with more flexible credit. On $300,000 → $10,500.
• VA (eligible service members/veterans) and USDA (eligible rural areas): 0% down.

Yes, less than 20% down means mortgage insurance for a while. Mortgage insurance is not a scam — it's the price of buying years earlier, and on conventional loans it goes away as your equity grows. Compare it against years of additional rent and it usually looks very reasonable.

Where the down payment can come from (not just your savings)

• MN Housing downpayment & closing cost loans — up to $18,000 depending on the loan type, layered on a MN Housing first mortgage. Some are deferred with no monthly payment. Details on the MN Housing page.
• The First-Generation Homebuyer Loan — up to $35,000, interest-free and forgivable, if neither of your parents owned. See the first-gen guide.
• County & city programs — Minneapolis, St. Paul, and several metro county CDAs run their own assistance, often stackable. See county & city grants.
• Gift funds — family gifts are allowed on most loan types with a simple gift letter. If grandma wants to help, the underwriter is fine with grandma.
• Seller/lender credits — negotiated money that offsets closing costs, keeping more of your cash available for the down payment.

The mindset shift

Stop asking "how long until I save 20%?" and start asking"what's the smallest safe amount of cash I need to get in, and what programs cover the rest?" For a lot of Minnesota first-time buyers the honest answer to that second question is a number they could reach within a year — sometimes a number they've already reached.