You do not have to wait until you can put 20% down to buy. Waiting can avoid conventional PMI. Buying sooner with a smaller down payment usually means PMI (conventional) or MIP (FHA) until that product’s rules let it end. The honest comparison is cash, timeline, and what you pay for housing in the meantime — not a rule that 20% is “responsible.” Snapshot as of 2026-08.
Waiting until you can put 20% down can avoid conventional PMI. It also delays the purchase: you keep paying rent (or staying put), and the price and insurance lines can move while you save. Buying sooner with PMI is a cash-and-timeline trade, not a moral failing.
Some conventional products start around 3% down for eligible borrowers. FHA can start around 3.5% down under HUD policy (overlays often sit higher). Neither is a promise that a file will close, and neither is “the best” down-payment number.
Dollar figures on education pages are worked examples for illustration. They are not your payment, cash to close, or an offer of credit.
| Question | Wait until 20% cash | Buy sooner with PMI / MIP |
|---|---|---|
| Cash at purchase (illustration) | On a $450,000 price, 20% is $90,000 down — plus closing costs and prepaids. | 5% is $22,500; FHA 3.5% is $15,750. The gap versus 20% is real cash you still have to source later or keep saving. |
| Mortgage insurance | Conventional PMI is typically not required at 20% down. That is the usual reason people wait. | On many conventional loans, borrower-paid PMI can later come off with equity (original-value HPA path or, separately, a current-value appraisal path). That is different from FHA annual MIP, which is timed from original LTV and often does not drop off just because the house appraised higher. |
| Time and rent | Months or years of saving. Rent (or staying put) continues. The house you wanted may not still be at this illustration price. | You may buy on a documented file now. PMI or MIP is a line on the payment until it ends under that product’s rules — not a life sentence on every loan. |
| Not this page | This page is the purchase question: wait for 20% vs buy sooner. It is not how MIP vs PMI already on a loan ends, and it is not the servicer mechanics of PMI cancellation. | How PMI already on a loan is cancelled (original value vs appraisal) is a later conventional topic. How FHA MIP is timed is a different product. |
Closing costs, prepaids, and reserves sit on top of down payment. PMI and MIP percents are file-specific; this table does not invent a monthly premium.
The cash gap is the real number
On this illustration price, 20% minus 5% is $67,500. That is often years of saving after rent, retirement, and an emergency fund. It is also the pile that cash besides down payment still has to sit next to: earnest money, title, and prepaids. First-time map: cash, assistance, and closing.
Three pages people mix up
- This page. Purchase decision: wait for 20% vs buy sooner.
- How MIP vs PMI actually leaves the loan. You already have insurance on the note. FHA’s clock is not conventional PMI.
- PMI removal: original value vs new appraisal. Servicer mechanics after you already bought conventional with PMI.
This page is the purchase question: wait for 20% vs buy sooner. It is not how MIP vs PMI already on a loan ends, and it is not the servicer mechanics of PMI cancellation.
What happens next
- Put PMI or MIP on two payment illustrations with the payment calculator and include HOA if the property has dues — see DTI with HOA.
- Compare FHA vs conventional on insurance duration, not only the note rate: FHA vs conventional.
- If family or an agency is filling the cash gap, read gift funds before you wait another year to “do it yourself.”
Common questions
Keep going
What to do next
Education first. A conversation with a loan officer is how you find out what may actually fit your file.
Loan information is provided by Ondo Real Estate (NMLS ID on file). This is not a commitment to lend, a loan approval, or an offer of credit. Rates, terms, and payments shown are estimates for illustration only, are not a quote, and are subject to credit approval, underwriting, and market conditions. You are not required to use Ondo for financing to buy or sell with Ondo. Equal Housing Lender. Program rules, fees, and county loan limits change. Confirm the current published schedule and lender overlays. Nothing here is a quote, a lock, or a credit decision. Licensing and disclosures