You’ve been saving for years. Every month, you set aside what you can for that 20% down payment. At this rate, you’ll be ready to buy in another three years. Maybe four.
Here’s the problem: you don’t need 20% down. You never did.
Lenders report that the 20% down payment myth is the single biggest barrier keeping qualified buyers from moving forward. It’s simply not true. Multiple loan programs exist that require little to nothing down, and they’re available right here in Las Vegas.
If you’re 50 or older and thinking about your next move, understanding down payment options changes everything. You might be ready to buy today.
The Truth About Down Payment Requirements
The 20% figure came from somewhere real. Put down 20% and you avoid private mortgage insurance. That’s a legitimate benefit. But it’s not a requirement.
Somewhere along the way, avoiding PMI became confused with qualifying for a mortgage at all. They’re different things.
Multiple programs allow qualified buyers to purchase homes with minimal or zero down payment. These aren’t special deals or limited-time offers. They’re standard loan products that have existed for decades.
Zero-Down Mortgage Programs
Three main programs offer zero-down financing.
VA Mortgages
The Department of Veterans Affairs guarantees zero-down VA mortgages for qualified borrowers. This includes veterans, active-duty service members, and certain members of the National Guard and Reserves.
Las Vegas has a substantial veteran population. Many military retirees choose Nevada for the cost of living, no state income tax, and quality of life. If you served, you likely qualify. The benefit doesn’t expire when you separate from service.
USDA Rural Development Loans
The U.S. Department of Agriculture guarantees zero-down mortgages as part of its Rural Development Program. The loan guarantees are available in eligible areas, mostly rural areas, though some are suburban.
You might be surprised what qualifies as “rural” in the USDA’s definition. Some areas on the outskirts of Las Vegas metro qualify. Check the USDA eligibility map for your target neighborhoods.
Navy Federal Credit Union
Navy Federal Credit Union offers zero-down mortgages for qualified members to buy primary residences. Membership requires military affiliation, but eligibility extends beyond active duty to include veterans and family members.
Low Down Payment Options
If you don’t qualify for zero-down programs, low down payment options exist.
FHA Loans
Federal Housing Administration-insured mortgages allow down payments as small as 3.5%. FHA loans work for a wide range of buyers, including those with less-than-perfect credit. You’ll pay mortgage insurance, but you’ll own a home instead of renting.
Conventional Loans with 3% Down
A few lenders offer conventional mortgages with down payments of as little as 3% with private mortgage insurance. These loans typically require stronger credit than FHA loans, but they offer more flexibility in some situations.
Work with someone who knows the Las Vegas lending landscape. Aaron Taylor “The Real Estate Guy” maintains relationships with local lenders who can match you with the right program based on your credit, income, and down payment capacity.
Why the 20% Myth Persists
The 20% down payment idea persists because it offers real advantages.
You avoid private mortgage insurance. PMI typically costs between 0.5% and 1% of the loan amount annually. On a $300,000 loan, that’s $1,500 to $3,000 per year. Avoiding that payment matters.
You start with immediate equity. Put down $60,000 on a $300,000 home and you own 20% from day one. That equity cushion provides financial flexibility.
You qualify for better interest rates. Lenders view 20% down as lower risk. Lower risk means better rates.
These are real benefits. But they don’t mean you can’t or shouldn’t buy with less down.
When It Makes Sense to Put Down Less Than 20%
Several situations favor buying with less than 20% down.
You’re currently renting. Every month you rent is a month you’re not building equity. If you’re paying $1,800 in rent, that’s $21,600 per year going to your landlord instead of your own equity. Even with PMI, you might come out ahead owning.
Home values are rising. Las Vegas home values have recovered significantly from recession lows. If prices continue rising, waiting to save 20% means buying a more expensive home later. Your down payment grows, but so does the purchase price.
You’re approaching retirement. At 50 or 60, you have less time to save than someone in their 30s. Getting into a home now lets you start building equity before retirement. You can always make additional principal payments to eliminate PMI faster.
You have stable income but limited savings. If your income supports a mortgage payment but you haven’t accumulated 20% down, don’t let that stop you. Your income matters more than your savings for qualifying.
The Real Cost of PMI
Private mortgage insurance gets a bad reputation. Let’s look at the actual cost.
On a $300,000 loan with 5% down ($15,000), you’ll borrow $285,000. At 0.75% PMI, you’ll pay about $178 per month for mortgage insurance.
That sounds like dead money. But compare it to the alternative. If you’re renting at $1,800 per month while saving for 20% down, you’re paying $1,800 in dead money every month. The entire rent payment builds no equity.
Your mortgage payment with PMI might be $2,100 per month. Of that, $178 goes to PMI and the rest goes to principal, interest, property taxes, and insurance. You’re building equity with every payment.
Plus, PMI isn’t permanent. Once you reach 20% equity (through principal payments and appreciation), you can request to have PMI removed. On conventional loans, it automatically drops off at 22% equity.
Las Vegas Market Considerations
Las Vegas presents specific factors that affect down payment decisions.
Home prices in many Las Vegas neighborhoods have recovered to near pre-recession peaks. If you’ve been waiting for prices to drop, you might be waiting a long time. The market has stabilized.
Property taxes in Nevada are relatively low compared to many other states. No state income tax means more money available for housing costs. These factors might make a slightly higher payment (due to PMI) more affordable here than in other markets.
The Las Vegas market also offers diverse price points. From established neighborhoods in Henderson to newer communities in North Las Vegas, you’ll find options at various price levels. Lower absolute prices mean smaller down payments even at the same percentage.
How to Decide Your Down Payment Strategy
Ask yourself these questions:
What’s your monthly rent? Compare that to your estimated mortgage payment with PMI. Even with PMI, you might pay less or close to the same while building equity.
How long will it take to save 20%? If the answer is more than two years, calculate what happens to home prices during that time. A 5% annual appreciation rate means a $300,000 home costs $315,000 next year and $330,750 in two years.
What’s your timeline to retirement? If you’re 55 and want the house paid off by 70, starting now gives you 15 years. Waiting three more years to save 20% down leaves you only 12 years to pay off the loan.
Do you qualify for zero-down programs? If you’re a veteran, check your VA eligibility. If you’re considering suburban or outlying areas, check USDA eligibility.
What’s your credit score? FHA loans work with lower credit scores and smaller down payments. Conventional loans with 3% down typically require stronger credit.
Getting Started with Less Than 20% Down
Start by checking your credit score. You’ll need at least 580 for FHA loans with 3.5% down, or 620+ for conventional loans with 3% down.
Calculate your debt-to-income ratio. Add up all monthly debt obligations (including your estimated mortgage payment) and divide by gross monthly income. Lenders typically want this below 43%, though FHA allows higher ratios in some cases.
Determine how much you have available for down payment and closing costs. Don’t deplete savings entirely. Lenders require reserves, and you’ll need emergency funds.
Connect with a Las Vegas lender who understands programs for buyers 50+. They’ll evaluate your situation and recommend the best program. Aaron Taylor “The Real Estate Guy” can refer you to lenders who specialize in helping buyers at this stage of life.
Get pre-approved before house hunting. Pre-approval shows sellers you’re serious and helps you understand your buying power.
Frequently Asked Questions
What’s the minimum down payment I can make on a house in Las Vegas?
Zero down if you qualify for VA, USDA, or Navy Federal Credit Union loans. Otherwise, 3% for conventional loans with PMI or 3.5% for FHA loans. The minimum depends on your loan type, credit score, and financial situation. Veterans and those buying in eligible rural/suburban areas have the best zero-down options.
Will I pay more in interest with a smaller down payment?
Generally yes, but not always enough to justify waiting years to save more. A smaller down payment means a larger loan amount, which means more interest over the life of the loan. But it also means you start building equity immediately instead of paying rent. Run the numbers for your specific situation to compare total costs.
How long do I have to pay PMI if I put down less than 20%?
Until you reach 20% equity through principal payments and appreciation. On conventional loans, PMI automatically drops at 22% equity. On FHA loans made after June 2013, MIP lasts 11 years for down payments of 10% or more, or for the life of the loan for down payments under 10%. You can eliminate it by refinancing once you reach 20% equity.
Can I use gift money for my down payment?
Yes, most loan programs allow down payment gifts from family members. The lender will require a gift letter stating the money doesn’t need to be repaid. Some programs have restrictions on how much of the down payment can come from gifts versus your own funds. Check requirements for your specific loan type.
Is it harder to get approved with a small down payment?
Not necessarily. Lenders care more about credit score, income, employment history, and debt-to-income ratio than down payment size. FHA loans specifically exist to help buyers with smaller down payments qualify. VA loans allow zero down because the government guarantee reduces lender risk. Approval depends on your complete financial picture, not just down payment.
Should I drain my retirement account to make a larger down payment?
Usually no. First, you’ll pay taxes and potentially penalties on retirement withdrawals. Second, lenders want you to maintain reserves for emergencies. Third, at 50+, you have less time to rebuild retirement savings. Most financial advisors recommend keeping retirement accounts intact and using a low down payment program if needed.
What happens if home prices drop after I buy with a small down payment?
You could end up with negative equity temporarily. This matters if you need to sell quickly. But if you’re buying to live in the home long-term (5+ years), short-term price fluctuations matter less. Historically, real estate appreciates over longer periods. You’ll build equity through principal payments even if prices stagnate.
Are zero-down loans only for first-time buyers?
No. VA loans are available to eligible veterans whether it’s their first home or fifth. USDA loans don’t require first-time buyer status. Navy Federal loans serve members buying primary residences regardless of past homeownership. The “first-time buyer” restriction applies to some down payment assistance programs, but not to these main zero-down loan types.
Can I buy investment property with low down payment?
Generally no. Low and zero down payment programs typically require the home to be your primary residence. Investment properties and vacation homes usually require 15-25% down minimum. The programs discussed here are designed for owner-occupied primary residences only.
What credit score do I need for a 3% down conventional loan?
Typically 620 minimum, though some lenders require 660 or higher. These loans also require private mortgage insurance and often have income limits. FHA loans with 3.5% down accept lower credit scores (580 minimum), making them more accessible for buyers with imperfect credit histories.
Key Takeaways
- The 20% down payment requirement is a myth that keeps qualified buyers from purchasing homes unnecessarily
- VA loans offer zero down for veterans, active-duty service members, National Guard, and Reserves with qualifying service
- USDA loans provide zero-down financing in eligible rural and some suburban areas around Las Vegas
- FHA loans require only 3.5% down and accept credit scores as low as 580
- Conventional loans with 3% down are available for buyers with stronger credit (typically 620+)
- PMI adds cost but may be less than continued rent payments while you save for 20% down
- PMI isn’t permanent and can be removed once you reach 20% equity through payments and appreciation
- Waiting to save 20% down means potentially buying a more expensive home as Las Vegas prices rise
- At age 50+, getting into a home sooner gives you more time to build equity before retirement
- Work with local experts like Aaron Taylor “The Real Estate Guy” who understand Las Vegas lending programs for buyers in your situation
