Quick Answers: Down Payment FAQ
How much down payment do you really need for a home? Most buyers do not need 20% down. The national median down payment in 2025 was 19% for all buyers and just 10% for first-time buyers, according to the National Association of Realtors. Many loan programs require as little as 3% down, and some require nothing at all.
What is the average down payment in the Raleigh, NC area? With the median home sale price in Raleigh at approximately $430,000 as of early 2026, a 10% down payment comes to around $43,000. A 3% down payment on that same price is approximately $12,900. Exact numbers depend on the home, the loan type, and your financial profile.
Can you buy a new construction home with less than 20% down? Yes. New construction homes qualify for the same loan programs as resale homes, including conventional loans with as little as 3% down, FHA loans at 3.5%, and VA loans with 0% down. At New Home Inc, many of our buyers use these programs to move into a brand-new home without waiting years to save 20%.
What down payment assistance programs are available in NC? North Carolina offers several powerful programs through the NC Housing Finance Agency (NCHFA). The NC 1st Home Advantage provides up to $15,000 in down payment help for first-time buyers and veterans. The NC Home Advantage Mortgage offers up to 3% of the loan amount in assistance. Both are structured as zero-interest loans forgiven after 15 years.
Why the 20% Down Payment Rule Is Outdated
If you have been saving for years trying to hit 20%, you are not alone. That number has been repeated so many times that it feels like a requirement. It is not.
At New Home Inc, we talk to buyers in the Raleigh area every week who assume they need $80,000 or more in savings before they can even think about buying a home. The truth is that the 20% figure is a guideline that made more sense when home prices were lower and loan programs were less flexible. Today, the mortgage landscape looks very different.
What Today's Buyers Are Actually Putting Down (2025/2026 Data)
According to the National Association of Realtors' 2025 Home Buyers and Sellers Report, the median down payment across all U.S. home buyers in 2025 was 19% of the purchase price. That is close to 20%, but the number hides a significant split between buyer types.
First-Time Buyers vs. Repeat Buyers
Repeat buyers, people who have sold a previous home and rolled equity into their next purchase, made a median down payment of 23%. First-time buyers put down a median of just 10%. That difference makes sense. If you are buying your first home, you do not have a previous sale to fund the next one.
On a home priced at $430,000, which is close to the current Raleigh median according to Redfin, a 10% down payment is approximately $43,000. A 20% down payment is approximately $86,000. That $43,000 gap represents years of additional saving for most families, and it may not be necessary.
Down Payment Requirements by Loan Type
The amount you need for a down payment depends largely on the type of mortgage you choose. Here is what the major loan programs require.
Conventional Loans (3% to 5% Minimum)
Conventional loans are the most common mortgage type in the United States. If you are a first-time buyer, you may qualify for a conventional loan with as little as 3% down. Most lenders set the minimum between 3% and 5% depending on your credit profile and financial history. On a $430,000 home, a 3% conventional down payment comes to approximately $12,900.
If you put down less than 20%, your lender will require private mortgage insurance (PMI). PMI protects the lender in case you default on the loan. The cost varies but typically runs between 0.5% and 1% of the loan amount per year. Once you reach 20% equity in your home, you can request that PMI be removed.
FHA Loans (3.5% Minimum)
FHA loans are backed by the Federal Housing Administration and are popular with first-time buyers. The minimum down payment is 3.5% with a credit score of 580 or higher. On a $430,000 home, that is approximately $15,050. FHA loans do require mortgage insurance for the life of the loan in most cases, which is a trade-off to consider. For a deeper look at how FHA loans work with new construction, read our guide to FHA Loans for New Homes.
VA Loans (0% Down)
If you are an active-duty service member, veteran, or eligible surviving spouse, a VA loan allows you to purchase a home with zero down payment. There is no PMI requirement either, which makes VA loans one of the most powerful mortgage tools available. For military families stationed near Fort Bragg, VA loans are especially relevant. Many of our buyers in Lillington use VA loans to purchase new homes in Lillington NC without putting any money down at closing.
USDA Loans (0% Down)
USDA loans are backed by the U.S. Department of Agriculture and designed for buyers in eligible rural and suburban areas. Like VA loans, USDA loans require zero down payment. Eligibility depends on the property location and your household income relative to the area median. Several communities in the Triangle area fall within USDA-eligible zones, which can be a significant advantage for buyers looking at towns outside the Raleigh city center.
What a Down Payment Looks Like in the Raleigh Area
National statistics are helpful, but what matters most is what these numbers look like in your market. The average home value in Raleigh is approximately $431,000 according to Zillow, while Redfin reports the median sale price at $430,000 as of February 2026. NHI's active communities range from the low $400s to the mid $400s depending on the submarket and floor plan.
Here is what different down payment percentages look like on a $430,000 home with a 30-year fixed mortgage at 6.25%, which is close to where Freddie Mac reported the national average as of mid-March 2026:
3% down ($12,900): Loan amount of $417,100. Estimated monthly principal and interest of approximately $2,568. PMI adds roughly $175 to $350 per month until you reach 20% equity.
10% down ($43,000): Loan amount of $387,000. Estimated monthly principal and interest of approximately $2,382. PMI still applies but at a lower rate, typically adding $160 to $320 per month.
20% down ($86,000): Loan amount of $344,000. Estimated monthly principal and interest of approximately $2,118. No PMI required.
The difference between 3% down and 20% down is roughly $450 per month in principal and interest, plus the cost of PMI. That is meaningful, but so is the $73,100 in additional savings you would need to reach 20%. For many buyers, the math favors getting into a home sooner with a smaller down payment rather than waiting years to save more while rent prices continue to rise.
Pros and Cons of a Larger Down Payment
There are legitimate advantages to putting more money down. There are also real risks. The right answer depends entirely on your financial situation.
When Putting More Down Makes Sense
A larger down payment reduces your loan balance, which means lower monthly payments and less interest paid over the life of the loan. Putting 20% or more down eliminates PMI entirely, saving you $200 to $400 per month on a typical Raleigh-area home. A bigger down payment also strengthens your offer in competitive situations because it signals financial stability to both the lender and the seller.
When a Smaller Down Payment Is the Smarter Move
Draining your savings account to maximize your down payment can leave you financially vulnerable. Homeownership comes with costs beyond the mortgage: property taxes, insurance, maintenance, and the occasional unexpected repair. If putting 20% down means you have no emergency fund left, a smaller down payment with a financial cushion is the safer choice.
There is also an opportunity cost to consider. Every year you spend saving for a larger down payment is a year you are paying rent instead of building equity. In the Raleigh market, where home values have appreciated steadily over the past decade, buyers who purchased sooner with a smaller down payment have often come out ahead.
North Carolina Down Payment Assistance Programs
This is one of the most overlooked advantages of buying a home in North Carolina. The state offers several programs that can dramatically reduce or even eliminate the cash you need at closing.
NC 1st Home Advantage Down Payment ($15,000)
The NC 1st Home Advantage Down Payment program provides up to $15,000 in down payment assistance for first-time buyers and military veterans. The assistance is structured as a zero-interest second mortgage that is completely forgiven after 15 years of homeownership. You need a credit score of 640 or higher and must meet county-specific income and purchase price limits. The program works with conventional, FHA, VA, and USDA loans.
For a buyer purchasing a $430,000 home with an FHA loan (3.5% down, or approximately $15,050), the NC 1st Home Advantage program could cover nearly the entire down payment.
NC Home Advantage Mortgage (3% Assistance)
The NC Home Advantage Mortgage is available to both first-time and move-up buyers. It provides a competitive fixed-rate mortgage with up to 3% of the loan amount in down payment assistance. Like the NC 1st Home Advantage, the assistance is a zero-interest loan forgiven after 15 years. On a $430,000 home, 3% of the loan amount could provide approximately $12,500 in assistance.
NC Home Advantage Tax Credit
The NC Home Advantage Tax Credit is a Mortgage Credit Certificate (MCC) that provides a federal tax credit equal to a percentage of your annual mortgage interest. For buyers purchasing a new home, the credit is 50% of the interest paid, up to $2,000 per year. This is not a one-time benefit. It applies every year for the life of the loan, creating thousands of dollars in long-term savings.
VA Loan Benefits for Military Families Near Fort Bragg
Military families in the Fort Bragg corridor have a unique advantage. A VA loan with 0% down, combined with the NC 1st Home Advantage program (available to veterans), can mean moving into a brand-new home with very little cash out of pocket. Our buyers at Duncan's Creek in Lillington regularly take advantage of this combination. If you are exploring off-post housing options, our guide to off-post housing near Fort Bragg covers what military families should know.
Down Payments on New Construction vs. Resale Homes
If you are comparing a new construction home to a resale home, you may wonder if the down payment process is different. The loan programs and minimum percentages are the same regardless of whether the home is new or existing. Where the process differs is in the structure and timing.
When you purchase a new construction home with a builder like New Home Inc, the process typically starts with an earnest money deposit at the time of contract. This deposit secures your home site and floor plan selection. The earnest money is applied toward your down payment at closing, so it is not an additional cost on top of what you would already pay. If you are exploring new home construction Raleigh NC options, understanding this deposit structure upfront helps you plan your savings more accurately.
One significant advantage of new construction is that NHI homes are built to meet Eco Select Energy and ENERGY STAR standards. That means lower monthly utility bills from day one, which improves your overall monthly housing cost even if your mortgage payment is slightly higher due to a smaller down payment. When we talk to buyers about the total cost of homeownership, not just the mortgage, the energy efficiency of a new home often tips the balance.
New construction also means no deferred maintenance surprises. With a resale home, a smaller down payment can feel risky because you might face an unexpected roof replacement or HVAC repair. With a new NHI home, everything is new, warrantied, and built to current code. That peace of mind matters when you are managing your finances carefully around a down payment.
If you are curious about how the entire process works from contract to closing, read our walkthrough of The New Home Buying Process.
How to Start Saving for a Down Payment
If you are not quite ready to buy yet, here are practical steps to build your down payment fund.
Start by determining how much you actually need. Use the loan type breakdowns above and the NC assistance programs to calculate a realistic target. For many first-time buyers in the Raleigh area, that number may be much lower than you expect. For example, NHI's homes at Fish Hawk Ranch in Willow Spring start from the low $400s. A 3% conventional down payment on a home at that price point comes to roughly $12,000 to $13,000, and the NC 1st Home Advantage program could cover nearly all of it. That is a very different savings goal than the $80,000-plus number most people picture when they hear "down payment."
Automate your savings by setting up a dedicated transfer each month into a high-yield savings account. Even small, consistent contributions add up over six to twelve months. Direct any windfalls (tax refunds, bonuses, cash gifts) toward the fund.
Run the rent-vs-buy comparison for your situation. If you are currently paying $1,500 to $2,000 per month in rent in the Triangle area, that money is building someone else's equity. A mortgage payment of a similar amount, even with PMI, starts building yours. For more savings strategies, our article on the Best Ways to Save for a Home Down Payment breaks this down further.
Down Payment Gift Rules
Many first-time buyers receive financial help from family members. Lenders allow gifted funds for down payments on most loan types, but there are documentation requirements. Your lender will need to know the source of the gift, verify it through bank statements, and confirm through a signed gift letter that the money is a gift and not a loan. Each loan program has its own rules about how much of the down payment can come from a gift, so talk to your lender early in the process.
Ready to Explore New Homes in the Raleigh Area?
The down payment does not have to be the barrier that keeps you from homeownership. Between today's flexible loan programs and North Carolina's assistance options, many buyers qualify for far more than they realize.
New Home Inc builds personalized new homes across the Triangle in communities from Clayton and Fuquay-Varina to Wendell, Zebulon, Willow Spring, and Lillington. Whether you are a first-time buyer with 3% saved or a military family using a VA loan, we can help you figure out the right path.
Explore new homes in Raleigh NC to browse our communities and floor plans. Looking at specific areas? Check out new homes in Clayton NC, new homes in Fuquay-Varina NC, explore our Lillington communities, new homes in Wendell NC, new homes in Zebulon NC, or new homes in Willow Spring NC to see what is available near you. You can also read our First Time Homebuyer Tips or learn How Much Mortgage Can I Afford and What Is a Good Credit Score to Buy a House to keep building your knowledge.
Have questions? Contact us and we will walk you through it.
