The best down payment is one that fits your financial situation without draining your savings or delaying homeownership unnecessarily. In fact, most first-time home buyers put down far less than 20%.

Many conventional mortgages allow qualified buyers to purchase with as little as 3% down, while FHA loans typically require 3.5% down. And some buyers may even qualify for loans that require no down payment at all.

The reason 20% gets so much attention has more to do with the long-term cost of the home loan. There are state and federal down payment assistance programs designed to help buyers cover part or all their down payment and closing costs.

A smaller down payment usually means:

• A higher monthly mortgage payment
• Added costs like Private Mortgage Insurance (PMI)
• More interest paid over time compared to a larger a down payment