The short version
The twenty percent figure is a convention, not a requirement. It has not been the entry fee for a long time.
What you actually need depends on the loan program and on your situation — and in Michigan there is help specifically built to close that gap.
Twenty percent is the point at which most conventional loans no longer require mortgage insurance. Avoiding that cost is a genuine benefit, which is why the number is everywhere.
But there is a difference between a useful goal and a requirement, and twenty percent has been treated as a requirement for far longer than it has actually been one. Most first-time buyer programs are built around much smaller down payments.
Rather than quote a figure that will be wrong for you, the honest version is this: different programs set different minimums, and the range is wide. Some are designed specifically to lower the down payment barrier, and some eligible borrowers can buy with nothing down at all.
Which of those applies to you depends on the program, on your situation, and on the home you are buying. It is a specific answer, not a general one — which is exactly why it is worth asking.
Michigan has first-time buyer programs at the state level and through counties, cities and community organizations, built specifically to help with the down payment and closing costs. Some pair directly with your first mortgage.
The structure varies. Most commonly it is a second loan, often with no monthly payment, that is forgiven over time if you stay in the home. Sometimes it is silent until payoff. The terms matter more than the headline, and they are worth going through line by line rather than skimming.
These programs change. Funding runs in rounds, income limits are updated, and something open last year may be paused today. So the answer worth having is the one confirmed against the current rules for your situation.
Money from a family member toward your down payment is allowed on most programs. It simply needs a paper trail: a documented transfer and a short letter confirming it is a gift rather than a loan.
Plenty of first-time buyers use family help. There is nothing unusual about it, and it does not weaken your file. It is one of the most common ways people get from saving to buying.
Asked most often
No. That figure is a convention rather than a requirement. Several programs are built around much smaller down payments, and some eligible borrowers can buy with nothing down. What applies to you depends on the program and on your situation.
Yes, on most programs. Gift funds are allowed; they just need to be documented so the lender can see where the money came from and confirm it is a gift.
It reduces what you borrow and can lower or remove mortgage insurance, so it often helps. But keeping some money in reserve after closing matters too, and the right balance depends on your situation. That is worth working out rather than assuming.
I can't determine through this chat whether another financing option will be available. James can review your circumstances and discuss what may be worth exploring.
This article is general education, not a decision about your loan. Nothing here approves, denies or selects anything, and specifics vary from person to person and change over time. James Cox, Mortgage Loan Originator, NMLS #2134648.
Your next step
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