Ask a room full of people what it takes to buy a house and most of them will say twenty percent down. It’s the single most persistent piece of misinformation in American real estate, and it keeps people renting for years longer than they need to.
It isn’t true. It hasn’t been true for a long time.
I brought this up with mortgage broker Bill Jacobs of Lendid Home Loans over a pitcher of margaritas at Joe T. Garcia’s in Fort Worth, mostly because I hear it at every open house I hold. Here’s what you actually need, and the second myth, the one about pre-qualification, that costs buyers more deals than the first one.
You do not need 20% down to buy a home in Texas. Conventional financing commonly allows 3% down for first-time buyers and 5% down for buyers who have owned a home before. Qualifying veterans can use a VA loan with 0% down.
Twenty percent is the traditional threshold for avoiding private mortgage insurance, not a minimum purchase requirement. The two ideas got welded together and never came apart.
- Twenty percent is a mortgage-insurance threshold, not a minimum to buy. The two ideas got welded together and never came apart.
- Keep the cash in your bank. Money in your account after closing is what covers the first surprise. Draining savings to hit an arbitrary number is a worse position than putting less down and staying liquid.
- Pre-qualification is not pre-approval. One is a number you typed into a website. The other is a lender who has read your documents and is standing behind the letter.
- The VA benefit is not one-time use, and in some circumstances a VA-financed home can be kept as an investment property after you move.
What you actually need down in 2026
On a $400,000 house, that is the difference between needing $80,000 and needing $12,000. It’s not a rounding error. It’s the difference between buying this year and buying in 2031.
Bill’s position on it is blunt, and I agree with him: keep that money in your bank. Cash in your account after closing is what covers the first surprise, the HVAC that goes out in August, the fence the storm took down.
Draining your savings to hit an arbitrary threshold and then living with no reserve is a worse financial position than putting less down and staying liquid.
Putting less than 20% down usually means paying mortgage insurance, and it means a larger loan balance. Your monthly payment will be higher.
What it buys you is time in the market and a cash cushion. For most buyers in the current DFW market, where inventory is high and sellers are negotiating, that’s a trade worth making. Run the actual numbers with a lender rather than taking anyone’s rule of thumb, including mine.
The same 3%/5%/0% figures apply if you’re buying a house that needs work and financing the renovation into the mortgage. Here’s how renovation loans and Compass Concierge compare.
The VA loan nobody talks about correctly
VA loans are the most misunderstood product in the market, and the misunderstanding runs in both directions.
Buyers underuse them because they’ve heard the appraisal standards are strict. Sellers sometimes steer away from VA offers for the same reason. Both are overcorrecting.
It’s true that VA loans hold the home to higher standards of livability. But if you have a clean house and you’ve disclosed everything you know about it on your seller’s disclosure, that’s not an obstacle, it’s a formality. Help a veteran out. These are excellent loan products and you should feel good about accepting one.
The VA benefit is not a one-time use. Depending on how much of your entitlement remains, you can use it again on a subsequent purchase.
You can also, in some circumstances, keep a VA-financed home as an investment property when you move to a new primary residence, meaning you could hold both mortgages. There are real qualifying factors around this: the loan has to be for a primary residence at origination, there needs to be a legitimate reason for the move (distance, family, lifestyle), and how much entitlement you have left drives everything. It’s an in-depth conversation with a lender, not a checkbox. But it’s possible, and most people have no idea.
The more expensive myth: pre-qualification is not pre-approval
When Bill and I talked about the most common mistake buyers make, neither of us said anything about down payments. We both said the same thing: not getting pre-approved.
And there’s a trap inside that, because a lot of buyers think they’ve done it when they haven’t.
| Where they differ | Pre-qualification | Pre-approval |
|---|---|---|
| How you get it | Fill in numbers on a bank website | A loan officer reviews your actual documents |
| Based on | What you say is true | What the documents show is true |
| Depth | Surface-level estimate | Essentially pre-underwritten |
| What a seller thinks | “They might be able to close” | “They can close” |
Bill put the difference in terms of what it costs him personally to write one: “I don’t know what I would do if that loan didn’t close. I would freak out.” That’s the point. A lender who has actually dug through your file is staking their reputation on the letter. That’s why the listing agent on the other side can pick up the phone, call Bill, ask whether the letter is solid, and get a real answer.
A pre-qualification you generated yourself on a website carries none of that weight, because nobody vetted it and nobody is standing behind it.
Why I ask for it before we go look at houses
I love working with buyers. But I’m not driving you around to look at $500,000 houses until we have that letter, and it’s not gatekeeping, it’s protecting you.
We meet at an open house, you tell me you want to buy, we go see five houses in the $500K range, you fall in love with one. Then we find out you’re approved for $420,000. Now I’ve shown you a house you can’t have and taught you to want something out of reach. Every house after that one looks like a compromise.
Get the letter first. Then we shop in the range where you can actually write a competitive offer, and in a market with this much inventory, being the buyer who can close cleanly is worth real money at the negotiating table.
While we’re killing myths: the 2% rate isn’t coming back
Everybody is waiting for the pandemic-era rate to return. It isn’t going to, and Bill said it plainer than I would have: if it does, watch out, because a 2% rate means the economy is in the tank.
You might get the rate. You might not have the job.
Mortgage rates broadly track the market’s expectations for inflation over the next decade, which is why they move on geopolitical news and energy prices rather than on anyone’s opinion about housing. That’s also why nobody’s crystal ball is any good, including mine, and including the crystal ball of anyone telling you confidently what rates will do next year.
The practical version: buy the house that works at the payment you can handle today. If rates improve later, you refinance. Date the rate, marry the house. That advice has been repeated so often it sounds like a slogan, but it’s repeated because the alternative, waiting indefinitely for a number nobody controls, has cost a lot of people a lot of equity.
Frequently asked questions
Do you need 20% down to buy a house in Texas?
No. Conventional financing commonly allows 3% down for first-time buyers and 5% down for buyers who have previously owned a home. Qualifying veterans can purchase with 0% down through a VA loan. The 20% figure is the traditional threshold for avoiding private mortgage insurance, not a minimum requirement to purchase. Putting less down generally means paying mortgage insurance and carrying a larger loan balance, so the tradeoff is worth running with a lender.
What is the minimum down payment for a first-time home buyer in DFW?
First-time buyers can often purchase with as little as 3% down on conventional financing. On a $400,000 home that’s roughly $12,000 rather than $80,000. Down payment assistance programs and VA eligibility can lower it further. The exact minimum depends on the loan program, credit profile, and property type, which a lender can confirm during pre-approval.
What is the difference between pre-qualification and pre-approval?
Pre-qualification is an estimate based on information you provide yourself, often generated online without verification. It is a soft permission slip. Pre-approval means a loan officer has reviewed your actual documentation and effectively pre-underwritten the file, so the lender is standing behind the letter. Sellers and listing agents treat the two very differently: a listing agent can call the lender on a pre-approval and get a substantive answer about whether the buyer will close.
Can you use a VA loan more than once?
Yes. The VA benefit is not limited to a single use. Whether and how much you can use again depends on how much of your entitlement remains after any prior loan. In some circumstances a borrower can retain a VA-financed home as an investment property after moving to a new primary residence, though qualifying factors apply. The property must have been a primary residence at origination, and there generally needs to be a legitimate reason for the move. This is a detailed conversation to have with a lender rather than a simple yes or no.
Should sellers accept VA loan offers?
VA loans do hold the property to higher livability standards during appraisal, which is the source of most seller hesitancy. For a home in good condition with an accurate and complete seller’s disclosure, that standard is usually a formality rather than an obstacle. VA loans are solid loan products, and screening them out narrows the buyer pool for no strong reason.
Will mortgage rates go back to 2% or 3%?
It’s very unlikely, and the conditions that would produce it are not conditions most buyers would want. Mortgage rates broadly track the market’s expectations for inflation over the next ten years, and rates that low have historically accompanied severe economic distress. The practical approach is to buy at a payment that works today and refinance if rates improve later, rather than waiting on a number no one controls.
Find out what your number actually is
If you’ve been assuming you’re years away from buying because you haven’t saved 20%, the fastest way to find out whether that’s true is a real pre-approval, not a website estimate. It costs nothing and it takes a conversation.
I’m happy to introduce you to Bill Jacobs at Lendid Home Loans, and then we can go look at houses in the range you can actually buy in. More about how I work with buyers here.
Stop guessing at your number
A real pre-approval costs nothing and takes a conversation. Then we shop in the range where your offer actually competes.
Book a call with TravisBased on a conversation between Travis-Lee Moore, REALTOR® with the Cliffside Collective at Compass, and mortgage broker Bill Jacobs of Lendid Home Loans, recorded at Joe T. Garcia’s in Fort Worth, August 2026. Loan programs, rates, and qualifying requirements change and vary by borrower. Confirm current terms with a licensed lender. This is general information, not lending, tax, or legal advice.
Travis-Lee Moore · Cliffside Collective · Compass
