Why You Don’t Need 20% Down to Buy a Home in Orange County

By Danae Aballi-Mecham

Danae Aballi-Mecham is a long-time real estate industry veteran. She has worked in various positions in the industry having grown from an independent real estate agent to running a team of 5 top producing agents.

Many buyers think they need 20% down to buy a home, but that’s not true. If you’re renting because you’re waiting to save a large down payment, you could be missing your chance to own. Most buyers I help purchase homes with far less than 20% down. Some start with only 3%. The real issue isn’t money, it’s believing the myth that you can’t buy without 20% down. Here’s what you need to know:

Low-down-payment loans exist. In Orange County, the average starter home is around $750,000, which means you need $150,000 as a 20% down payment. For most people, $150,000 is not a small amount. The idea of needing this huge amount stops them from buying because it will take years to save it. With a conventional loan, you could qualify with just 3% down, which is $22,500. That’s a big difference. If you can cut $1,000 off your monthly rent and save it, you could have your down payment in less than two years.

Mortgage insurance is not a deal breaker. When you put less down, lenders require private mortgage insurance (PMI). This usually adds about $100 per month to your payment. Some people think it’s a reason not to buy, but it’s a small trade-off. Once you build enough equity, PMI can be removed. The benefit of locking in your mortgage now usually outweighs the short-term cost.

Renting costs more than you think. Rent in Orange County averages around $4,500 a month and continues to rise. In ten years, that same rent could be $6,500 or more. When you rent, you’re paying for someone else’s property. When you own, you lock in your payment for 30 years, build equity, and eventually own your home free and clear.

Waiting makes it more challenging. Saving for 20% down can take many years, but home prices don’t sit still. By the time you save enough, prices may have gone up even more. Acting sooner with a smaller down payment gets you in the market now, so you can benefit from appreciation instead of chasing it.

Other options are available. Beyond the 3% down programs, there are also strategies like the 3-2-1 buydown. This lowers your interest rate for the first three years, making your payment more affordable while you adjust to homeownership.

Homeownership is more within reach than most people realize. You do not need to wait until you have 20% saved. There are loan programs that make it possible with much less. Working with the right agent and lender can help you understand your options and take the next step confidently.

If you’ve been holding back because of the 20% down payment myth or you have questions about buying your first home, call or text me at 949-216-8565 or email me at danae@danaeaballi.com. I’m here to help you get started.