STL Home Buyer Journey
George Kindler
13 Years Of Real Estate Experience At Your Fingertips
The 20% down payment myth keeps more buyers on the sideline than any other misconception in real estate. In St. Louis, most buyers are closing with significantly less. Here is what you actually need -- and what the different options cost you over time.
The idea that you need 20% down to buy a home is one of the most persistent myths in real estate. It exists because 20% is the threshold that eliminates mortgage insurance on a conventional loan. That is a real benefit. But it is not a requirement -- and waiting to save 20% while the market appreciates is often a losing strategy.
In St. Louis, the median home price in early 2026 was approximately $250,000. Twenty percent of that is $50,000 -- before closing costs. Most first-time buyers do not have $50,000 in liquid savings, and most do not need it.
For eligible veterans, active duty service members, and surviving spouses, VA loans offer zero down payment with no private mortgage insurance. This is the best financing available to any buyer who qualifies -- not just because of the down payment, but because the absence of PMI saves $100 to $200 per month compared to low-down-payment conventional loans. If you have served, start here.
USDA rural development loans offer 100% financing for properties in eligible areas. Parts of Jefferson County, outer St. Charles County, and some areas of the St. Louis metro qualify. Income limits apply. Worth checking if you are considering areas like Hillsboro, De Soto, Wentzville perimeter, or other outer-ring communities.
FHA loans require 3.5% down with a 580+ credit score. On a $250,000 home, that is $8,750. The tradeoff is mortgage insurance premium for the life of the loan if you put less than 10% down -- approximately $115 to $130 per month on a $250,000 loan that you cannot cancel without refinancing.
Qualifying first-time buyers can access conventional loans with as little as 3% down through Fannie Mae HomeReady or Freddie Mac Home Possible programs, which have income limits and require a minimum 620 credit score. Standard conventional loans typically require 5% down for first-time buyers. PMI on conventional loans is cancelable once you reach 20% equity -- a significant long-term advantage over FHA.
Missouri's MHDC First Place Loan program offers down payment and closing cost assistance of up to 4% of the loan amount as a non-repayable grant. On a $250,000 purchase, that is up to $10,000. Income limits apply -- in the St. Louis metro, they range from approximately $85,000 to $110,000 depending on household size and county.
That means a qualifying buyer purchasing a $250,000 home with FHA financing and MHDC assistance might need as little as $5,000 to $8,000 out of pocket -- down payment after assistance, plus any gap in closing costs not covered. That is very different from the $50,000 that 20% down would require.
The full breakdown of MHDC, HomeSTL, and other assistance programs available in St. Louis right now. First-Time Buyer Programs in St. Louis → →The down payment is not the only money you bring to closing. Plan for:
Putting less down means a larger loan, more interest over time, and mortgage insurance costs until you reach sufficient equity. Putting more down means lower monthly payments, less total interest, and potentially avoiding mortgage insurance -- but less cash on hand for repairs and reserves after closing.
For most St. Louis buyers, the right answer is somewhere between 5% and 10% -- enough to keep the loan and PMI manageable without depleting reserves entirely. Buying a home with zero reserves and a perfect budget leaves you exposed to the first major repair bill. In a market with significant older housing stock, that bill has a way of arriving within the first year.
How much down payment do I need in St. Louis?
VA and USDA loans require zero down for eligible buyers. FHA requires 3.5% with a 580+ score. Conventional can go as low as 3% for qualifying first-time buyers. With MHDC assistance, many buyers close with less than $10,000 out of pocket on a $250,000 home.
Do I have to put 20% down?
No. The 20% threshold eliminates mortgage insurance on conventional loans but it is not a requirement. Most St. Louis buyers put between 3% and 10% down. Waiting to save 20% while prices appreciate is often a losing strategy.
What is the down payment on a $250,000 home in St. Louis?
At 3% (conventional first-time), it is $7,500. At 3.5% (FHA), it is $8,750. At 5% (conventional standard), it is $12,500. MHDC assistance can provide up to $10,000 toward down payment and closing costs for qualifying buyers.
Can my down payment be a gift?
Yes -- both conventional and FHA loans allow down payment gifts from close family members. The lender requires a gift letter and documentation of the transfer. The gift must be a true gift, not a loan.
Ready to talk through your financing situation before you commit to anything? I work with buyers at every stage -- including before pre-approval. No pressure, no agenda.