If I had to pick the single biggest myth that keeps renters from buying, it's this one: "I need 20% down." On a $450,000 home, that's $90,000, and for most first-time buyers that number feels impossible, so they stop looking before they ever start.
So, let me clear this up. The real number is usually a lot lower than you think, and in some cases a lot lower than half of that.
The two buckets: down payment and closing costs
When you buy a home, the cash you bring to the table falls into two buckets.
The down payment is your ownership stake in the house. How much you need depends on the loan:
- Conventional loans can go as low as 3% down for first-time buyers (and some repeat buyers who meet income limits).
- FHA loans require 3.5% down, and they tend to be more forgiving on credit scores.
- VA loans (for eligible veterans and service members) can be 0% down.
- USDA loans (for eligible homes in more rural areas) can also be 0% down.
Closing costs are everything it takes to actually get the loan done and transfer the house to you: lender fees, the appraisal, title insurance (which protects you and the lender if there's a problem with ownership history), escrow fees, recording fees, and "prepaids" (your first year of homeowners insurance and a few months of property taxes and interest set aside up front). In Oregon, buyers pay about 2.83% of the purchase price in closing costs on average.
What that looks like on a $450,000 home
So instead of $90,000, our 3% down buyer needs roughly $26,000. That's still real money, I'm not pretending it isn't. But it's a very different conversation.
Ways to bring that number down even further
Ask the seller to cover your closing costs. This is called a seller concession (or seller credit), and in today's market, with homes sitting a little longer, sellers are a lot more open to it than they were a few years ago. The limits depend on the loan: up to 3% of the price on a conventional loan with less than 10% down, up to 6% on FHA and USDA, and up to 4% (with some exceptions) on VA. On our $450,000 home, a 3% seller credit is $13,500, which covers basically all of the closing costs.
That means our 3% down conventional buyer could potentially get into this house with closer to $13,500 to $15,000 out of pocket. That's not a typo!
Use down payment assistance. Both Oregon and Washington have programs that help first-time buyers with the down payment or closing costs, and some cities and counties have their own on top of that. (I wrote a whole separate post on this one, because there's a lot to cover.)
Use gift funds. Most loan programs allow family members to gift you some or all of your down payment. There's some paperwork involved (a signed gift letter and a paper trail showing where the money came from), but it's very common.
A few costs people forget about
These aren't technically part of closing, but you'll want to plan for them:
- Earnest money. When your offer is accepted, you'll usually put down a good faith deposit (often 1% to 3% of the price). The good news is it goes toward your down payment, so it's not an extra cost, it just comes out of your account earlier than you might expect.
- Home inspection. Typically a few hundred dollars, paid when the inspection happens. Please don't skip this one, especially on older Portland homes (and add a sewer scope, trust me).
- Moving and setup costs. Movers, utility deposits, and the inevitable Home Depot run in week one.
- Reserves. I always recommend keeping some cushion in the bank after you close, ideally a couple of months of mortgage payments. Some loans require it, but even when they don't, you'll sleep better.
Bottom line
You probably don't need 20% down, and you might not even need 10%. Between low down payment loans, seller credits, and assistance programs, a lot of first-time buyers in Portland can get into a home with somewhere between $15,000 and $30,000, depending on the price, the loan, and how the deal is negotiated.
The best way to find your actual number is to sit down and run it. I'm happy to put together a custom estimate with your target price and the programs you might qualify for, and it doesn't cost you anything.
Example is for illustration only and is not a loan quote. Closing costs vary by lender, title company, loan program, and property. Down payment minimums are subject to program eligibility, including credit, income, and property requirements.
Want this run on your actual numbers?
Everything above is a worked example. Give me your real figures and I'll tell you what it looks like for you, with no application and no credit pull.