For many first-time homebuyers, purchasing
Saving for a down payment, managing monthly expenses and navigating today's affordability challenges can make it difficult to know when buying might be realistic. If you've been waiting until you have a large down payment saved or until you can afford a particular type of home, it may be worth looking at the options available to you.
Two considerations that may help you explore your path to homeownership are starting with a more affordable home and looking beyond the traditional 20% down payment.
A starter home generally refers to a home in the lower portion of the price range for a particular market. Depending on where you live, that could be a smaller single-family home, condo or townhome.
Choosing a home at a lower price point may mean you need less money for your down payment. It can also give you an opportunity to focus on the features and location that are most important to you rather than waiting for a home that checks every box.
Zillow found that nationwide, a starter home takes half the time – about 7.2 years – to save for and come out ahead on, compared with renting (see graph below):
Source: Zillow .com, In Some Markets, Saving and Breaking Even on a Home Purchase Can Take a Buyer into Their Retirement Years, August 2026.
That doesn't mean a starter home is the right choice for everyone. Your decision should take into account your budget, monthly payment, anticipated length of ownership, maintenance costs, location and overall financial situation.
The important thing is to understand what homes may be available within a price range that works for you.
One of the most common assumptions among first-time buyers is that they need to save 20% of the purchase price before they can buy a home.
That's not necessarily the case. Most first-time buyers don't put down anywhere near that. The National Association of Realtors shows the median down payment for first-time buyers is 10% (see graph below):
Source: National Association of Realtors, Highlights from the Profile of Home Buyers and Sellers, June 2025
Depending on the mortgage program and your qualifications, some buyers may be eligible for options with lower down payments. Certain conventional programs may offer down payments as low as 3% for qualified borrowers, while FHA financing may allow a down payment as low as 3.5% for qualified borrowers.
There are also mortgage programs designed for specific buyers that may offer additional options. For example, eligible veterans and qualified buyers using certain rural housing programs may have no-down-payment options.
Lowering the down payment doesn't mean there are no upfront costs. Buyers should also consider closing costs, prepaid expenses, reserves and other costs associated with purchasing a home.
Depending on where you live and your individual circumstances, you may also qualify for down payment or closing cost assistance.
Programs can vary by state, county, city and borrower eligibility. Some are designed specifically for first-time buyers, while others may be available to buyers based on income, occupation, location or other criteria.
Because these programs can have specific requirements and limitations, it's important to review the details before assuming a particular program will apply to you.
There's no single timeline for becoming a homeowner, and there's no one-size-fits-all approach.
For some buyers, continuing to save may be the best choice. For others, exploring a starter home, considering a lower down payment or researching available assistance programs may provide additional options to consider.
The first step is understanding what you may qualify for and what fits comfortably within your budget.
Buying your first home starts with understanding what's available to you.
At First Federal Bank, our loan officers can help you review mortgage options, discuss potential down payment requirements and explain programs that may be available based on your circumstances.
Ready to see what options you may have? Connect with a First Federal Bank loan officer to start the conversation.