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Tim McGarry on the 20%-down-payment myth costing homebuyers thousands
Tim McGarry, a loan officer and former professional football player, is in the business of helping homebuyers save money. He’s seen firsthand how outdated myths can discourage qualified buyers from stepping into the market. And the most pervasive myth by far is that of the 20% down payment.
“For some reason, the biggest myth is that you need to put 20% down,” says McGarry. “But there are so many programs to help you, so you don't need to make a down payment that substantial. You can even get rid of mortgage insurance without a 20% down payment.”
Those programs include the Federal Housing Administration (FHA) Loan Program, where borrowers can put as little as 3.5% down, conventional mortgages with just 3% down, and the Veterans Administration (VA) Loan Program, where qualifying veterans can buy a home for 0% down.
So where did the 20% myth come from? Up until the private mortgage insurance (PMI) industry took off in the mid-1950s, homeowners had to make a 20% down payment to get a mortgage. The payment was effectively an insurance policy for the bank in case the borrower defaulted.
Now, instead of requiring borrowers to pay 20% of a home’s value immediately, banks give them the option to pay for an actual insurance policy instead. Lenders typically require borrowers to pay PMI premiums to protect their interests if the borrowers default on their mortgage.
That policy change has made home ownership more accessible for many, especially those in costly markets like San Diego, where McGarry is based. As of early 2026, the median home price in San Diego was $930,000, meaning a 20% down payment would be $186,000.
The 20% threshold isn’t completely meaningless in today’s housing market, however. If a borrower can pay 20% down when buying a home, they aren’t required to pay for PMI.
If you’ve been following the housing market for any length of time, you know that mortgage rates have finally started to drop. While that’s generally a good thing, McGarry warns that San Diego’s market will probably continue to be challenging for buyers.
“When rates drop, prices are going to go up,” he says. “The idea is to hopefully get more inventory. As rates are dropping, more people will start buying, but it's going to be more competitive because the inventory is still not as high as we want it to be.”
McGarry offers valuable guidance for would-be homebuyers hoping to secure a home without breaking the bank. While he works to help each client save money, he never suggests that they do anything to put themselves at risk.
“I would never recommend buying a house by removing all contingencies,” he says. “I think you need to have the contingencies. They're literally there for you as the buyer. There's a lot that can go wrong.”
“I work with clients on things like getting rid of mortgage insurance, finding ways to put less money down, and having a lower payment than if you had put 20% down,” McGarry continues. “With today's rates the way they are, it’s important to take advantage of the market in different ways.”
Here's something you might be interested in.
Tim McGarry on the 20%-down-payment myth costing homebuyers thousands
Tim McGarry on the 20%-down-payment myth costing homebuyers thousands
Tim McGarry, a loan officer and former professional football player, is in the business of helping homebuyers save money. He’s seen firsthand how outdated myths can discourage qualified buyers from stepping into the market. And the most pervasive myth by far is that of the 20% down payment.
“For some reason, the biggest myth is that you need to put 20% down,” says McGarry. “But there are so many programs to help you, so you don't need to make a down payment that substantial. You can even get rid of mortgage insurance without a 20% down payment.”
Those programs include the Federal Housing Administration (FHA) Loan Program, where borrowers can put as little as 3.5% down, conventional mortgages with just 3% down, and the Veterans Administration (VA) Loan Program, where qualifying veterans can buy a home for 0% down.
So where did the 20% myth come from? Up until the private mortgage insurance (PMI) industry took off in the mid-1950s, homeowners had to make a 20% down payment to get a mortgage. The payment was effectively an insurance policy for the bank in case the borrower defaulted.
Now, instead of requiring borrowers to pay 20% of a home’s value immediately, banks give them the option to pay for an actual insurance policy instead. Lenders typically require borrowers to pay PMI premiums to protect their interests if the borrowers default on their mortgage.
That policy change has made home ownership more accessible for many, especially those in costly markets like San Diego, where McGarry is based. As of early 2026, the median home price in San Diego was $930,000, meaning a 20% down payment would be $186,000.
The 20% threshold isn’t completely meaningless in today’s housing market, however. If a borrower can pay 20% down when buying a home, they aren’t required to pay for PMI.
If you’ve been following the housing market for any length of time, you know that mortgage rates have finally started to drop. While that’s generally a good thing, McGarry warns that San Diego’s market will probably continue to be challenging for buyers.
“When rates drop, prices are going to go up,” he says. “The idea is to hopefully get more inventory. As rates are dropping, more people will start buying, but it's going to be more competitive because the inventory is still not as high as we want it to be.”
McGarry offers valuable guidance for would-be homebuyers hoping to secure a home without breaking the bank. While he works to help each client save money, he never suggests that they do anything to put themselves at risk.
“I would never recommend buying a house by removing all contingencies,” he says. “I think you need to have the contingencies. They're literally there for you as the buyer. There's a lot that can go wrong.”
“I work with clients on things like getting rid of mortgage insurance, finding ways to put less money down, and having a lower payment than if you had put 20% down,” McGarry continues. “With today's rates the way they are, it’s important to take advantage of the market in different ways.”
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