Senior real estate Chicago buyers often believe they need 20 percent down before they can even start looking. That belief stops a lot of people from exploring their next move long before they run the real numbers. It is simply not true anymore, and in many cases it never was. Once you actually look closely, the real numbers tell a very different story.
Where This 20 Percent Myth Comes From
The 20 percent figure has stuck around for decades. Mostly, it survives because it avoids private mortgage insurance on a conventional loan. Older financial advice leaned heavily on this number as the responsible standard. That advice was not wrong exactly. It was just incomplete, and it never fit every buyer’s actual situation.
Many homeowners over 50 grew up hearing this rule repeated by parents, banks, and financial books. Once an idea gets repeated enough times, it starts to feel like a hard requirement instead of one option among several. That is exactly what happened here, and the myth has outlived the reasoning behind it.
What the Real Numbers Actually Show
According to the National Association of REALTORS®, the median down payment across all buyers in 2025 was 19 percent, not 20. Repeat buyers landed at a median of 23 percent. First-time buyers came in far lower, at just 10 percent. Notice that even the higher figure for repeat buyers still falls short of a strict 20 percent rule.
That 23 percent median for repeat buyers is not coming from years of saving cash in a bank account. More than half of repeat buyers, 54 percent according to NAR, used proceeds from selling their previous home to fund their next purchase. Their down payment came from built-up equity, not a separate savings goal they had to hit first.
Age matters here too. According to Bankrate, buyers between 60 and 69 put down a median of 28 percent, and buyers 70 and older put down even more. Older buyers are not scraping together 20 percent from scratch. They are rolling forward decades of home equity they already built.
This distinction matters enormously if you already own a home. Your down payment is not something you need to save from scratch. It is often already sitting in your current property, waiting to be unlocked through a sale.
The Loan Programs That Make Lower Down Payments Possible
You do not need equity from a sale to buy with less than 20 percent down either. According to LendingTree, conventional loans require as little as 3 percent down for a primary residence. A program called Conventional 97 makes this possible, though it’s generally limited to first-time buyers. FHA loans require just 3.5 percent with a qualifying credit score and are open to repeat buyers.
These programs exist precisely because 20 percent was never a legal requirement or a universal rule. It was always one option among several loan structures, each shaped by its own history and purpose. Each comes with different tradeoffs around mortgage insurance, interest rates, and monthly payments. A lower down payment usually means paying mortgage insurance until you build enough equity, but that cost is often manageable compared to years of delayed moving plans.
In Illinois specifically, the median down payment sits around $40,000, according to Bankrate’s state-level data. That is a helpful benchmark to compare against your own numbers, especially once you factor in what your current home might sell for in today’s market.
A Simple Example Worth Running
Picture a homeowner selling a house for $400,000 in the South Suburbs, with $250,000 left on the mortgage. After typical selling costs, that leaves roughly $130,000 to $140,000 in proceeds. On a $350,000 next home, even a 20 percent down payment of $70,000 leaves a healthy cushion left over for moving costs, updates, or savings.
Now compare that to a 3.5 percent FHA down payment on that same $350,000 home, which comes to just $12,250. That gap between those two numbers is enormous, and it shows exactly why the 20 percent figure should never be treated as a fixed requirement. The real question is not whether you can hit 20 percent. It is what down payment amount makes the most sense for your monthly budget and your long-term plans.
Two Other Related Myths Worth Retiring
The 20 percent rule rarely travels alone. A few other assumptions tend to ride along with it, and they deserve a quick look too.
The first is the belief that you must sell your current home before you can even apply for a new mortgage. That is not always true. In many cases, a bridge loan or a home equity line of credit lets you access your current equity before closing on the sale. That approach gives you the down payment funds without forcing a rigid sequence of events, and it lets you make an offer on your next home with more confidence.
The second is the idea that your down payment has to come entirely from cash savings. In reality, equity from a home sale counts as legitimate down payment funds, and so do gifts from family members in many loan programs. Your financial picture is usually more flexible than the “20 percent in cash” version of the rule suggests.
Why This Matters Even More After 50
If you already own your current home, your situation looks completely different from a first-time buyer’s. You likely have real equity built up, sometimes substantial equity after years or decades of ownership. That equity can become your down payment on the next home, often without touching your retirement savings at all.
I encourage every homeowner over 50 to run the actual numbers before assuming a move is out of reach. Selling your current home first, or arranging a bridge loan to buy before you sell, are both realistic paths worth exploring. The math often works out very differently than the 20 percent myth suggests.
Credit score and income still matter in this equation, of course, just as much as the down payment itself. Lenders look at your full financial picture, not just your down payment source. Working with a lender early in the process helps you understand exactly what you qualify for before you fall in love with a specific home.
Timing is worth thinking through early too. If you plan to sell your current home to fund the next purchase, coordinating the two closings takes some planning. Some homeowners choose to sell first and rent short-term while they search. Others prefer a bridge loan so they can buy first and move only once. Neither approach is automatically better. Your comfort level, the local market, and how quickly you want to be settled all factor into the right choice.
What This Means for Your Next Move
This 20 percent myth keeps too many homeowners frozen in place, assuming a move is financially impossible when it may not be. Real numbers, not decades-old assumptions, should guide that decision. Sometimes the math is more forgiving than years of hearing “20 percent” have led you to believe.
This does not mean every homeowner should put down less than 20 percent. A larger down payment still lowers your monthly payment and avoids mortgage insurance entirely. The point is simply that a smaller down payment is a legitimate, common choice, not a sign that something has gone wrong with your plan.
For senior real estate Chicago buyers weighing their next move, the takeaway is straightforward. The 20 percent rule was never a locked requirement, and the data proves it. What matters is running your specific numbers with a lender and a REALTOR® who understands your situation. Equity, timing, and loan programs all fit together differently for every homeowner over 50, and a cookie-cutter answer rarely serves anyone well.
As an SRES®, I’ve trained specifically to understand how home equity, timing, and financing intersect for homeowners over 50. That’s exactly why I coordinate closely with lenders, so you’re working from your real options instead of outdated assumptions about what a move requires.
When you are thinking about your next move, the free resource library has practical guides covering everything from downsizing and aging in place to senior living options and the resources you need to make confident decisions along the way. And if you would like to understand how I work with homeowners over 50, the Homeowners 50+ page is the right place to start. Both are in my free resource library.
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Disclaimer: This blog is for educational purposes only and does not constitute tax, legal, or financial advice. Every homeowner’s situation is unique. Please consult a qualified CPA, tax advisor, or estate attorney before making any decisions related to the sale of your home.
If you’re starting to think about what comes next, you don’t have to figure it out on your own. Sometimes it helps just to talk things through.
You can always take the next step at your own pace, with no pressure and no expectations. I’m always happy to help you get a clearer picture of your options.
Michelle Williams is a REALTOR® and SRES® serving Chicago and the South Suburbs, helping homeowners 50+ make confident decisions about their next move.