Write the stay length before you pick FHA vs 20%. Honest number, not the listing-agent “forever home.” Under 5 years, paying extra years of PMI (or FHA MIP you cannot cancel) to “get in cheaper” can still be the right cash move — and 20% can be the wrong one if it empties the HYSA. A job that relocates, a visa, a residency match: those are 2-year files. The stay-length spreadsheet is the rent vs buy sequence. This file is the cash-to-close stack once you have decided to buy.
Do not skip the match, the 24% card, or the HYSA sleeve to “get in.” A 100% match on the first 6% is a 100% week-of return. A 24% card is a 24% guaranteed hole. Buying with $0 left after closing is how a water heater becomes a credit-card event. The payday file is match → HYSA → Roth/trad → taxable. Size the sleeve to 3 months of the new PITI + food, not 3 months of the old rent. Run the payment at the lock you were offered — Freddie Mac’s PMMS printed 6.71% the week of September 3, 2026; that is an average of applications, not your quote.
Run DTI before you fall in love with a list price. Front-end is PITI ÷ gross. Back-end is PITI + other monthly debts ÷ gross. Classroom ceilings: conventional often starts near 36% and automated underwriting can stretch toward 45–50%; FHA’s published pair is roughly 31/43 and AUS can go higher. Approved is not comfortable. Student loans: ask the officer which rule they will run (billed IDR vs 0.5% of balance). Get it in writing. Plug the harsher number into the DTI tool. If you are 2–8 points over, that is the 90-day cut, not a bigger house.
Cash that must survive closing is four lines, not one. (1) Down payment. (2) Buyer closing — plan 2–3% of price if you are not rolling seller credits. (3) Moving + immediate repairs. (4) Three months of the new PITI from step 2. On the worked $420,000 house, 2.5% closing is $10,500 before a single payment. Run the stack in the PITI calculator (tax, insurance, HOA, PMI over 80% LTV). If the leftover after match + sleeve + this PITI is $0, you wanted a cheaper house or a later year.
FHA is a tool, not a stain. Minimum down 3.5% at FICO 580+, or 10% at 500–579. Occupancy: move in within 60 days (HUD 4000.1). 2026 one-unit floor $541,287 / ceiling $1,249,125 (HUD Mortgagee Letter 2025-23; 65% / 150% of the FHFA conforming limit). Two insurance lines: upfront MIP 1.75% of the base loan (usually financed) plus annual MIP. HUD ML 2023-05 / Handbook 4000.1 App. 1.0: most 30-year loans with LTV >95% and base ≤ $726,200 pay 0.55% (55 bps) for the life of the loan. Original LTV ≤90% (10%+ down) is 11 years, then it stops. Equity growth does not cancel FHA MIP. The exit is a conventional refinance once you have the LTV and the credit — break-even tool, not a phone call to the servicer.
Conventional 3–5% vs 20% is a PMI-years problem. Standard purchase can go to 97% LTV (3% down) on a 1-unit principal residence; Fannie HomeReady / Freddie Home Possible are the income-capped (typically ≤80% AMI) 3% cousins with cheaper MI and no UFMIP. 2026 baseline conforming limit is $832,750 one-unit, high-cost ceiling $1,249,125 (FHFA, Nov 25, 2025). PMI protects the lender. Homeowners Protection Act (12 U.S.C. 4902): you may request cancellation at 80% of original value; automatic termination is 78% of original value if you are current. FHA MIP is a different animal. Mechanics: 80% request / 78% automatic.
Price PMI as monthly × 12 × years until 80%, then compare that pile to the cash you would have kept. Type your MI quote — do not scrape a live PMI table into this page as if it were frozen. Worked $420,000 / 6.71% 30-year (PMMS average, labeled) / tax $5,200 / insurance $1,400. FHA 3.5%: down $14,700, UFMIP $7,093 financed, loan $412,393, P&I $2,664, MIP $189/mo, all-in PITI $3,403, MIP for life (~$2,268/yr; $15,900 over 7 years if you never refinance). Conv 5%: down $21,000, loan $399,000, P&I $2,577, example PMI 0.70% = $233/mo, PITI $3,360, amortization-only 80% of original in 126 months (10.5 years) → ~$29,300 of PMI if you never appraise or dump principal. Conv 20%: down $84,000, loan $336,000, P&I $2,170, PITI $2,720, $0 PMI. 5% vs FHA is close on the payment; 20% is a $640/mo cheaper PITI that cost $63,000 more cash at the table.
Gift funds are a letter, not a screenshot. FHA: 100% of the down payment may be a gift from an allowed donor (family, employer, close friend with a documented interest, charity, government program) with a gift letter and a paper trail — HUD 4000.1. Fannie B3-4.3-04 (Feb 4, 2026): on a one-unit principal residence, gifts may fund all of the down payment, closing, and reserves even above 80% LTV; two- to four-unit and second homes still need 5% of the borrower’s own funds when LTV >80%. Gifts are not allowed on investment property. A $40,000 parent gift can be a Form 709 item for the donor once it exceeds the 2026 annual exclusion of $19,000 per donor per donee (Rev. Proc. 2025-32) — it uses lifetime exemption, it is not a loan-file problem if it is a true gift. IRA first-time exception (IRC 72(t)(2)(F)): up to $10,000 lifetime, no 10% penalty, still ordinary income on a traditional IRA; “first-time” means no principal-residence ownership interest in the prior two years. A 401(k) loan to fund a down payment is almost always a future regret — due in full if you leave the job.
Seller credits pay closing, not the down payment, in most files. FHA interested-party contributions: up to 6% of the sales price. Conventional (Fannie B3-4.1-02): typically 3% of the price when LTV >90%, 6% at 75.01–90%, 9% at ≤75%. Credits that exceed actual closing costs usually cut the price rather than become cash back. Do not write an offer that only works if the seller funds your 3.5%. If the house only qualifies because of a 6% credit and a stretched DTI, you wanted a cheaper house.
Price the 20% path as capital that still has a job if you put 5% down instead. The extra $63,000 in step 7 is not “thrown away” as a 5% buyer. At a 4.5% after-tax example (HYSA/T-bill blend — type yours; do not scrape a live APY) it is $85,700 in 7 years before counting the monthly PITI gap. Emptying the HYSA to skip PMI is how people become house-rich and cash-poor. Park-the-cash mechanics: I-bonds vs T-bills vs HYSA. If 20% still leaves 3 months of the new PITI + the match + no 24% card, 20% can win on the $640/mo and the $0 PMI. If it does not, you wanted 5% or FHA and a PMI-years calendar.
After closing, the cancel calendar is a file, not a vibe. Conventional: call at 80% of original (or current appraised if the servicer allows); automatic at 78% if you are current. Keep the letters. Extra principal and a reappraisal are how 10.5 years becomes 4 — the extra-vs-invest file is after-tax coupon vs expected return, not this one. FHA: MIP does not drop with equity. Refinance to conventional once LTV and credit clear, and run the break-even. Do not cash-out a future cheap first lien to “invest the difference” — that is HELOC vs cash-out.
Hard-stop list: emptying the HYSA to hit 20%, skipping the 401(k) match to afford PITI, a 401(k) loan or IRA raid above the $10k first-time exception, treating FHA MIP as PMI that falls off at 80%, stretching DTI past comfortable because the lender said yes, a gift that is actually a loan, a large unexplained deposit in the two months before closing, new car / new card / furniture-store financing after the pre-approval, and buying because rent is “thrown away” (that file is rent vs buy). Lock a quote, inspect, rerun at +1% rate. If the +1% version wrecks the leftover, you are one refi-cycle from stress.
One-page decision
Stay under 5 years, thin credit or thin cash: FHA 3.5% is a bridge, not a stain — price the 1.75% UFMIP and the 0.55% MIP you cannot cancel, and plan the refinance exit. Credit 620+, cash for 5% plus a 3-month PITI sleeve: conventional 5% and a PMI-years calendar (80% request / 78% automatic). Cash for 20% and the sleeve and the match: skip PMI. Gift letter if family is funding. 401(k) loan is out. DTI is the other half of this file. Type the lock; 6.71% is not a quote.
Worked example (educational, not advice): $420,000 price, 6.71% 30-year (PMMS week of Sep 3, 2026, labeled average), tax $5,200, insurance $1,400, 2.5% closing = $10,500, $4,000 moving. FHA 3.5%: down $14,700, UFMIP $7,093 financed, loan $412,393, P&I $2,664, MIP $189/mo, PITI $3,403, 3-month sleeve ~$10,200, cash to survive ~$39,400. Conv 5% at example 0.70% PMI: down $21,000, P&I $2,577, PMI $233/mo, PITI $3,360, 126 months to 80% original, cash to survive ~$45,600. Conv 20%: down $84,000, P&I $2,170, PITI $2,720, cash to survive ~$106,700. Extra $63,000 at 4.5% after-tax → $85,700 in 7 years.