It is not "vital" in the sense that you can usually find loan programs that will allow you to put down less than 20% (e.g. FHA, VA, etc.). However, any time you put down less than 20%, you will likely have to pay Private Mortgage Insurance (or, PMI), which protects the lender should you default on the loan. PMI used to be "lost" money in the sense that you paid it, but could not deduct it. Then during the financial crisis in 2008, Congress passed a law that made PMI deductible. So far, Congress has not extended the deduction for 2015 (though they effectively have until the end of the year to do so - they waited until toward the end of the year in 2014 to extend it for 2014). So, we may be getting back to a time when PMI is no longer deductible. I suggest trying your best to get to a 20% down payment to avoid having to pay PMI and ensuring that you have plenty of equity in the house. It's generally not a requirement to put down 20%, but I would argue that putting down less than 20% is less than ideal.
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