The primary design change between the earlier F-5E and the F-5G was the use of a single General Electric F404 engine that was originally designed for the F/A-18 Hornet. The new engine provided 60% more thrust compared to the combined output of the F-5E's paired General Electric J85s. This improved the aircraft's thrust-to-weight ratio to 1.13 from 1.0. The new engine gave speed of over Mach 2.0, a ceiling over 55,000 ft (16,800 m), an initial climb rate of 52,800 ft per minute (16,100m/min), and overall climb performance to 40,000 ft (12,192 m) that was decreased from 2.2 minutes to 1.1 minutes.
The wing profile remained the same as the F-5E, but had modified leading edge extensions (LEX), which improved the maximum lift coefficient of the wing by about 12% with an increase in wing area of only 1.6%. The original aircraft was fairly sluggish in pitch, so the horizontal stabilizer was increased in size by 30% and a new dual-channel fly-by-wire control system was added. Destabilizing the aircraft in pitch and modifying the LEX improved the instantaneous turn rate by 7% to 20°/sec. Sustained turn rate at Mach 0.8 and 15,000 ft (4,572 m) rose to 11.5°/sec, which compared well with the F-16's 12.8°/sec. Supersonic turn rates were 47% higher than those of the F-5E.
The F-20 would also make greater usage of composite materials in its construction. During its development, several areas using metal were re-designed to use fiberglass, and there were numerous upgrades to various mechanical parts.
The F-20's avionics suite was all-new and greatly improved over the earlier designs. The General Electric AN/APG-67 multi-mode radar was the heart of the sensor suite, offering a wide range of air-to-air and air-to-ground modes. The F-5's electro-mechanical navigation system was replaced with an all-electronic version based on a ring laser gyroscope. Time from power-on to being able to launch was greatly reduced as a result, to about 22 seconds, and Northrop boasted the aircraft had the shortest scramble time of any contemporary aircraft. The cockpit of the F-5 was completely re-worked with a large heads-up display (HUD) and two monochrome multi-function displays set high on the control panel, and the addition of a complete hands-on-throttle-and-stick (HOTAS) control system. Many of the avionics promised to have reliability beyond that of any competing aircraft then in service.
The F-20 would have been able to utilize most of the common weapons in U.S.'s inventory, including the entire range of Mark 80 series bombs, the AGM-65 Maverick air-to-ground missile, and the AIM-9 Sidewinder and AIM-7 Sparrow air-to-air missiles. Like the earlier F-5s, the test F-20s were equipped with two M39 cannon mounted in the nose. Production F-20s may have substituted two Ford Aerospace Tigerclaw cannons instead of the M39s; while the Tigerclaw was based on the M39, it was lighter and had a higher rate of fire than the M39A2.
The F-20 did, however, have several problems inherent to its small size. The low-mounted wing meant that there was limited ground clearance, and the position of the landing gear meant loads had to be positioned towards the outer ends of the wings. This limited hard point weights to 1,000 lb (454 kg) or less. A single hard point under the fuselage could carry more, a single Mk 84 2,000 lbs bomb or up to five Mk 82 500 lbs bombs. Additionally, although the wing profiling improved lift at higher angles of attack (AoA) while maneuvering, it did not improve cruise lift performance at normal AoA. This did not present a problem in the fighter role, but did severely reduce its payload/range figures compared to similar aircraft like the F-16.
Offered as a low-cost option, the F-20 was significantly more expensive than the F-5E, but much less expensive than other designs like the $30 million F-15 Eagle, or $15 million F-16 Fighting Falcon. The F-20 was projected to consume 53% less fuel, require 52% less maintenance manpower, had 63% lower operating and maintenance costs and had four times the reliability of average front-line designs of the era. The F-20 also offer the ability to fire the beyond-visual-range AIM-7 Sparrow missile, a capability that the F-16 lacked at that time, and did not gain until the Block 15 ADF version in February 1989.