When buying a home, one of the biggest decisions you'll make is how much to put down. A 20% down payment has long been considered the standard, but is it right for you?

Pros and cons of 20% down payment

Pros of 20% Down

  1. No PMI required
  2. Lower monthly payments
  3. Better interest rates
  4. More equity from the start

Cons of 20% Down

  1. Takes longer to save
  2. Less cash available for emergencies
  3. Could miss out on rising home values
  4. Ties up large amount of cash

Use our mortgage calculator to see how different down payment amounts affect your monthly payments.

Benefits of a Lower Down Payment

1. Keep More Cash on Hand

  • Requires less money upfront
  • Maintains emergency savings
  • Provides flexibility for home repairs and improvements
  • Faster path to homeownership

2. Investment Opportunities

  • Keep more funds available for other investments
  • Potential for higher returns in retirement accounts
  • Diversify your investment portfolio
  • Maintain financial flexibility

Drawbacks to Consider

1. Monthly Payment Impact

  • Higher loan amount means larger monthly payments
  • Less room in your monthly budget
  • May affect debt-to-income ratio
  • Could limit other monthly expenses

2. Private Mortgage Insurance (PMI)

  • Required for conventional loans with less than 20% down
  • Adds to your monthly payment
  • Typically costs 0.5% to 1% of loan amount annually
  • Continues until you reach 20% equity

3. Long-term Costs

  • More interest paid over the loan term
  • Higher total cost of homeownership
  • Takes longer to build equity
  • May affect loan terms and rates

Using Our Tools

Try these scenarios in our calculators:

  1. Use our mortgage calculator to compare different down payment amounts
  2. Check our rate comparison tool to see how down payments affect rates

Making Your Decision

Consider these factors:

  • Your savings and income stability
  • Local market conditions
  • Investment opportunities
  • Monthly budget constraints
  • Long-term financial goals

Pro Tip: Don't deplete your emergency fund for a larger down payment. Having reserves for unexpected expenses is crucial for new homeowners.

Next Steps

  1. Calculate your potential down payment options
  2. Review your savings and investment strategy
  3. Consult with mortgage professionals
  4. Compare loan programs and rates
  5. Make an informed decision based on your unique situation

Want to explore your options? Use our mortgage calculator to run different scenarios.