HOW MUCH SHOULD I PUT DOWN WHEN BUYING A HOME?

HOW MUCH SHOULD I PUT DOWN WHEN BUYING A HOME?

There is no magic number that every buyer should put down.

And despite what you may have heard, 20% is not the only way to buy a home.

You may hear numbers like:

3%

5%

10%

20%

And sometimes even more.

Different loan programs have different requirements, and some buyers may qualify for down payment assistance or other financing structures.

So How Much Should I Put Down?

The answer depends on your financial situation, the loan program, the property and your goals.

For example, some conventional financing can be structured using a piggyback or second mortgage. One commonly known structure is an 80/10/10 arrangement:

  • 80% first mortgage
  • 10% second mortgage
  • 10% down payment

But this isn’t automatically available to every buyer or every property.

Credit, income, debt, reserves, lender requirements and other factors can all matter.

That’s why I don’t want you choosing your down payment based on something you read on the internet.

Talk with a knowledgeable mortgage professional about your actual options.

What About 20%?

Twenty percent down can have advantages.

Depending on the loan, putting 20% down may eliminate the need for private mortgage insurance.

But that doesn’t automatically mean putting 20% down is the right decision for everyone.

And here’s something else to think about:

Do you want to put every dollar you have into the house?

Because buying the house isn’t the end of the expenses.

You may need money for:

  • Closing costs
  • Inspection
  • Appraisal
  • Moving
  • Immediate repairs
  • Furniture
  • Appliances
  • Homeowners insurance
  • Emergency expenses

I would much rather see you buy a home and still have a financial cushion than put every penny into the down payment and have nothing left when something goes wrong.

This Is Where a Great Lender Matters

A good mortgage professional shouldn’t simply tell you:

“You need X% down.”

They should help you understand the different financing options available to you and how each option affects your monthly payment, closing costs, mortgage insurance and overall financial picture.

That’s a conversation worth having before you start shopping.

The Bottom Line

Don’t ask:

“What’s the smallest down payment I can make?”

And don’t automatically assume:

“I have to put 20% down.”

Instead ask:

“What financing structure makes the most sense for my situation?”

That’s a much better question.

Have a Question?

Buying a home comes with a lot of questions. You don’t have to figure everything out on your own.

Have a question about something you read here? Want to talk through your situation? Or just not sure what your next step should be?

I’m happy to help.

Schedule a Time to Talk With Karyn

No pressure. No obligation. Just straight answers.

Prefer to just send me a question?