Does it make more sense to put 20% down to buy a house or should you put less down? There are pros and cons to both:
- More down: You won’t have to pay Private Mortgage Insurance which can add .5% to 1% of the entire loan amount on an annual basis. For example: $200,000 loan with .5 PMI equals an extra $83.33 per month to your payment.
- More down: You will owe less on your monthly mortgage payment.
- Less down: It takes some buyers a long time to save 20% for your down payment. Ex: $200,000 homes equals $40,000 down payment.
- Less down: You will have more cash in the bank for home improvements, starting a family, emergencies, etc.
You can readily finance with an FHA loan and only need 3.5% down. Or if you are a veteran, you can qualify for 100% financing.
Talk to a lender and get all the information on the different types of loans, different amounts of down payments and make the best decision for you and your situation.
If you need a great lender to discuss this with, don’t hesitate to ask us for our preferred lender’s information.