Buying A Home -Downpayment Options – Best Mortgage Rates | Home Loans | Real Estate Investment Loans

How Do I Determine What Down Payment To Put Down When Buying A Home?

We know that the preference would be that you could pay cash but for most of us that is not a reality. A number of factors need to be considered prior to making a decision about how much of a down payment you should make. First and foremost is how much can you afford? Can you afford to put down 20% or more. Avoiding the PMI insurance will lower your monthly payment but decrease your cash reserves.  Do you need money to fix up your new home or to purchase furniture. Lets look at this more closely.


By putting down a larger down payment somewhere in the neighborhood of 15% to 20% can make lenders feel more confident that you’re committed to buying the house. That’s because you’ve got some skin in the game. If you’re putting less down less of a down payment or if you are going with the minimum 3 or 3% down, it can be considered a riskier loan for them and, therefore, can come with a higher interest rate. Weigh this with renting vs building wealth and equity with owning..

In addition a larger down payment means that less money financed and a lower monthly payment. A lower down payment can be a good thing if you’re having trouble qualifying for your loan or if you’re looking at homes at the top of your price range. 

Individuals with lower credit scores or higher debt-to-income ratios may also be required to make a larger down payment.

If you and your lender are comfortable with a certain size down payment, you don’t necessarily need to put more than that down. Doing so can lower your monthly payments, absolutely. 

However, you should consider whether that money could be better spent elsewhere—for example, paying down credit card or other high-interest debt, socked away into an emergency fund, or earmarked for home improvements or repairs. And don’t forget about paying for closing costs and fees, including the home inspection.


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