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The 4 Benefits of Making a 20% Down Payment

The Amy Jones Group
May 16 4 minutes read

There is much to consider when Buying a home. What is your budget? What can you qualify for? How much money should I put down? This week, we explore the four benefits in putting down a 20% down payment. With all of the options out there, this may seem like a stretch, but do your research and see what will work best for YOU!

1. You Can Say "No Thanks" To Private Mortgage Insurance (PMI)

PMI is “an insurance policy that protects the lender if you are unable to pay your mortgage. It’s a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.”

Depending on what type of home buyer you are, could determine which way your lender suggests you go with down payment options. As a first time home buyer, it might make more sense to put less money down in the beginning. There are many 0% down loan programs available right now for that exact reason! It's a great time for first time home buyers or for those looking for a low to no down payment option!

When buying your second or forever home, sellers typically have more equity to work with and putting down 20% will benefit that seller more in the long run, especially if they plan on staying in that home for the duration of their loan term.

Contact Guild Mortgage for questions on PMI and what you qualify for today! 

2. Pay Less For Your Home!

The more money you are able to put down for a down payment, the lower your total loan amount will be overall. Since you are initially putting down 20% of the loan amount, that means that you only have 80% remaining that you will be paying interest on. So when you look at the big picture, you will be paying a lot less for the entire loan.

Contact Fairway Independent Mortgage for questions on loan amounts and what you qualify for today! Contact Below:

3. Lower Interest Rate For The Win

20% for a down payment might seem like a lot, especially when you consider all of the other costs of buying a home. But when you compare a larger down payment amount with a low to no down payment option, you are considered a "higher risk" to the bank or lender that you are borrowing the money from. You end up paying the bank or lender for this risk up front and on a monthly basis. The more confident your bank is with your credit score along with how much money you put down determines what your interest rate will be. The more you put down, the lower your interest rate will be! Want a lower down payment option? Discuss the many options available for refinancing after a few years for a lower interest rate or even to eliminate the PMI with your lender today!

Guild Mortgage can walk you through all of your options including interest rates! Contact Below:

4. Have A Better Chance At An Accepted Offer

Right now, we are in a market where buyers are competing for the same home due to lower inventory. When sellers are looking at these offers with their agents, sellers like to see higher down payment amounts. Like the bank or your lender having more confidence in lending, the seller has more confidence in you following through with the home purchase. You are viewed as a stronger buyer and that might make all of the difference in this market.

Contact Fairway Independent Mortgage for questions down payments today! Contact Below:

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