Pros and Cons of Making a 20% Mortgage Down Payment

Think you need at least a 20 percent mortgage down payment in order to buy a home?

Saving up a minimum of 20 percent of the purchase price of the home used to be the rule of thumb, but that’s no longer the case. As a mortgage borrower, you have the freedom to decide how much to put down – and you may even qualify for a zero-down mortgage or a home loan program that requires as little as 3 percent down.

According to the National Association of Realtors, the median mortgage down payment in 2019 was just 12 percent. For first-time homebuyers, that figure drops to just 6 percent. So, should you still put down 20 percent – or is putting less money down the right choice? That’s your decision, but the following information should help.

Mortgage Down Payment

Advantages of Putting 20 Percent Down on a Home

There are a few reasons why people opt to make a 20 percent down payment. The merits of putting down more money include:

Drawbacks of Making a 20 Percent Down Payment

Putting 20 percent down on a home isn’t always the best approach. The disadvantages of making such a large down payment include:

  • Becoming a homeowner may take longer
  • Accessing the money requires a home loan refinance, home equity line of credit (HELOC) or property sale
  • A drop in home value will result in a loss of more money
  • The risk of foreclosure in a time of crisis is greater for those with home equity, as that limits the lender’s losses when the property is sold

Having Trouble Saving Up Enough to Buy a Home?

Regardless of how much of a mortgage down payment you’d like to make, saving up the money may prove to be a challenge. If so, contact the professional team at Intercap Lending for expert help.

We have access to home loan programs with low- and zero-down options as well as grants and assistance programs for homebuyers. And, our lending specialists can recommend strategies – such as a piggyback loan or lender-paid mortgage insurance – to help you avoid a PMI payment.

The choice of how much money to put down when you buy a home is in your hands, but the experienced professionals at Intercap Lending are ready to help you decide. For answers to your questions and expert advice on whether or not to follow the 20 percent mortgage down payment rule, reach out to our team today!