{"id":24881,"date":"2015-08-08T13:41:26","date_gmt":"2015-08-08T17:41:26","guid":{"rendered":"https:\/\/www.bhgre.com\/bhgrelife\/?p=24881"},"modified":"2015-10-08T13:56:44","modified_gmt":"2015-10-08T17:56:44","slug":"do-i-need-to-put-20-down","status":"publish","type":"post","link":"https:\/\/www.bhgre.com\/bhgrelife\/do-i-need-to-put-20-down\/","title":{"rendered":"Do I Need to Put 20% Down?"},"content":{"rendered":"<p>Home buyers across the country ask if it is required to put 20% down on a house to qualify for a new home. It is not difficult to grasp why that \u201c20%\u201d figure strikes such fear into the hearts of potential homeowners, especially the young and not-so-wealthy. The average for home sales has reached $347,000 as of 2015. When you consider that 20% of an average sold home, priced above, is more than $69,000, it resonates that one needs serious savings to provide a 20% down payment.<\/p>\n<p><strong>The Amount of Money You Pay Up Front is Impacted by the Following<\/strong><strong>:<\/strong><\/p>\n<ul>\n<li>How your loan application is viewed by lenders<\/li>\n<li>Your interest rate<\/li>\n<li>If you will need to pay for private mortgage insurance (PMI)<\/li>\n<li>The Type of loan you qualify for<\/li>\n<\/ul>\n<p>Fortunately, the 20% &#8220;rule&#8221; is considered a myth today. In fact, according to U.S. News &amp; World Report, many lenders will still finance a home sale with less than 20% down. Keep in mind that even if you put down a 20% payment on a house that offers potential benefits, it is not a necessity. There are many loan programs that exist primarily for home buyers that are not able to set aside tens of thousands of dollars. A growing number of home buyers\u00a0simply do not\u00a0put 20% down.<\/p>\n<p>Here are some pros and cons of paying a 20% down payment:<\/p>\n<p><strong>Why a 20% Down Payment is Important:<\/strong><\/p>\n<ul>\n<li><strong>Higher down payments equal lower monthly payments for you<\/strong>.By paying more up front, you will have smaller monthly payments. Not owing as much money enables your <strong>debt-to-income ratio <\/strong>(the total amount paid toward debt every month as compared to your monthly income) to become even lower. Lenders consider your debt-to-income ratio when determining whether you qualify for a loan.<\/li>\n<li><strong>A larger down payment can get you a lower interest rate on your loan<\/strong>. That means that you will pay less overall for the life of the loan. That equates to more money in your savings.<\/li>\n<li><strong>Putting 20% down allows you to avoid private mortgage insurance (PMI). <\/strong>Making a 20% down payment means you will not be required to purchase private mortgage insurance. PMI is usually a requirement if your down payment is less than 20%. PMI premiums, added to your mortgage, require more money from you.<\/li>\n<\/ul>\n<p><strong>The Benefits of\u00a0<em>Not Paying a<\/em> 20% Down Payment:<\/strong><\/p>\n<ul>\n<li><strong>You can become a homeowner<\/strong>Saving the money required for a 20% down payment requires years. Working with a lender that accepts lower down payments will help you purchase your home in less time.<\/li>\n<li><strong>Waiting may cause you to spend more.<\/strong> Interest rates tend to fluctuate causing prices generally, to rise over time. The money saved today will likely buy you <em>less<\/em> house in a few years. Consider the following:<\/li>\n<\/ul>\n<p><em>If you pay $10,000 down today at a 4% interest rate or wait several years when you can afford to pay more, such as a down payment of $60,000, but with an interest rate that has risen to 7% &#8211; you will end up paying more overall just in interest.<\/em><\/p>\n<ul>\n<li><strong>A homeowner builds equity as a result of owning their home<\/strong>. Waiting years to become a homeowner while saving money may result in the loss of time and thus the loss of equity.<\/li>\n<li><strong>Purchasing a home is for<\/strong> <strong>everyone<\/strong>. Whether you can afford 20% down or something less, buying a home is within reach for everyone. Lenders are a great source to learn about the many options available and to find the program that is right for you and your unique needs.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<div class=\"more-link-wrapper\"><button class=\"more-link\" role=\"button\" tabindex=\"-1\" aria-hidden=\"true\">Read More<span class=\"screen-reader-text\"><\/span><\/button><\/div>","protected":false},"author":1271,"featured_media":24891,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[251],"tags":[2461,1981],"class_list":["post-24881","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-advice-finance","tag-do-i-need-to-put-20-down","tag-finance-tips","entry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Do I Need to Put 20% Down? - Better Homes and Gardens Real Estate Life<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bhgre.com\/bhgrelife\/do-i-need-to-put-20-down\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Do I Need to Put 20% Down? 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