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How much should I put down?

Brandon Grosse

Brandon is our managing real estate broker with experience since 2001 in professional sales...

Brandon is our managing real estate broker with experience since 2001 in professional sales...

Feb 8 2 minutes read

Whether you're a first-time buyer of a one-bedroom condo, or a seasoned real estate shopper buying a multi-million dollar home, it's always a good rule of thumb to put at least 20 percent of the purchase price down. Depending on the sales price and your personal comfort level, some advisors may even encourage their clients to put more cash down at purchase, say 30 percent, or perhaps even pay the full asking price in cash if it's an investment property, for example.

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Of course, every situation entirely depends on the exact terms of your home loan, your financial footing, and your flexibility. Putting more money down upfront will lower your monthly mortgage payment while allowing you to avoid private mortgage insurance. Also called lender's mortgage insurance, PMI is additional insurance that lenders oftentimes require from most homebuyers who obtain loans in which the down payment is less than 20 percent of the sales price or appraised value. Furthermore, the interest charged on a loan with 20 percent down is often lower than the interest on a loan with less money down, depending on your approved lending institution. Your lower interest rate will save you thousands over the life of your loan. Lastly, and perhaps most importantly, putting at least 20 percent down instantly adds equity to your home--which is crucial if the market changes quickly or if your personal/professional plans change and you need to sell the home quicker than you than anticipated.

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Overall, when saving for a home and planning for your financial future, keep in mind that putting at least 20 percent down on your property purchase is an important component of home ownership - regardless if you're a twenty-something, city dweller or a retired, small town resident!

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