Do You Really Need 20% Down for Your Next Home?
If you're thinking about buying your next home, you've probably heard the old advice that you need a 20% down payment. The good news is that's not always true.
There are plenty of loan programs that allow qualified buyers to put down much less. But here's something interesting. Many homeowners who are buying again are choosing to put down 20% or more, and there's a good reason why.
Why More Repeat Buyers Are Putting More Down
One of the biggest advantages of already owning a home is equity.
Over time, you've been paying down your mortgage while your home's value has likely grown. That difference between what your home is worth and what you still owe becomes equity, and when you sell, that equity can become the down payment for your next home.
Many repeat buyers are using that built-up equity to make a larger down payment, which can make their next move a little easier.
What a Bigger Down Payment Can Do
If putting 20% down is an option for you, it comes with some real benefits.
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Lower monthly mortgage payments because you're borrowing less.
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Less interest paid over the life of your loan.
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No private mortgage insurance on most conventional loans.
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A stronger offer that can stand out to sellers in a competitive market.
That doesn't mean it's the right choice for everyone, but it's worth looking at the numbers before making a decision.
The Bottom Line
You don't have to put 20% down to buy your next home. But if you've built up equity over the years, you may have more options than you realize.
Before you decide, it's worth sitting down with a trusted lender to see what makes the most sense for your budget. And if you're curious about how much equity you could use toward your next home, I'd be happy to help you figure that out.
