Figuring out your down payment

There’s really no magic number when it comes to down payments. Some conventional loans require as little as 3% down, but you can pay up to 20% or more to avoid paying private mortgage insurance (PMI). Ultimately, how much you put down should depend on your unique situation. Consider your holistic picture, including savings, income, and other debts or financial priorities. 

Go high: Perks of a higher down payment

•  You don’t have to pay for PMI when putting down 20% or more (generally, if paying less than 20%, PMI would raise the monthly cost of your mortgage until you’ve paid off 20% of the principal balance).
• The higher your down payment, the lower your monthly payments will be.
• A higher down payment can help you secure better interest rates, which can significantly reduce the cost of borrowing.
• You’ll have instant equity in your home and a lower debt-to-income ratio, which keeps your credit score healthier.

Or go low: Perks of a smaller down payment

•  You can own a home sooner rather than later.
• You may have more money left over for moving, repairs, and renovations.
• You can use more of your savings for other financial goals, like investing in the stock market or boosting your emergency fund (which you might need more often as a homeowner!).