Twenty Percent Downpayment Mythology

An old friend and past client sent me a message the other day telling me that she will be ready to buy a house as soon as she saves up 20% to use as a down payment. I have no idea where and how the 20% down payment payment myth got started.

Most first time home buyers need at least 3.5% for a down payment and lets not forget another 3% or so for closing costs.  There are down payment assistance programs out there too.  It is a good idea to talk to a lender and then come up with a plan for saving some money.

It isn’t easy to save up for a down payment on a house but saving enough for a 3% to 5% down payment is a lot easier than putting aside enough for a 20% down payment.

Do a little research, talk to a mortgage professional. If you don’t have a savings account open one today.

Bird’s eye view of Rossmor Condo building on Robert Street
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3 Replies to “Twenty Percent Downpayment Mythology”

  1. I thought the 20% down was what you needed to avoid paying for (useless to the buyer) mortgage insurance. Has this changed?

    1. Teresa Boardman says:

      No mortgage insurance has not gone away. Most home buyers put less than 10% down and pay mortgage insurance. Sure it is useless but for many it is easier than scraping up the cash.

  2. Cristy De La Cruz says:

    My financial advisor recommends 20% down because of the lack of mortgage insurance. But I think that puts a lot of people “out of the running” for home ownership since 20% is a lot to put down. My parents never did it.

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