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You are here: Home / Blog / Is A Big Down Payment Always A Good Idea?

Is A Big Down Payment Always A Good Idea?

January 6, 2021 by Sean Zalmanoff

People looking to buy a house often worry about the down payment with the infamous “20% take it or leave it” deal.

First, that 20% isn’t standard. According to the National Association of Realtors, the average downpayment for 2019 was 12%, and for first-time buyers, it went as low as 6%. But if you read up on the subject, you’ll see many benefits for both big and smaller down payments.

It’s important to find out which option is right for you. The Sean Z Team can help!


How Much Do You Need to Put Down on a House?

The figure depends on the type of mortgage you get. For instance, a conventional loan has down payments as low as 3.5%, while an FHA loan can even be lower, depending on the type of insurance you get.

Other types of loans, such as VA loans, don’t require any down payment at all, so you could finance your home with 100% of the money coming from the lender – though you’ll still have to cover some closing costs.

How Much Should You Put Down on a House?

So, should you pay the least amount possible, or the opposite, and put as much as you can? Well, the right amount to put in a down payment really depends on your financial situation.

If you have a lot of money saved and a good annual income, opting for a higher down payment isn’t that bad. You get started with more home equity, and your lifestyle isn’t all that affected by this big investment. The same goes if you have money saved, but your annual salary isn’t all the great. A bigger down payment reduces your monthly payment size, which can make it easier to navigate through your mortgage.

But if you don’t have anything saved up, it’s best to opt for a low down payment, even if you have a great annual salary. Mortgages are long-term deals, and if you have no financial safety net to fall back on, you can risk not being able to cover the monthly payments if you lose your job, for instance.

So take a closer look at your financial situation, and opt for the type of down payment that is comfortable to you and won’t create any money problems down the line. If you’re not sure how much to put down, consider speaking to a personal finance advisor who can help you crunch the numbers.

We Can Help with That!

The SeanZ Team completely understands that finding the right loan and downpayment can be difficult, especially for first-time buyers. But our team is here to guide you through the process and provide expert support to make sure you make the best decision for yourself and your family.

Call The Sean Z Team Today!

Home of the TBD $5K Guarantee Approval

(314) 361-9979

Filed Under: Blog Tagged With: Down Payment

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Sean Zalmanoff: Better Rate Mortgage

1118 Hampton Ave
St. Louis, MO 63139
(314) 361-9979

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