March 30, 202320% Down Isn’t Always Needed

We’re going to say it! YOU DON’T NEED TO SAVE 20% FOR A DOWN PAYMENT ON A HOME.  

Let’s be honest. Saving 20%, especially in today’s economy, isn’t realistic. But purchasing a home can be a great financial decision that can reward you for years to come.  

Buying a home is an investment in your future. Let’s say your rent is $1,500 monthly. If you keep that same rent for the next 30 years, you will have paid $540,000. And that’s being optimistic, considering rent tends to increase exponentially by the year! You wouldn’t get any of that money back when you rent, except for the security deposit if you were the perfect tenant.  

However, when you buy a home, you have the opportunity to make your money back when you sell—or even make a profit if the market is good! So, is it worth putting less than 20% down to buy a house? We’re here to serve as your financial guru to help you decide.  

Let’s dive into the pros and cons of putting less than 20% down so you understand all your options.  

Pros of not putting 20% down 

  • There’s less money you have to save to buy a home, allowing you to become a homeowner sooner than later—and let’s face it, time is of the essence when it comes to house hunting.   
  • You can sock away more money for emergencies.  
  • In some cases, your mortgage payment might be cheaper than rent.  
  • You’ll invest money in your future with your mortgage payments.  

Cons of not putting 20% down:  

  • You’ll have less equity in your home when you first purchase. 
  • Your monthly payment will be higher.    
  • Unless you’re a part of PEFCU’s First-Time Home Buyer program, you must pay Private Mortgage Insurance (PMI) with your monthly payments. This will cause your monthly payment to be even higher.  

We’re Here to Help! 

Buying a home is both exciting and scary. It’s a significant financial investment, so make sure you’re making the right decisions along the way. If you have any questions about financing your new home or the home-buying process, we’re here to help.  

Please stop by any of our convenient branch locations or call 800-226-6673 x6515 to speak with a member of our mortgage team today.  

Each individual’s financial situation is unique and readers are encouraged to contact PEFCU when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents. 


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