How Much Should You Put Down on a House?

The traditional target is 20% down, but it is not a requirement. The right amount balances monthly cost, cash reserves and mortgage insurance.

Example

On a $350,000 home, 20% down is $70,000 and the loan is $280,000. At 6.5% over 30 years, principal and interest is about $1,770 per month. Putting less down raises the loan and usually adds mortgage insurance.

Benefits of a larger down payment

• Lower monthly payment and less total interest.
• Mortgage insurance may be avoided on conventional loans.
• More equity from day one.

Why not always maximize it?

• Draining savings leaves no cushion for repairs or job loss.
• Closing costs and moving expenses also need cash.
• Money tied up in a home is harder to access.