See how much down payment you need and how it affects your monthly payment and total cost.
A larger down payment reduces your loan amount, which lowers your monthly payment and total interest paid over the life of the loan. Putting 20% or more down also eliminates the need for Private Mortgage Insurance (PMI), saving you an additional $100-300 per month on a typical home.
Conventional: 3-5% minimum. PMI required under 20%. Best rates with 20%+ down and 740+ credit score. FHA: 3.5% minimum with 580+ credit score. Mortgage insurance required for the life of the loan. VA: 0% down for eligible veterans and active military. No PMI. USDA: 0% down for rural areas. Income limits apply.
PMI typically costs 0.5-1% of the loan amount annually, or about $125-250/month on a $300,000 loan. Over the 7-10 years it takes most buyers to reach 20% equity, PMI can cost $10,000-25,000 total. Once you reach 20% equity (through payments or appreciation), you can request PMI removal on conventional loans. FHA loans require refinancing to remove mortgage insurance.
Not necessarily. If home prices are appreciating faster than you can save, waiting could mean paying more for the same house. Calculate the cost of PMI against the cost of renting longer. In many markets, buying with 10% down and paying PMI for a few years is cheaper than renting and waiting to save 20%, because you start building equity immediately.