Home Purchase Loans - When Should I Have a Down Payment?

Get a lower interest rate


If you have 20 percent of the value of the home to put down as a down payment, you can find yourself having a lower interest rate and you won't have to pay private mortgage insurance premiums. Investing the 20 percent of the money in a down payment can be a great way to invest your money in your real estate and secures your money for you for the future.

Invest your money elsewhere


If you don't have the 20 percent to put down or if you have a lot more than 20 percent to put down as a down payment, you should first look for other ways to invest your money. You may be able to find a better place to put your money as an investment. Look at stocks, mutual funds, certificates of deposits—whichever investment forms work for you.

Putting more than 20 percent of the value of your home down as a down payment doesn't net you a whole lot unless you have a personal concern about having a sizable debt to your mortgage lender. The other good reason for investing your money in your property is if you belief putting your cash into the value of your home will prove to be a better investment than investing your money in other ways.

What if I have less than 20 percent?


Carefully consider what to do with your money. There are many ways to get a mortgage loan, even if you don't put any money down as a down payment.

The Bottom Line


The main reason to invest as much as you can in your home as a down payment even if you don't have the 20 percent down payment is because the more money you use as a down payment, the smaller your loan. And the smaller your loan, the less money you'll owe in interest payments each month.