Do You Still Need A 20% Down Payment?

Experts Discuss How Much You Really Need

One of the first questions potential homeowners ask is: “How much do I need for a down payment?” We’ve helped many clients make home buying a reality. Unfortunately, many waited much longer than they needed to, believing they couldn’t enter the market without a 20% down payment. We dive into the issue below! 

Do I Need 20%? Is That the Best Strategy?

The right agent will help you determine the best strategy and guide you through the entire process. They will also connect you with an expert lender to be part of your home buying team. “The rule of having a 20% down payment is an outdated myth,” says our trusted local lender Kathleen Kerins. “Just a few years ago, the required monthly mortgage insurance buyers needed if they put less than 20% down was three times higher than it is now. So, many of the norms in real estate financing have changed. Now, I often encourage my clients to be creative. Use the money they would use for a down payment in a way that will give them a competitive edge in the market.”

Some homebuyers believe they will be more competitive with a larger down payment, while others are proposing a lower down payment, allowing them to escalate their offer. “It’s not just checking boxes for a client,” Kathleen explains. “It’s about identifying the best plan so our clients win.”

Different Priorities, Different Down Payments

While first-time home buyers may benefit from programs allowing as low as a 2% down payment or no down payment at all, it will obviously lead to a higher monthly mortgage. Donna Kerr Group agent Jim Holland concurs that it’s a very individualized strategy, one that can be thought through as a team. As Jim points out, some clients have enough for a large down payment but, with interest rates so low, decide to make a smaller down payment and invest the rest. 

When Is the “Right” Time to Buy?

This question is frequently on the minds of potential buyers as well. While home prices are strong, mortgage rates are still spectacularly low which is why so many clients are finding it a great time to buy. Historically, home prices have continued to rise in the DC metro area. So, while you may be waiting for the market to “die down,” the reality is the market is very much alive.

The Takeaway

While the magic number for your down payment may be higher or lower than the dated tradition of 20%, speaking with an experienced agent about your financial situation and your ultimate goals will allow you to construct the best plan of action. 

Want to learn more? Our team of agents is ready to assist. Contact us today so we can guide you through the journey.