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Deciding to purchase a home can be very exciting but also a little intimidating. It may feel overwhelming to try to find your dream home once you begin your journey. One of the many questions buyers ask themselves is, how much do I need for a down payment on a home? The general rule of thumb is 20% of the purchase price. 

If that number sounds a bit daunting to you, it’s okay. Fortunately there are many loan options that require less of a down payment depending on your specific needs and circumstances. For example, first time home buyers can take advantage of the FHA loan which requires a down payment of as little as 3.5% and veterans can take advantage of VA loans which don’t require a down payment at all. 

While this is a great option for buyers who may be in a rush or need assistance financially, there are many benefits to submitting a larger down payment for those who can. 



Typically, lenders will require the borrower to obtain Private Mortgage Insurance (PMI). This requirement is a fee automatically added to your monthly mortgage payments until the paid amount is equal to 20% of the purchase price. In other words, if you submitted a 10% down payment on a home, you will have the PMI fee until you’ve paid the other 10% on top of your monthly mortgage. By initially putting down 20%, you’ve become less of a risk to the lender and therefore will not be required to have PMI. Also, a 20% down payment looks strong on an offer to the seller. It can show that you are very interested in the home and financially capable of purchasing it. This is extremely beneficial in situations where you may be competing with other cash offers.



A higher down payment tells the lender that you are less of a credit risk. The lender has to be confident that you will repay the loan. It is important that the lender is confident that you will repay the loan. The more confidence they have in you, the more willing they will be to give you a lower interest rate.


Submitting a higher deposit help prove to the seller that you can purchase the home without the deal falling through. This also bodes well with the lender. You can avoid paying extra every month with a deposit of at least 20%. The higher the deposit – the less you have to borrow – the lower the interest rate.



The housing market is currently experiencing an unprecedented inventory low and a surplus of buyers. This has caused a surge in competition for houses. It is important that finance buyers understand what they can do to stand out from cash buyers. As discussed here, a great way to do that is to submit a down payment of at least 20%. This shows the seller that you are serious and financially capable. This proves to the lender that you are of less risk to them. And it can save you money in the long run.


If you are interested to learn more about other ways to make your offer stronger call us, The Connie Cabral Group, today at 305.776.0899 or send us an email to Our team of certified luxury property specialists go above and beyond for our clients – from first contact to after closing.