Small Down Payments Are Best Sometimes

According to the National Association of REALTORS®, more than 40% of first-time home buyers make small down payments on their homes.

Some make no down payment at all.

When you make a small down payment, it doesn’t mean you can’t afford to buy a house. It means you prefer to keep your money for things besides a down payment.

Here are three times when it makes sense to make a smaller down payment on a home.

One, when making a large down payment depletes your cash savings.

Having a cash stash matters. Your life moves in unexpected directions. Cash is valuable when you fall ill suddenly, or need emergency dental work, or lose a portion of your household income.

Two, when you want to buy a house and don’t have much cash saved up.

The gauge for “affording a home" isn’t how much cash you’ve saved up. It's whether you can make your monthly payment without feeling stressed about it.

And, three: when you feel like it! It doesn't matter what your friends say. It doesn't matter what your family says. Make a down payment decision that works best for you.

The size of your down payment is your choice. Let us know your question in the chat and we're happy to help.

Dan Green

Dan Green

Dan Green is a former mortgage loan officer and an industry expert. He's appeared on NPR and CNBC, and in The Wall Street Journal, Bloomberg, and dozens of local newspapers. Dan has helped millions of first-time home buyers get educated on mortgages, real estate, and personal finance. Have mortgage questions? Ask Dan in the chat.

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