Buying a home with 20% down

What 20% down actually gets you

1. No PMI. Instant $120–$220/mo savings on a $400K home depending on credit tier.

2. Best rate tier. Conventional loans typically price 5%, 10%, 15%, and 20%+ down separately. 20%+ down is the top tier — usually 0.125%–0.25% better than 5% down at the same FICO.

3. Lower total interest. On a $400K purchase, moving from 5% to 20% down saves $130K–$180K in total interest over 30 years.

4. Instant equity cushion. If home values drop 10%, you're still positive-equity at 20% down.

When 20% down is the smart move

Do put 20% down if: - You'd still have 6+ months of PITI in reserves after closing - You have no high-rate debt (>7%) outstanding - You've maxed retirement contributions this year - The alternative use of the cash (investments, cash-flow) doesn't clearly beat the rate + PMI savings

For a buyer with $150K in cash, buying a $400K home: - $80K down leaves $70K + emergency fund intact - Saves $180/mo - Locks in best rate tier

That's usually correct.

When NOT to put 20% down

Do not put 20% down if: - You'd deplete your emergency fund below 3 months living expenses - You'd borrow from a 401(k) to make it happen - You have any credit-card debt at 15%+ that could be paid off first - Your loan officer confirms your PMI at 5%–10% down would drop off within 5 years anyway (accelerated by extra payments)

A common mistake: buyers with $80K cash putting all of it down and having zero left for closing costs, moving expenses, or the water heater that fails in month 4.