Do I Really Need a 20-Percent Down Payment?

Many potential homebuyers are under the false impression that a 20-percent down payment is required to buy a house. However, the average first-time homebuyer puts around six percent down, and some loans require as little as zero to three percent down. 

The right down payment for you depends on your overall financial situation, savings and home-buying goals. Read on to learn more about down payments and buying a home. 

Pros & Cons of 20-Percent Down Payments


  • You can afford a more expensive house with the same monthly payments. 
  • You avoid paying private mortgage insurance, or PMI, each month (PMI is a type of insurance that conventional mortgage lenders require when homebuyers put down less than 20 percent – the cost varies by lender). 
  • You may qualify for lower mortgage rates. 


  • Saving for a large down payment can delay the purchase of a home, which increases the amount of time you have to pay rent and aren’t building equity. You also run the risk of being priced out of certain markets. 
  • If you run into an emergency, you can’t access that money unless you sell your home or take out a loan against it. 
  • The money you spend on a large down payment can interfere with other long-term/retirement investments. 
  • Many benefits of large down payments are seen in the long-term rather than the short-term. These benefits might not matter much, if you don’t plan on living in the house for the foreseeable future. 

For more information on buying a house in Des Moines or the surrounding area, contact the Knickerbocker Real Estate Team today!