The Top 3 Benefits of a 20% Down Payment when Buying a Home

Reblogger Will Nesbitt
Real Estate Agent with Nesbitt Realty at Condo Alexandria 0225-089134

The top three benefits of a 20% down payment when buying a home is an interesting article that offers insight into the home buying process. For more specific information, continue reading below.

Original content by David Krichmar NMLS #293883


Many of us have heard when buying a home that it is best to put down 20% of the home’s price.  While this is not possible for everyone, if you can do it there are huge benefits.  Here are the top 3 benefits to putting down a 20% down payment when buying a home:



1. The Evil Mortgage Insurance- Some of us have heard that Mortgage Insurance is EVIL.  It’s not really evil as it is something that is required when you are putting down less than a 20% down payment when getting a conventional loan.  Mortgage insurance is insurance for the lender incase you are foreclosed on, it helps them recoup some of the money they lose.  But with a 20% down payment you can avoid mortgage insurance, saving you money each month on your mortgage payment.  On a 200,000 loan amount and a 5% down payment(740+ credit score) the mortgage insurance alone could be $98 a month.


2. Escrow Account- An Escrow Account is an account that your mortgage lender holds to collect the taxes and insurance for the home.  At the end of the year they pay the tax and insurance bill for you.  In your monthly mortgage payment is 1/12th of your yearly tax and insurance bill.  It really depends on your preference if you want an escrow account but without a 20% down payment you would be required to have an escrow account.


3. Lower Mortgage Payment- Obviously a 20% down payment can help you get a lower payment based on #1.  But keep in mind with a 20% down payment you are borrowing less money vs a higher loan amount, so your payment will be lower.  Yep, this seems obvious but it is good to keep in mind.



A 20% down payment is not possible for everyone, but if you can afford it there are 3 major benefits to it. 






David Krichmar 

Mortgage Banker NMLS#293883 NMLS

Core Lending dba of Weststar Mortgage Corporation

Branch NMLS#868672  WMC NMLS#93243

Has Written For Realtor Magazine, Houston Agent Magazine, Scotsman Mortgage Guide


Named 5 Star Mortgage Professional 2013


Named Top Mortgage Professional 2010,2011



For More Mortgage Info Follow me at  Dave's Blog is Voted the #1 Mortgage Professional in Houston, Texas.  2011

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DEANNA EARLY - - ( NMLS # 268590 )
American National Bank & Trust - Smith Mountain Lake, VA
Highest Ranked Mortgage Loan Originator Virginia

These are excellent reasons for buyers to consider a larger down payment.   Thanks for sharing them, Will. 

Nov 13, 2013 03:06 AM #1
David Krichmar - Legend Lending - Sugar Land, TX

Thanks Will for reposting this article. 

Nov 14, 2013 11:07 PM #3
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