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You’ve most likely heard the rule: Save for a 20-percent down payment before you buy a home.

The logic behind saving 20 percent is solid, as it shows that you have the financial discipline and stability to save for a long-term goal. It also helps you get favorable rates from lenders.

The downsides of a small down payment are pretty well known. You’ll have to pay Private Mortgage Insurance for years, and the lower your down payment, the more you’ll pay. You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down payment, which will eliminate some homes from your search.

THE UPSIDE

The national average for home appreciation is about five percent. The appreciation is independent from your home payment, so whether you put down 20 percent or three percent, the increase in equity is the same. If you’re looking at your home as an investment, putting down a smaller amount can lead to a higher return on investment, while also leaving more of your savings free for home repairs, upgrades, or other investment opportunities.

THE HAPPY MEDIUM

Of course, your home payment options aren’t binary. Most borrowers can find some common ground between the security of a traditional 20 percent and an investment-focused, small down payment.

I can provide some answers as you explore your financing options or speak to Dean Wong, my Lender I have worked with my entire career.

Contact Thomas Ray for all your real estate needs!

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Search For Homes:

30420 Morning View Dr Malibu, CA 90265

$8,500,000 - 6Br/7Ba -  for Sale in Malibu
New
00787980
Price $8,500,000
Beds 6
Baths 7
Living Area SqFt 6,208
Status Active
MLS # 21-787938
Property Type Single Family Residence
 

1222 Princeton St Apt 7 Santa Monica, CA 90404

$885,000 - 2Br/2Ba -  for Sale in Santa Monica
New
Price $885,000
Beds 2
Baths 2
Living Area SqFt 933
Status Active
MLS # 21-784248
Property Type Condominium
 
 

1021 Hill St Apt 3 Santa Monica, CA 90405

$749,000 - 2Br/2Ba -  for Sale in Santa Monica
New
Price $749,000
Beds 2
Baths 2
Living Area SqFt 921
Status Active
MLS # 21-787946
Property Type Condominium
 
 

18109 Kingsport Dr Malibu, CA 90265

$2,899,000 - 4Br/3Ba -  for Sale in Malibu
Open House
New
Price $2,899,000
Beds 4
Baths 3
Living Area SqFt 2,620
Status Active
MLS # 21-787954
Property Type Single Family Residence
 
 

201 Ocean Ave Apt 1906b Santa Monica, CA 90402

$4,000,000 - 2Br/3Ba -  for Sale in Santa Monica
New
Price $4,000,000
Beds 2
Baths 3
Living Area SqFt 1,744
Status Active
MLS # 21-779594
Property Type Condominium
 
 

401 Ocean Ave Apt 2 Santa Monica, CA 90402

$8,995,000 - 4Br/6Ba -  for Sale in Santa Monica
New
01864250
Price $8,995,000
Beds 4
Baths 6
Living Area SqFt 3,915
Status Active
MLS # 21-786760
Property Type Townhouse
 
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