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  • Writer's pictureMatt Schnitker

Benefits of 20% Downpayment

FHA, VA, Conventional, USDA - all types of loans available in today's market. Topic for this blog is leaning towards a Conventional downpayment of 20%.

1. Putting down 20% versus 3.5% for a FHA loan shows the financial institution that you are more financially stable and puts less risk on the institution - they will repay this stability by giving you a lower interest rate.

2. You will pay less for your home. Putting down 20% will leave your mortgage balance at 80%. Putting down 5% leaves you paying 95% of your balance. In the long run, it will save you money by not paying interest on 95% of your loan amount.

3. Your offer will stand above all others when you find a home you want. This is when we come into play. When my client makes an offer and they are financed by a conventional loan, this frees up a lot of red tape and "boxes to be checked" by FHA appraisals, inspections, etc. Makes the process faster and includes less steps.

4. You will NOT pay PMI. Private Mortgage Insurance "PMI" is a monthly insurance rate that financial institutions tack onto a mortgage payment to protect themselves if you fault on your payment. This can be roughly $100 extra per month. Positive side is that when you have paid off 20% of your home (see how this comes back into play), the PMI goes away.

Have more questions? WE HAVE ANSWERS

Matthew & Brooke Schnitker


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