Let’s bust a myth that’s holding way too many people back from buying a home.
You’ve probably heard it: “You need 20% down to buy a house.”
And while it sounds responsible and smart on the surface, it’s not always the winning strategy people think it is. In fact, waiting until you have 20% saved up can cost you a whole lot more than just time—it could mean missing out on hundreds of thousands of dollars in equity and home value growth.
The Truth About the 20% Down Rule
The idea of putting 20% down comes from the desire to avoid private mortgage insurance (PMI), a monthly fee tacked onto your mortgage if you put down less than 20%. And sure—no one loves the idea of paying PMI. It might feel like throwing away money. But what if that small monthly fee could actually save you big in the long run?
Example: Buying Today vs. Waiting 6 Years
Let’s say you’re eyeing a $500,000 home, but you only have 5% saved up. That’s $25,000 down. Add PMI of about $193/month. That’s manageable, right?
But maybe you’ve been told to wait—save more, avoid PMI, and come in strong with that full 20% down.
So you hit pause and keep saving…
Fast forward 6 years. You finally have $100,000 saved.
But wait—that home? It’s no longer $500,000. It’s $609,000.
Now, even with your $100K, you’re only putting down 16%—and you still owe PMI.
Even worse? You’ve just missed out on six years of equity, appreciation, and growth. That’s money future-you could’ve had in your pocket.
Why Time in the Market > Timing the Market
The longer you wait, the more likely prices will rise—especially here where the market continues to appreciate year after year. That $193/month in mortgage insurance? It might feel like a hit now, but it’s far less painful than watching prices rise $100K+ while you’re sitting on the sidelines trying to “save enough.”
Here’s the real cost of waiting:
- Lost equity
- Higher purchase price later
- Potentially higher interest rates
- More competition as prices rise
Meanwhile, homeowners who got in earlier are building wealth every month simply by living in their homes.
The Smarter Strategy? Get In When You’re Ready
The truth is, most first-time buyers don’t put down 20%. Many put 5%, 3%, or even as little as 0% down (hello, VA and USDA loans!). And that’s okay.
It’s not about putting down the perfect amount.It’s about buying when you’re ready—financially, emotionally, and realistically. If you’ve got enough saved for a small down payment, stable income, and a plan, you’re in a good spot to buy. From there, let appreciation do its thing.
Bottom Line: Stop Letting PMI Be the Dealbreaker
Private mortgage insurance is a short-term cost, but it helps you make a long-term move.Yes, it adds a bit to your monthly payment. But in exchange, you’re building equity, locking in your housing cost, and getting ahead of future price jumps. And once your home value increases—or you pay down enough of your loan—you can request to remove PMI. It’s not forever.
So, What Should You Do?
- Stop waiting for the “perfect” 20% down
- Start where you are
- Explore low-down-payment loan options
- Understand how appreciation builds wealth over time
If you’re ready to make a move, or even just curious what buying now might look like—let’s chat. Because that house you’re dreaming about? It might be more within reach than you think.
Contact us today!!!
Phone: 916-847-3090
1350 Old Bayshore Hwy Ste. 520
Burlingame, CA 94010
margeate@workhomeloans.com
DRE ID # 01769353
NMLS ID # 394275
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