Should You Put Down a Large Down Payment?
by Ron Douglas
that buying a home is one of the biggest investments you’ll
ever make. However, most people don’t evaluate it as an
experienced investor would. Any successful real estate
investor knows two things:
created by leveraging other people’s money as much as
Risk in real
estate can be mitigated if you have a long time horizon and
adequate cash reserves.
principles can also be applied to buying a house to live in.
I’m known online
for helping home buyers find special programs that they
qualify for which provide grants and other funding. In other
words, I show them how to buy with no money down.
I often get asked
the question: “wouldn’t it be better to put a large down
payment on my house so that I can reduce my monthly payments?”
My response is
always: “Yes, unless you can afford not to…”
Let’s look at
your options in an example. The following scenarios both
assume a 30 year fixed interest rate of 6% and a selling price
- Interest rate: 6% (30 yr fixed) - Purchase Price:
You put down 10% - Total Mortgage: $180,000 - Down Payment:
$20,000 - Monthly Payment: $1,079
You put down 0% - Total Mortgage: $200,000 - Down Payment: $0
- Monthly Payment: $1,199
As you can see in
this example, by leveraging 100% of the bank’s money, your
monthly mortgage payment is only $120 more per month.
Plus, you can
keep your $20,000 (that you would have paid for the down
payment) in the bank.
This means if you
lose your job or get into financial trouble, you can use that
money to pay your mortgage for up to 16 months ($20,000 /
$1,199 = 16.86).
I don’t know
about you, but Scenario 2 sounds like a much better deal to
In both scenarios
you have to consider taxes, insurance, and maintenance
expense. Also consider that some of theses expenses will be
offset by the mortgage interest and property taxes being tax
To be clear,
don’t go out and buy a house unless you can afford the monthly
payments. But, if you can handle the extra $120 a month in
this example, it may make more sense to keep your cash
Zero down was the
way to go for me. However, you can’t just walk into a bank and
get this type of deal. It’s only available through the special
financing programs listed in the instructional guide “Free
Money for First Time Homebuyers.”
secrets to buying your dream home with no down payment and no
closing costs. I’ll show you step by step how I did it -
Click Here to order now.
Ron Douglas is a Licensed Real Estate Salesperson,
real estate investor, and the author of "Free Money for First
Time Homebuyers." Ron specializes in helping homebuyers
find grants and gift funding from federal, local, and
non-profit organizations. Subscribe to his free Real
Estate Investing Newsletter and get a free report "7 Step to
Getting Free Money." Go to: