As we say time and time again, a house is likely the most expensive thing you will ever purchase. Very few things cost hundreds of thousands of dollars! When looking into purchasing a home, figuring out how much to spend on the down payment is often one of the biggest concerns that homebuyers have.

While conventional wisdom might recommend one thing, there are actually pros and cons to putting down much more or much less money, depending on the situation. This post will help you to figure out how much of a down payment you should make on your home.

Note that we are not financial experts, and the points in this post are just general advice. We are not liable for any financial decisions that you make, and we recommend speaking to a certified financial expert before buying a home.


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How Much Is the Average Down Payment?

Generally speaking, the average down payment is 20%. This is the amount that the majority of homeowners choose to put down on their house. While your down payment doesn’t need to be exactly 20%, it is definitely the industry standard and is used as the benchmark.

Just because it is the norm doesn’t mean that it is the only option! There are many loan options that allow for down payments that are significantly less or more than 20%.


Reasons to Put Down 20% on a House

One of the main reasons to put 20% down on a house is to avoid private mortgage insurance. In most cases, if you put less than 20% down on a home, you will need to pay private mortgage insurance each month in addition to your monthly payment. This can cost anywhere from fifty to several hundred dollars each month, and continues until you reach 20% equity in your house.

Another reason to put down 20% is to get the best interest rate possible. Many mortgage lenders provide favorable interest rates to buyers who can put down a full 20%. The best possible rate is usually offered to buyers who put down 20% or more, which can mean a difference of tens of thousands of dollars by the time the loan is paid off.


Down Payments Smaller than 20%

Not everyone has access to the cash required to make a 20% down payment. After all, houses are very expensive, and getting your hands on $50,000 to $100,000 of cash can be very difficult! Mortgage lenders understand this, and there are many pathways to put down less than 20%.


Can You Put Down Less than 20% on a House?

In almost all cases, you can absolutely put down less than 20% on a house. 10% and 15% down payments are very common, and certain types of loans allow for down payments as low as 3.5%.

While lower down payment are possible, they may not be available to everyone. When you put less money down on a house, the eligibility criteria tend to be stricter. If you have a good credit history and a relatively low debt to income ratio, you may be able to find a lender willing to let you make a small down payment.


Reasons to Put Down Less than 20% on a House

The main reason to put down less than 20% on a house is because you don’t have 20%! Stretching your budget too far is never a good idea, and even if you have access to the full 20%, it might be wise to keep some of that in your savings. Many buyers underestimate closing costs, and spreading your finances too thin can cause major problems down the line.

Another popular reason to put down less than 10% is if you don’t see yourself living in the home for the long term. Making a larger down payment cuts down the total amount of interest you’d pay over the course of the loan, but this is less impactful if you only plan to live in the home a few years. If you plan on moving out after a few years, it might be wise to consider putting just 10% down and using the savings to offset the higher monthly payment you’ll be left with.


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Down Payments Larger than 20%

While most buyers are happy to put down 20% or less, some buyers with excess cash consider putting down more. This is much less common than putting down 20% or less, but it does happen and can lead to several potential benefits.


Can You Put Down More than 20% on a House?

You can absolutely put down more than 20% on a house. After all, you are buying the house! Just like you can add extra to your monthly payment, you can add extra to your down payment.

There is theoretically no limit to how much of a down payment you can make. Some buyers even buy their houses in cash, which is essentially a 100% down payment. Whatever you choose to do, it is just important that you do not stretch yourself too far financially.


Reasons to Put Down More than 20% on a House

There are two major reasons to put down more than 20% on a house. The first of these is to access lower monthly payments.

Your monthly payment is calculated based on how much of a loan you need, not how much the house costs. By putting more money down on the house, you reduce the total amount of money you need as a loan. Naturally, this decreases your monthly payment.

Your payment can decrease by the tens, hundreds, or even thousands depending on the house price and down payment amount. These savings can make your monthly payment much more affordable, which is especially favorable in the long run.

The second reason to put down more than 20% on a house is to reduce the total amount of interest paid throughout the life of the loan. While your interest rate probably won’t get much better than if you only put down 20%, the total interest paid on the loan will decrease. By putting more money down and reducing the size of the loan, you can save tens of thousands of dollars of interest throughout the course of the loan.


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So, What Is the Best Amount to Put Down on a House?

The best amount to put down on a house depends entirely on the situation. For some people, the best option is to buy a house in cash, essentially utilizing a 100% down payment. For others, putting down just 5% might be the best option.

Generally speaking, the best idea is to speak to a financial professional who can assess your individual situation and help you to make the most informed decision possible with regards to your own situation. While the industry standard is 20%, there are countless reasons that putting more or less down can be wise, and the right answer varies for everyone.


If you visit Myrtle Beach or any other place in South Carolina and fall in love, we’re here to help. We at The Boyd Team are committed to helping you find the right property for your needs and dreams. Any question that you have about moving to the area and finding your dream home by the beach is our pleasure to answer. Feel free to send us an email at or text or call us at (843) 222-8566, and we will get back to you as soon as we can. Being true natives of the Grand Strand and Horry County and with over 25 years of experience in the local real estate market, whether buying or selling, we can help you make your dreams a reality.  


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