The Case for Putting 20% Down on Your Next Home

You don't have to put 20% down to buy a home. There are plenty of loan options that allow qualified buyers to put down considerably less. But a lot of repeat buyers are choosing to go bigger anyway — and there are good reasons why.

Two things tend to make it possible and worthwhile: the equity they've built in their current home, and the real financial benefits that come with a larger down payment.

Repeat Buyers Put More Down Than You Might Expect

According to the National Association of Realtors, the typical repeat buyer puts down 23% when purchasing a home — more than double the 10% a first-time buyer typically puts down.

How do they get there? Equity. When you've owned a home for several years, two things happen: you pay down your mortgage balance, and your home's value tends to rise. The gap between what you owe and what your home is worth is equity — and for many homeowners in the DFW market, that number has grown significantly over the past several years.

When you sell, that equity becomes cash. And NAR data shows most repeat buyers put it directly toward their next down payment.

What You Get in Return

If putting 20% down is within reach, here's what it actually gets you.

A lower monthly payment. The more you put down, the less you borrow — and with today's rates, borrowing less has a real impact on what you pay each month. A smaller loan also means less interest paid over the life of the mortgage. Put 5% down and you're paying interest on 95% of the purchase price. Put 20% down and that number drops to 80%.

No private mortgage insurance. On a conventional loan, putting down less than 20% typically triggers a monthly PMI fee. At 20%, that fee goes away — which saves you money every single month.

A stronger offer. Sellers tend to view larger down payments as a sign of financial stability. In a competitive situation, that can make a difference.

The Bottom Line

You don't need 20% down to buy your next home. But if your equity makes it possible, it's worth running the numbers. A lower monthly payment, less interest over time, no PMI, and a more competitive offer position — those add up.

Reach out to the team at Mills Real Estate Group to talk through what your current home's equity could look like, and what that might mean for your next move.