You May Not Need 20% Down, But Your Equity Could Make It Possible

If you’re thinking about buying your next home, you’ve probably heard the old rule: you need 20% down.

The good news? You don’t.

There are plenty of loan programs that allow qualified buyers to purchase a home with a much smaller down payment. But there’s an interesting trend happening with repeat buyers. Many are choosing to put 20% or more down when they move into their next home.

So, why put more money down if you don’t have to?

For many homeowners, it comes down to one word: equity.

After years of owning their current home, they may have built up significant equity. That equity can become an important part of their next move and, in some cases, make a larger down payment possible.

Repeat Buyers Are Putting More Down

According to the National Association of REALTORS®, the typical repeat buyer puts 23% down when purchasing their next home.

That’s more than double the typical 10% down payment for first-time buyers.

The difference often comes from the equity homeowners have built over time.

When you own a home, two things can happen as the years go by. You’re paying down your mortgage, and your home may increase in value. The difference between what your home is worth and what you still owe on your mortgage is your equity.

And for many homeowners, that equity can become a powerful tool when it’s time to move.

When you sell your current home, the equity you’ve built can help fund the down payment on your next one. First-time buyers don’t have that same advantage yet, and that’s completely normal. But if you already own a home, you may have more buying power than you realize.

Why Consider Putting 20% Down?

If your equity makes a larger down payment possible, it’s worth looking at the numbers and understanding what that could mean for you.

Here are a few potential benefits:

1. A lower monthly payment

The more you put down, the less you need to borrow. That can help lower your monthly mortgage payment, which can be especially helpful when mortgage rates are higher than they were a few years ago.

2. Less interest over time

Borrowing less also means paying interest on a smaller loan amount. Over the life of a mortgage, that difference can really add up.

3. You may avoid PMI

With a conventional loan, putting less than 20% down typically means paying private mortgage insurance, or PMI. Putting 20% down can eliminate that additional monthly cost.

4. A stronger offer

A larger down payment can also make your offer more appealing. It can signal to the seller that your financing is strong and may give them additional confidence in the transaction.

Your Equity Could Be the Key to Your Next Move

One of the things I always encourage homeowners to do is look at the bigger picture.

You may be focused on what you still owe on your current mortgage, but what matters just as much is what your home could be worth today. The difference between those two numbers could have a meaningful impact on what you’re able to do next.

And remember, 20% down is not a requirement for buying a home. It’s simply one option.

The right choice depends on your goals, your finances, the type of loan you qualify for, and how you want your monthly payment to look.

A trusted lender can help you understand the financing side and run the numbers for different down payment options. As your local real estate agent, I can help you take a closer look at what your current home may be worth and how your equity could fit into your next move.

If you’re wondering what your options might look like, let’s talk. Sometimes the home you’re in today can be the stepping stone to what comes next.