Is the 20% down payment rule dead? Realtors, millennials say yes - Business Insider

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Would-be homebuyers are finding it can take years to save a full 20% down payment, especially for anyone living near a big city, where real-estate prices are soaring

found that 76% of Americans who bought a home in December put down less than 20%.

"I had a client that bought a house at the beginning of 2018 and they didn't put any money down," Morrison said, explaining that the client used a state program in South Dakota allowing people to. "They had to have PMI on it, which cost them an extra $86 a month." In this buyer's scenario, the market helped the person reach 20% equity in just under two years. In a market that's growing, Morrison says, PMI can be gone rather quickly. When the home's value increases, the loan-to-value ratio decreases, making your loan eligible for PMI removal.

Putting 5% allowed him to start building equity sooner rather than later. "Where I live in the Black Hills, our appreciation is starting to jump up," he said. "We're starting to speed up to the point where if you don't have a down payment, your interest rate may be a quarter percent higher, but you're going to gain so much equity in that time.

In other parts of the US, especially in more expensive areas, it's becoming common to make a smaller down payment. "I think 10% is, if not the new standard, it's acceptable," said But to Watterson, the down payment isn't the main consideration when thinking about buying a home. "The most important thing is making sure that you feel confident that you can make your monthly mortgage payment, however much you put down," she says.

 

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You could always rent from me and pay my mortgage.

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