Hot take: I was wrong about needing a 20% down payment

For a whole year, I saved like crazy, thinking I couldn't buy anything without that full 20%. My realtor in Charlotte finally sat me down and showed me the numbers for an FHA loan at 3.5% down. On a $300,000 house, that's $10,500 versus $60,000. The PMI cost was way less than I thought, and I could have been in a home months ago. I was just stuck on what everyone online says is the 'right' way. Has anyone else bought with a low down payment and been okay with it?

3 comments

3 Comments

the_lucas4mo ago

Low down payments can leave you underwater fast if the market dips. That PMI is just throwing money away every month.

margaretj404mo ago

Totally agree with @the_lucas. That PMI is a killer fee for just having a small down payment. It feels like renting your own mortgage.

anderson.jason2mo ago

Margaretj40 I get what you're saying about PMI feeling like wasted money, but running the numbers on my own place changed my mind. My payment with PMI is only like $80 more a month compared to what it would be with 20% down, and I got into the house 3 years sooner. Over those 3 years rent would have gone up at least twice and I'd have nothing to show for it. Plus once I hit 20% equity the PMI drops off automatically, so it's not forever.