Should I put a bigger down payment on a house?

Hello PFC Fam, I’ve been missing posting on the community but I have a question for ya’ll.

I’ll use the PFC article as a reference.

We’re in the process of purchasing a home, current cost is $1.2M , it’s still not a done deal, but as for the loan (2.99% interest), we’re putting a 20% down payment, but in reality we could go up to 30% down payment (which was already allocated for) .

If we were to do the 30% down payment, at the end of the loan of 30 years, we would have “saved” ~ $31K in interest, this would translate to a return of ~2.5% over 30 years.

And the article referenced above got me wondering, if it would make more sense to just do the 20% and invest the remaining money and let it grow, which could most likely give me a return higher than 2.5%.

What do ya’ll think?

Mathematically, if you assume the rate of return of whatever you invest the money in will be more than 2.5%, you’re better off putting as little down as possible.

But the smaller down payment comes with the guaranteed cost of the extra loan interest, plus risk in the case that the market drops (i.e. imagine home prices drop by 20%, then you’re in a position where you would have to pay money to sell your house).

Either way I’d make sure your retirement investments are on pace before overpaying the mortgage.

Both are good options. Go with your gut. Would you rather try to maximize your net worth upside, or would you rather owe less money and live in a paid off home sooner? This article talks about the options too:


@Jeremy thank you !!! you are the best :slightly_smiling_face:

I have to agree with Jeremy! My wife and I refinanced last year to a 10yr at 2.35% and I actually regret doubling the mortgage payment over the last 16 payments. I’ve cut out about 5 years already on that 10yr note but my interest rate is so low and the market has done so well since last summer that I could have grown that excess payment a ton. If you can put down 5% and get a similar rate then that could be beneficial as well but I don’t know if that’s allowed with those jumbo loans or not.

I’m probably going to go back to my base payment from here on out and especially if the market pulls back and I’ll dump a bunch more in indexes/ETFs.

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