Why we put a 50% down payment on our home

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Mortgage borrowers typically put 20% on a house. Here’s why we went higher.

When I met my husband I was living in a small apartment and he was living in a modest three bedroom house that he had purchased as an investment in his very early twenties. I moved in when we got engaged. And after a few years of living together, we decided to expand our existing neighborhood. We knew we wanted to have kids, and the area was convenient to work and had a school district we wanted to stay in.

The problem? There was a limited supply of big houses on the market at the time, and none really suited our taste. So when we had the opportunity to purchase a new build home – one that would be custom built for us – we jumped on it.

Of course, this new house cost a lot more money than the one we were selling. We knew the property tax bill would also be much higher. And so we decided to do what we could to keep our housing payments manageable – and that meant putting 50% of the price of our house down as a down payment.

Why a 50% deposit made sense to us

My husband bought our old house for very little money, and he had locked in a low mortgage rate. As such, we were used to a fairly modest mortgage payment and didn’t want to triple it.

Many lenders want a standard down payment of 20%, although they may accept less. And, there are specific loan products designed for people who can’t put 20% down. New construction is different. You often need to put down at least 20% because there are additional risks for the lender with a home built to your specifications.

Our mortgage lender wanted a 20% down payment, especially since we were buying new construction. But we wanted to do better.

We knew that by putting down a 50% down payment on our new home, we would be giving up money that we could use for other things: investments, retirement savings, etc. But we didn’t want to weigh too much on our monthly budget either. We thought our mortgage payment would be significantly lower if we put down 50% of the purchase price of our home, which would make it easier to manage. In our case, depending on the interest rate we qualified for and the length of our loan, we had to pay $800 less per month by making this larger down payment.

Plus, we knew that the less we took out the mortgage, the less money we would spend on interest over the life of the loan. And that alone was motivation to pump more money into a down payment.

how we did it

By the time we sold our first house, its value had almost doubled since my husband had first purchased it. After paying our realtor commission, we had a nice amount of money left over.

In fact, that’s part of the reason we decided to make such a large down payment – we had the cash readily available and didn’t have to scramble like mad to save. Although we have actually reduced our expenses during the construction of our new house in case different expenses arise.

Nowadays, our mortgage is still quite manageable despite the fact that we recently refinanced a 30 year loan to a 15 year loan. By doing so, we increased our monthly payment by approximately $300. But because we started with an affordable payment, that higher amount isn’t too bad. Plus, it puts us on the right track to paying off our house sooner and spending even less money on interest.

Of course, most homebuyers won’t be able to put down a 50% down payment, especially first-time buyers who don’t have the proceeds from the sale of another home to use to their advantage.

But I’m grateful that we were able to deposit the amount we did. Over the years, we have seen our expenses increase (largely due to having children) and our incomes fluctuate (especially mine, as I am self-employed). Having a more reasonable mortgage payment has helped us avoid a world of financial stress. And while we could have easily gotten away with a 20% down payment on our home, we don’t regret paying half of it at closing.

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About Matthew R. Dailey

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