The Case for Putting 20% Down on Your Next Home

If you’re planning to buy your next home soon, you’ve probably heard the old rule about saving 20% for your down payment.

The truth is, you usually don’t have to. Plenty of loan options let qualified buyers put down much less. But a lot of repeat buyers are choosing to put down 20% anyway.

So, why are they if they don’t have to?

Two reasons. They know a bigger down payment can offer certain financial benefits, and after years in their current house, they may have built enough equity to make it possible.

Why Repeat Homebuyers Often Put More Money Down

According to the National Association of REALTORS® (NAR), the median down payment for repeat buyers is 23% (see graph below):

That’s more than double the median down payment of 10% for first-time buyers. So, how do they manage it? Their equity.

When you’ve owned a house for a while, two things may help you build equity. One, you pay down your mortgage, and two, your home may appreciate in value over time. The difference between what you still owe on your mortgage and what your house is worth is your equity. And over time, those factors may help you build more equity.

When you sell your home, proceeds from the sale may be available to put toward your next home purchase. And NAR data shows that many repeat buyers use proceeds from the sale of their previous home toward their next down payment (see chart below):

First-time buyers don't have that springboard yet, and that's normal. But if you already own, you may be holding more buying power than you think because of it.

And if putting 20% down is finally possible, it may be worth at least considering. Here’s why. Let’s go over what you get in return.

4 Benefits of Putting 20% or More Down on a Home

As Redfin explains, putting more down can offer several potential benefits:

• A smaller monthly payment. The more you put down, the less you borrow at today’s rates. And if taking on a higher mortgage rate is one of the reasons you’re debating whether to move, that’s a win.
• Paying less interest. A smaller loan can also carry less interest across the life of your mortgage. If you put 20% down, you’ll only pay interest on the remaining 80%. Put 5% down and you’ll pay interest on the remaining 95%, which will cost you more over the lifetime of the loan.
• No private mortgage insurance (PMI). When you put down less than 20% on a conventional loan, private mortgage insurance is generally required. With at least 20% down, you generally won't need PMI, which can help reduce your monthly housing costs. 
• A potentially stronger offer. A larger down payment may make your offer more attractive to some sellers, although many factors can influence how a seller evaluates an offer.

Bottom Line

So, no. You don't need to put 20% down to buy your next home. But you may want to. If your equity puts it within reach, a larger down payment may help lower your borrowing costs and make your next move more manageable.

If you're thinking about selling your current home and buying your next home in North County San Diego, these resources can help you explore your options:

• Check Your Home Value – Get an estimate of what your current home may be worth.
• Search Homes for Sale – Explore homes currently available in North County San Diego.
• View the Market Snapshot – See the latest North County San Diego real estate market trends.
• Use the Mortgage Calculator – Estimate potential monthly payments based on different home prices and down payment amounts.
• Contact Us – Let's discuss your current home, your next move, and your real estate goals.

A trusted lender can help you determine what down payment and financing options make sense for your financial situation.

Frequently Asked Questions

Do you need a 20% down payment to buy a home?

No. A 20% down payment is not required for every home purchase. Qualified buyers may have access to loan programs that allow lower down payments. The amount that makes sense for you depends on your financial situation, loan program, and goals, so talk with a trusted lender about your options.

Can I use proceeds from selling my current home toward the down payment on my next home?

Potentially. Proceeds from the sale of your current home may be available to put toward the down payment on your next home. According to the National Association of REALTORS®, the median down payment for repeat buyers is 23%. If you're planning to sell and buy a home in North County San Diego, understanding your current home's potential value can help you start planning your next move.

Can putting 20% down help you avoid mortgage insurance?

Yes, depending on the loan program. With a conventional loan, putting at least 20% down generally means you won't need private mortgage insurance (PMI). Mortgage insurance requirements vary by loan program, so talk with a trusted lender about the requirements that may apply to your financing.

About Patricia Villanueva – North County San Diego Real Estate Agent

Patricia Villanueva is a real estate agent serving buyers and sellers throughout North County San Diego. Whether you're looking to buy a home, sell your current home, or make a move within the area, Patricia Villanueva provides local real estate guidance to help you understand your options and navigate each step of the process.

For home sellers, Patricia Villanueva can help you understand current home values, local housing market conditions, and the home-selling process. For homebuyers, Patricia Villanueva can help you search for homes for sale in North County San Diego, evaluate properties, prepare an offer, and navigate the home-buying process from your initial search through closing.

If you're looking for a North County San Diego real estate agent to help you buy or sell a home, contact Patricia Villanueva to discuss your real estate goals and next steps.

Disclaimer: This information is provided for general educational and informational purposes only and is not intended as financial, mortgage, tax, or legal advice. Real estate market conditions, home values, loan programs, interest rates, down payment requirements, and mortgage insurance requirements may vary and are subject to change. Individual circumstances and eligibility will vary. Consult with qualified mortgage, financial, tax, and legal professionals regarding your specific situation. Real estate information and statistics are based on sources believed to be reliable but are not guaranteed and may change over time.