Exploring Your Options: Putting Down Less Than 20% on a Home

Today, we are diving into a topic that has been buzzing in the real estate world lately – the idea of putting down less than 20% on a house. I know it might sound a bit unconventional, especially if you've always heard that the 20% mark is the gold standard. But hang tight, because by the end of this, you'll have a whole new perspective on this matter.

But First, I’m Kyle Granger a local Realtor with Keller Williams Vestavia here in the Hoover Alabama Area. If you would find value in all things real estate living in the Hoover Alabama Area be sure to subscribe and turn on notifications so you never miss a post.

The Changing Landscape of Home Buying

We all know the drill – 20% down payment, right? It's been the rule of thumb for ages. But guess what? Times are changing, my friends. The market dynamics and financial strategies that govern real estate are evolving faster than ever. And that's where the magic of putting down less comes into play.

Picture this: A young couple in Hoover, Alabama, just got married, dreamt of owning their own home, but also they are young and have dreams of traveling the world. So lets say they find a good starter home a condo for $250,000 and while they were engaged they saved $50,0000 to buy a home and make their first travel plans. With a traditional 20% down that would be all of their savings gone to this new home and no travel plans. By opting for a lower down payment, they managed to snag their dream home and still had enough left to embark on their dream vacation isn’t that the flexibility we all would like to have.

We will go over how this effects monthly payments in a second because I know that’s what you are going to ask but first lets also consider this example

Putting down less gives you the freedom to allocate your extra cash for other purposes. Let's say you're eyeing those home improvements that can transform your space into a paradise. Think a new kitchen, a spa-like bathroom, or a cozy outdoor deck. When you put down less upfront, you've got the funds to turn your new place into your dream home. I hear time and time again about families in Hoover who took this idea and ran with it. They bought a fixer-upper and turned it into a jaw-dropping masterpiece. Can you imagine the increase in the property's value? That's not just a home; that's an investment in their future!

Now, I get it. You might be wondering, does a smaller down payment mean higher monthly mortgage payments? Well, lets look at an example. You find a home for $300,000 at a 5% rate Option 1 you put 20% down which is $60k your payment will be about $1,288 now Option 2 you put 10% down or $30k and you payment is $1,449 only $161 more! That’s where you have the flexibility to decide save $161 a month or have $30,000 in the bank to travel or do upgrades to raise the value of your home.

So there you have it, folks. The world of real estate is evolving, and the 20% rule is no

longer the only way to go. By putting down less, you're giving yourself the freedom to invest, travel, or simply breathe easy with a financial cushion. But remember, there's no one-size-fits-all answer. It's all about what aligns with your long-term goals.

Until next time thanks for joining, and I will catch you in the next one!

Kyle Granger, Realtor

Keller Williams Vestavia

To see this in video form go HERE