Why a 3% Down Payment on a House Beats 20% Down (Even in a Crash)

Everyone says you need at least a twenty-percent down payment on a house. While typical, this advice is untrue and could also cost you massive amounts of equity and kill your dreams of buying a home. What do we mean? Licensed mortgage advisor Hannah Escher is breaking down the math to prove that waiting to save twenty percent down could be a colossal mistake, EVEN if you buy before a housing market crash.
If you didn’t know already, you can put just three percent down to get into your first house. But with a lower down payment comes higher monthly payments, mortgage insurance, and more debt. Is it worth it to get into your first home faster? Hannah did that math for you, comparing buying a home in 2013 with three percent down to buying a home in 2023 with twenty percent down.
“But that was right after the 2008 housing crash!” We hear you. That’s why Hannah ALSO did the math for buying a home with three percent down in 2002 AND buying a home with twenty percent down in 2012 when home prices were still stunted. The math might shock you and prove that a bigger monthly mortgage payment might actually be a smarter financial move!
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How to Buy Real Estate with Just 3% Down! (Conventional Loans):
• How to Buy Real Estate...
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Check Out Hannah’s Other Videos on Funding Your Deals:
• Funding Your Deal
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How Much Is a Down Payment on a House?
www.biggerpockets.com/blog/do...
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Rookie Reply: Do You Have to Put 20% Down on an Investment Property?
www.biggerpockets.com/blog/ro...
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Stop! Before Making a Large Down Payment, Read This:
www.biggerpockets.com/blog/re...
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Connect with Hannah on BiggerPockets:
BiggerPockets: www.biggerpockets.com/users/h...
00:00 3% vs. 20% Down Payment on a House
01:53 2013 - 2023 Example
03:27 Home Price and Monthly Payment
06:01 Equity Growth
06:57 2002 - 2012 Example
07:24 Home Price and Monthly Payment
08:44 Equity Growth
09:12 Refinancing to a Lower Rate
10:14 Buy Now or Wait?
12:26 Connect with Hannah!

[@meritholdingllc123]

What you didn't share is HOW one gets a 3% down mortgage.

[@Benjemil23]

So you’re saying this based off of appreciation assuming that people are not putting 20% down cause they have to wait to save ? Also failed to mention the amount of money you’d save on pmi from putting 20% down.

[@meritholdingllc123]

Creative financing, baby! That's the real way to do it.

[@koziolsreps5870]

Nope! Do whatever you can to avoid PMI

[@IssacEinstein]

It’s either for a first time home buyer or creative financing

[@falsificationism]

Isn't using median prices a little like using the S&P 500? The analogy is that no one buys the entire housing market; we buy individual homes. This could be an absolute disaster for any given home in any given market 10 years from now, or it could be a gold mine. But median prices will still rise because the bottom of the market is hot.
When insurance costs quadruple over five years, but home values flatline, that's a recipe for regret. Most markets have been flat for almost four years now, while insurance and taxes have increased dramatically. If a person bought in a modal (as opposed to median) market in 2019-2024, they've been running on a treadmill from day one with little to no upside.

[@damonaniton]

Math is a funny thing. It is also never wrong.

[@TheEgg185]

Good god this is terrible.

[@AnilKumar-mj3xb]

Just for views. No useful info.

[@davidshowalter3880]

I work in the industry. I would disagree with your "No useful information" statement. I'm guessing you don't work in the mortgage industry.

[@jacobbuckman3713]

Did you just compare buying a home with 3% down to a home with 20% down 10 years later? Never really completed the comparison. Dumb