The benefits of a 20% down payment
For many conventional mortgages, you need to have a down payment of at least 5 percent of the purchase price. However, putting less than 20 percent down can have significant financial implications. Not only could a 20 percent down payment save you hundreds of dollars on your monthly payment, but you’ll build equity in the house more quickly and save a considerable amount of money on interest.
One of the areas you will save the most money is PMI. PMI (private mortgage insurance) is what you pay to a lender to avoid loan failure on a conventional loan. If you put down less than 20% on your home, you will pay PMI until you meet 20% of your conventional loan. If you put down less than 20% on an FHA loan, you will pay PMI for the lifetime of the loan.
Check out this Infographic: Why Is 20% Ideal for a Down Payment?