Choosing a down payment: compare the cash you use with the payment you keep.
Having enough cash for a larger down payment does not make the decision automatic. The useful question is what each option changes for your payment, upfront cash and plans after closing.
Hold the home price constant
Compare the same property and purchase price first. Otherwise, you may mistake the effect of a different home for the effect of a different down payment. Ask your lender to show the applicable loan terms and estimated mortgage insurance for each option rather than assuming the rate and insurance cost will be identical.
Separate down payment from cash to close
A larger down payment reduces the amount borrowed, but closing charges, prepaids and escrow deposits also affect the money needed at closing. Compare complete estimates using the same property and timing assumptions.
Look at the full payment
Compare principal and interest, any mortgage insurance, taxes, insurance and HOA dues. Ask which items actually change between scenarios. A lender can explain the applicable mortgage-insurance treatment and pricing for your specific conventional-loan options.
Look at what remains after closing
Calculate the money you would have left after the estimated transaction and moving costs. Repairs, furniture and other goals may affect how much cash you want to retain. The financing comparison should inform your decision alongside your broader financial plan.
Ask for a useful comparison
For each option, request the estimated monthly housing cost, down payment, closing charges, prepaids and escrows, applicable credits, estimated cash to close and important assumptions. If points or lender credits differ, make those differences visible too.
Your next step
Ask Grant to compare down-payment scenarios for your actual price range. The right discussion is about the tradeoffs in your situation, not a universal rule that one percentage is best.
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Further reading
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