So, in this blog we're gonna cover the 20% down myth.
You can buy a house in the USA using the FHA loan. You don't need to wait until you have 20% down. Leverage the 3.5% down and make your money work for you.
Google searches just have too many ads. Here's a direct link to the FHA program via HUD, the government program.
FHA Link: https://www.hud.gov/buying/loans
This blog post is for those that have 20% down, still put 3.5% down. Your parents and realtors will push you to do 20% down for various reasons.
The scenario I have chosen is a $400,000 house.
The interest that your parents claim you save between putting 3.5% vs 20% down? $47,433.87. With PMI costs of $39,602.00 would bring that total to $87,035.87.
If you invested the difference in mutual funds, by only putting down $14,000 vs $80,000, which would leave you with $66,000. If you invested that, this is what you could have at the end of paying off your house.
The numbers speak for themselves. Make your money work for you. Your home is an asset that needs to be maintained. Use your money to your advantage.
Do you listen to your parents and save $87,035.87 only to lose out on $664,135.35 to $1,977,354.86? Wouldn't it be great to have a house AND $1,977,354.86??
You can buy a house in the USA using the FHA loan. You don't need to wait until you have 20% down. Leverage the 3.5% down and make your money work for you.
Google searches just have too many ads. Here's a direct link to the FHA program via HUD, the government program.
FHA Link: https://www.hud.gov/buying/loans
This blog post is for those that have 20% down, still put 3.5% down. Your parents and realtors will push you to do 20% down for various reasons.
- Your parents don't know any better and will say "save on interest". Little do they realize how little you save because the largest cost of interest is in the first 10-15 years.
- Your realtor will have various reasons because they want to close the deal quicker, they get paid and don't care about your future. The home owner gets paid regardless. If your realtor pushes it, then find a new one.
The interest that your parents claim you save between putting 3.5% vs 20% down? $47,433.87. With PMI costs of $39,602.00 would bring that total to $87,035.87.
If you invested the difference in mutual funds, by only putting down $14,000 vs $80,000, which would leave you with $66,000. If you invested that, this is what you could have at the end of paying off your house.
| Scenario | Down | Rate of Return | Cash | House | Total Assests in the end |
| 1 | 20% | None | In house | $ 400,000.00 | $ 400,000.00 |
| 2 | 3.50% | 8% | $664,135.35 | $ 400,000.00 | $ 1,064,135.35 |
| 3 | 3.50% | 10% | $1,151,660.55 | $ 400,000.00 | $ 1,551,660.55 |
| 4 | 3.50% | 12% | $1,977,354.86 | $ 400,000.00 | $ 2,377,354.86 |
The numbers speak for themselves. Make your money work for you. Your home is an asset that needs to be maintained. Use your money to your advantage.
Do you listen to your parents and save $87,035.87 only to lose out on $664,135.35 to $1,977,354.86? Wouldn't it be great to have a house AND $1,977,354.86??
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