By Mike Lentz | The Mike Lentz Team – Keller Williams Realty
While you don’t have to make a 20% down payment, many repeat buyers in South Jersey choose to do exactly that. A larger down payment lowers your monthly costs, eliminates private mortgage insurance, and makes your offer stronger. If you’ve built equity in your current home, it may be easier than you think.
If you’re planning to buy your next home soon, you’ve probably heard the old rule about saving up a 20% down payment.
Here’s what you should know: you usually don’t have to. Plenty of loan options let qualified buyers put down much less. But a lot of repeat buyers are choosing to put down 20% anyway.
So why are they if they don’t have to?
Two reasons. They know a bigger down payment pays off, and after years in their current house, they’ve built up enough equity that it’s finally possible.
Why Repeat Buyers Choose a 20% Down Payment
According to the National Association of Realtors (NAR), the typical repeat buyer puts down 23% when they buy a home.
That’s more than double the 10% they may have put down as a first-time buyer. So how do they manage it? Their equity.
When you’ve owned a house for a while, two things tend to happen. One, you pay down your mortgage. Two, your home’s value climbs. The difference between what you still owe on your mortgage and what your house is worth is your equity. And the longer you’ve lived in your house, the bigger that number grows.
When you sell, your equity turns into cash. And NAR data shows most repeat buyers put it straight toward their next down payment.
First-time buyers don’t have that springboard yet, and that’s normal. But if you already own, you may be holding more buying power than you think because of it.
And if putting 20% down is finally possible, it may be worth at least considering. Here’s why. Let’s go over what you get in return.
4 Perks of Making a 20% Down Payment
Putting more down pays off in a few ways:
A Smaller Monthly Payment
The more you put down, the less you borrow at today’s rates. And if taking on a higher mortgage rate is one of the reasons you’re debating whether to move, that’s a win.
Paying Less Interest
A smaller loan can also carry less interest across the life of your mortgage. If you put 20% down, you’ll only pay interest on the remaining 80%. Put 5% down and you’ll pay interest on the remaining 95%. That costs you more over the lifetime of the loan.
No Private Mortgage Insurance
When you put down less than 20% on a conventional loan, lenders usually add a monthly fee called private mortgage insurance. With 20% down, PMI isn’t required. That saves you money every month.
A Stronger Offer
A larger down payment can make your offer more attractive. Sellers tend to read it as a sign your financing is solid and the deal is more likely to close.
What This Means for Buyers in South Jersey
Whether you’re looking in Camden, Burlington, Gloucester, Salem, or Cumberland County, your equity is your most powerful tool for selling and buying at the same time. Many homeowners underestimate how much buying power they’ve accumulated over the years.
So no, you don’t need to put 20% down to buy your next home. But you may want to. If your equity puts it within reach, going bigger can lower your costs and make moving more doable than you think – even with today’s rates.
A trusted lender can run the numbers on your financing. And when you want to know what your current house could add to your next down payment, let’s talk.
If you want to talk through what making a 20% down payment means for your situation, schedule a quick call and we’ll walk through it together.
For the full picture in your county, see our county market reports for Camden, Burlington, Gloucester, Salem, and Cumberland counties.
