How much should you put down on a home?
A larger down payment reduces the loan balance and may reduce other borrowing costs. A smaller down payment preserves more cash. The right answer is a tradeoff, not a magic percentage.
Larger down payment
Usually means a smaller loan balance, lower principal-and-interest payment, less total interest if other terms are unchanged, and potentially lower or no PMI on some conventional loans.
Smaller down payment
Keeps more cash available for closing costs, repairs, moving expenses, emergency reserves, and other goals, but increases the amount financed.
20% is a threshold, not a universal rule
Twenty percent is often discussed because of conventional mortgage-insurance rules, but available loan programs and borrower economics vary.
Do not drain the reserve account to hit a round number.
Homeownership creates expenses that do not appear in the purchase price. Closing costs, immediate repairs, furnishings, maintenance, deductibles, and income interruptions can all require cash.
A lower mortgage payment can be valuable, but so can remaining liquid after closing. Compare the payment difference with the amount of emergency cash you would give up.