Twenty percent down is one of the most familiar numbers in home buying, but it is not a universal requirement and it is not automatically the best use of your cash. The useful question is what a 20% down payment changes in your specific loan and what you give up by moving that much money into the house on day one.
What 20% can do
On many conventional loans, reaching 20% down can eliminate private mortgage insurance. It also reduces the amount borrowed, which lowers the principal-and-interest payment and total interest exposure. A larger down payment can strengthen the financial profile of an offer as well, particularly when the seller is comparing financing risk between otherwise similar buyers.
The cash does not stop at the down payment
A buyer still needs closing costs, prepaid taxes and insurance, moving money and reserves after closing. Then the house starts asking for money. An older roof, sewer line, HVAC system, electrical panel, landscaping project or first-year furniture expense can make a technically affordable purchase feel very tight if the down payment drained the cash account.
That is why I would rather see a buyer choose a deliberate down payment than chase 20% as a badge of financial discipline. Keeping a healthy reserve may be worth paying some mortgage insurance, depending on the loan and the rest of the plan.
Denver ownership costs can vary sharply at the same price
Two $600,000 homes can produce very different monthly obligations. Property taxes, HOA dues, metro-district taxes, homeowners insurance and utility costs can move the payment by hundreds of dollars. A buyer putting 20% down on the wrong property can have a less comfortable budget than a buyer putting 10% down on a home with materially lower recurring costs.
Think in scenarios
I would compare at least three versions of the purchase: the minimum down payment you are comfortable with, a middle option, and 20%. For each, look at cash to close, monthly payment, mortgage insurance, remaining reserves and the cost of expected near-term work. The best answer is the one that keeps the total household plan strongest, not simply the option with the largest down payment.
A bigger down payment is a tool, not the goal
If 20% meaningfully improves the loan and still leaves you with strong reserves, it can be an excellent choice. If it leaves you house-rich and cash-poor, another structure may be better. The decision should be made alongside the property, loan options and the rest of your financial obligations.
If you are comparing down-payment options on a Denver Metro purchase, I can help you evaluate the real-estate side of the equation and coordinate the property assumptions with your lender. EricHyattRealEstate.com/contact.
Continue with related insights
How to Plan a Denver Metro Home Purchase Beyond the List Price · Waiting for Lower Mortgage Rates? Look at the Whole Denver Buying Equation · Why Mortgage Rates Move, and What Denver Buyers Can Actually Control