What happens if I put less than 20 percent down?
Answered by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
You'll carry mortgage insurance. On conventional loans that's PMI, which you can cancel at 20% equity; on FHA it's a premium that usually lasts the life of the loan. Your rate may also be marginally higher.
Putting less down still gets you into the home and keeps cash available. As your Florida home appreciates, you can drop PMI sooner. We'll show the added cost and when it goes away.
Mortgage insurance kicks in
With less than 20% down, you usually pay mortgage insurance. On a conventional loan it is private mortgage insurance, or PMI. On an FHA loan it is a mortgage insurance premium, or MIP. Both protect the lender and add to your monthly cost.
The good news is PMI on a conventional loan drops off once you reach 20% equity. So it is a temporary cost, not a life sentence.
Why buyers still do it
Putting less down lets you buy a home years sooner and keep cash for repairs and reserves. For most Florida buyers, the extra monthly cost is worth getting into a home and building equity now.
We will show you the exact PMI or MIP figure for your loan so there are no surprises. Try our down payment calculator, then apply and we will map your full monthly payment.