Downpayment amounts - 20, 25 or 30%?

[Felicia West]

Hello,

As a beginning investor, what down payment amount would you suggest if doing a traditional mortgage?  Of course, putting more down like 30 % would make it look like the property cash flows well, but is it worth it to put that much down, or is 20 or 25% down better depending on which gives you a better interest rate?  Thanks!

[Bill B.]

Ask your lender if there’s a discount at 25 or 30% (assuming 20% is required.)

It used to be “dumb” to put down more than required when rates were 3%. 

Today you might save 7% annually plus 1%+ on day 1 with origination and if there’s any chance to get even a 1/4th point lower rate with 25% down you’d be getting another 3/4’s of a % on your down payment. It’s pretty hard to earn a guaranteed 8-9% return. 

Putting down 25% instead of 20% won’t affect your until you can’t buy that 5th property and that might a couple years from now. You can always do a cashout refi if rates drop.