20 or 25% down? - 1st investment property

4 Replies

Lender is telling me we can get .5% rate reduction if we go with 25% down. This is a buy and hold long term investment (Joe Asamoah style) if everything breaks right. I'm unsure if it's more valuable to keep more of my cash for other potential investments or go with the higher down payment for greater interest savings over time. Help!

Expected rent of $2890 - Home is move in ready. Self managing, pretty handy, live 7 minutes away. 

20% - 3.875 - $67,000 (dp) - total interest $185,684 - PITI $1681

25% - 3.375 - $83,750 (dp) - total interest $148,626 - PITI $1532

Thoughts? What info am I leaving out that is helpful to know? Thanks!

Updated about 2 months ago

Locked in today at 3.625% with 20% down. Approximate monthly payment of $1625.

Is that interest over the entire term of your mortgage and do you plan on keeping it that long?  Based on the current numbers, you are looking at paying $16,750  to save just over $37K.  The difference in your payments (realizing that it is counting interest twice) is $1800 per year.

Even though the interest is higher (and the payments), what would you do with the $37K that you'd save with the 20% down payment?  If it would be used as a down payment for another property in a year or two, then save it.

20% all day long.

  • Higher ROI 22% Cash on cash vs 19% cash on cash
  • Another $16,750 in the bank for a rainy day or to build towards a future investment