20% down on a house…is it dumb?

You avoid pmi with 20% down

Well your acquaintances are poor af, think of pmi as a poor person’s tax. You are basically paying points for nothing. Avoid at all costs.

If you have enough invested in a taxable account, you could borrow against portfolio for down payment. Margin rates w/ IBKR are below 1.4% (variable). That beats selling assets and paying capital gains.

I'll have 10-12% for my primary residence when I pull the trigger next year. Would like to get to 20%, but time won't be in my favor and PMI will be a drop in the bucket all things considered.

You just have to do the math and figure out what works best for you.

The more you put down the less you'll pay on the life of the loan, but if you've got an investment vehicle that's going to consistently outperform your mortgage rate plus PMI payments it might be worth considering.

If the money's just going to be sitting in a low interest savings account, I'd lean towards putting it into the house.

You don’t need 20% to avoid pmi if you have excellent credit and a good broker.

I don’t think it’s dumb but it sure as hell doesn’t feel good.

You should get quotes on rates for 5%, 10%, 15%, and 20% down. See how it moves, or doesn’t move, the needle on your interest rate. When I bought my house, there was a gulf in interest rate between 5% and 10%, but a relatively small gap between 10% and 20%. Further, at 10%, my PMI was quoted at $35/mo. Giving up opportunity potential as well as a chunk of savings security to barely move the interest rate and then save $35/mo for a few years didn’t seem worth it, so I put 10% down. But your mileage may significantly vary, so you need to do your own legwork.

The main argument against putting 20% down is the opportunity cost of what that money might have earned somewhere else.

So I'll say this. I put 20% down on a house last August, and since that time my trading account has gotten date-raped by the stock market. Hindsight is always 20/20, but keep in mind investing your money isn't always guaranteed return. For me personally, I was better off investing in my house than risking it in stocks.

But don't exhaust all your emergency savings or anything to get 20%. Paying $50/month or less in pmi for a while isn't the end of the world... If your loan is conventional you can always make a chunk payment later on when you're comfortable or get it reappraised if you're confident it appreciated enough and get rid of the pmi that way.

Finding the right balance for your situation is key. But for the love of God, don't pay more than $50/month in pmi. I've seen people paying $200+/month. That's freaking insane. Lighting money on fire.

Usually say get the PMI off of there, but there are specific circumstances where it might make sense for the individual not to pay the 20% down. No blanket decision as this is very dependent on a number of personal variables.