Should I Pay More or Less "Up-Front"?

The down payment, a cost that you pay at closing, can affect your mortgage in a number of ways. Higher up-front payments result in:

• lower monthly payments
• lower private mortgage insurance (PMI) costs (if applicable)
• lower interest payments

In fact, making a down payment of 20% or more can save the home buyer money by avoiding the monthly mortgage insurance payments. On the other hand, lower up-front costs mean that your cash requirements at closing are much less, although monthly payments may be somewhat higher.

These lower up-front costs may be a significant benefit for first-time homebuyers and people who simply don't have a lot of cash on hand. The Department of Housing and Urban Development (HUD) has some tips that may be helpful to you as you shop for mortgages.

Learn more about Looking for the Best Mortgage from HUD. (You will need a PDF reader to view this booklet.)

Learn more about useful mortgage tips from HUD.