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By nbkc bank | 06/29/2026
If you're planning to buy a home, you've probably asked yourself some version of this question:
Should I buy now with a smaller down payment, or wait until I can put 20% down and avoid PMI?
It's one of the most common decision points for buyers, and the answer isn't the same for everyone. It comes down to how you weigh a few key tradeoffs:
PMI costs
Home prices
Interest rates
And your timeline
Once you understand how those pieces fit together, the decision becomes much clearer.
What Does Putting 20% Down On a Home Loan Actually Change?
Putting 20% down is often seen as the "goal" because it allows you to avoid private mortgage insurance (PMI). That can reduce your monthly payment and keep your costs more straightforward.
Beyond PMI, a larger down payment also:
Lowers your loan amount
Reduces your monthly principal and interest
Gives you more equity from day one
Those are all advantages. But they come with one key tradeoff: time.
The primary question is: If you don't currently have 20% saved up to put down on your home loan, is it worth it to wait? Let's break that down.
What Happens When You Buy a Home with 10% Down?
Buying with 10% down is very common, and for many buyers, it's how they get into the market sooner.
The main difference is that you'll likely have PMI as part of your monthly payment. As a rough benchmark, PMI often adds somewhere in the range of $100–$200 per month on a typical loan, depending on your credit and loan size.
In exchange for that cost, you gain something important: you're buying now instead of waiting.
Putting 10% vs 20% Down on Your Home Loan: Time vs. Cost
The decision isn't really "PMI vs. no PMI." It's a choice between these two options:
Pay PMI and buy sooner
Wait, save more, and potentially enter a different market later
That's where things get more nuanced.
If home prices rise while you're saving for 20%, the amount you need for that down payment increases. At the same time, interest rates may also change, impacting your future payment.
On the other hand, waiting does give you the benefit of less borrowing and lower long-term costs if the market stays stable.
A Simple Side-by-Side Example of 10% vs 20% Down on a Home Loan
Let's look at a simplified scenario of current costs vs accumulated costs over time.
If you buy a home now with 10% down vs waiting to put 20% down, this is what you could be looking at:
Option 1: Buy a Home Now with 10% Down
Home price: $350,000
Down payment: $35,000
PMI: ~$150/month
You start building equity immediately
Option 2: Wait to Put 20% Down on a Home
You save for another 1–2 years
You avoid PMI entirely
If home prices rise, that 20% target also increases
Additionally, if a combination of home prices and interest rates rise so that the monthly payment on the type of home you want increases on average more than PMI would cost, then "time" can be the costlier option.
This isn't about predicting the market, but instead about recognizing that waiting has a cost too, even if it's less visible than PMI.
How Long Will I Actually Pay PMI?
One thing that often gets overlooked is that PMI is temporary. In most cases, PMI can be removed once you reach 20% equity, either through:
Paying down your loan
Home value appreciation
Refinancing
That means you may only pay PMI for a few years, not for the life of the loan.
When you look at it this way, PMI becomes less of a permanent penalty and more of a short-term cost to enter the market sooner.
When Buying a Home with 10% Down Makes Sense
Buying with a smaller down payment often makes sense when:
You can afford the monthly payment, including PMI
You expect to stay in the home long enough to benefit from ownership
Waiting would take several years to reach 20%
You prefer to get into the market rather than risk price increases
In these scenarios, PMI is often a manageable trade-off.
When Waiting for 20% Down on a Home Might Be the Better Move
Waiting can make more sense when:
You're already close to a 20% down payment
PMI would stretch your monthly budget too much
You're planning a shorter-term move and want to minimize upfront costs
You prefer a more conservative financial starting point
In these cases, avoiding PMI may align better with your overall goals.
What Home Buyers Often Overthink With Their Down Payments
Many buyers get stuck on the idea that PMI is something to avoid at all costs. But in practice, it's just one part of a larger decision.
Instead of focusing only on PMI, it's more helpful to ask:
What's my total monthly payment in each scenario?
How long would I realistically wait to reach 20%?
What happens if home prices or rates change during that time?
Those questions tend to lead to a better answer than focusing on a single expense.
Want to See Both Options Side by Side?
General examples are helpful, but the real answer depends on your numbers—your price range, your savings timeline, and your loan options.
At nbkc bank, our team can walk through both scenarios with you so you can see how things compare side by side—monthly payment, PMI impact, and long-term cost—without the guesswork.