One of the most common misconceptions among first time home buyers is the belief that it’s better to have a down payment larger than 5%. 

Most consider paying the mortgage insurance premium too expensive, and they want to save where they can. 

Perfectly rational thinking… until you do the math. 

  There’s a few different ways you can think about it, but at the end of the day, the numbers truly tell the story. If you add up the appreciation a home can make over a couple of years, you’re losing money by not being in the market. 

  And it’s not just a little bit. 

  Let’s take a look at just one of the factors, how much you’re earning on your money while it’s sitting in a savings account. At the absolute best, you may be getting 2% in a “high interest” savings account. Meanwhile the inflation rate is nearly 3% a year.... you're guaranteed to lose money. 

  If you take that same money, say $25k, and buy a home with 5% down, that would be enough down payment for a $500,000 home. We can reasonably expect the home to appreciate by at least 3% a year. That means your $25k investment will return $15,000.

  That’s a 60% return... in one year!!

  And that’s just one of the factors affecting the numbers. 

  Today on the “Investment Property Income” podcast, we’re breaking down all of the numbers, and explaining exactly why waiting to save more, actually loses a ton of money. 

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