MAKING SMARTER DOWN PAYMENTS
- johnathanmcquoid
- Jan 17
- 2 min read
Most buyers assume that putting more money down is always better…
But when it comes to mortgage insurance premiums, that’s not always true.
Here’s how to make smarter down payment decisions 👇
💡 How mortgage insurance premiums actually work
When your down payment is under 20%, the mortgage insurer charges a premium based on your down payment percentage:
• 5%–9.99% down → 4.00% premium
• 10%–14.99% down → 3.10% premium
• 15%–19.99% down → 2.80% premium
These premiums get added to your mortgage — not paid upfront — so understanding the breakpoints can save you money.
📊 Example #1: 10% down on $600,000
Purchase price: $600,000
Down payment: $60,000 (10%)
Mortgage before premium: $540,000
Premium: 3.10% → $16,740
New total mortgage: $556,740
📊 Example #2: Using more down payment than needed
Purchase price: $600,000
Down payment: $110,760 (18.46%)
Mortgage before premium: $489,240
Premium: 2.80% → $13,699
Total mortgage: $502,939
Now here’s the smart part…
🤯 You don’t need 18% down to get the lower premium
If you drop the down payment to exactly 15%:
Purchase price: $600,000
Down payment: $90,000 (15%)
Mortgage before premium: $510,000
Premium: 2.80% → $14,280
Total mortgage: $524,280
Here’s the comparison ⬇️
• Down payment used in Scenario #2: $110,760
• Down payment needed for 15%: $90,000
➡️ You save $20,760 in cash upfront
Premium difference:
• With 18.46% down → $13,699
• With 15% down → $14,280
➡️ That’s only a $581 increase in premium
So you keep $20,760 in your pocket while the premium only rises by $581.
That’s a strategic win for most buyers.
💡 Why this matters
Keeping extra cash available can help with:
✔️ closing costs
✔️ moving expenses
✔️ furniture
✔️ emergency savings
✔️ repairs and upgrades
You can even use the saved funds later for a lump-sum prepayment.
🤔 When is it worth putting more down?
✔️ when cash flow is not tight
✔️ when you want the smallest mortgage possible
✔️ when reducing interest is your top priority
But if funds are tight, working the premium breakpoints can improve your financial flexibility.
💬 Final Thought
Down payment strategy matters more than most buyers realize.
If you want help structuring your down payment for the best financial outcome, message The Frontline Mortgage Group — we’ll walk you through the smartest options. 💬