Everyone says you have to put 20% down when buying a house.

I’m calling BS!

That’s terrible advice and I’ll prove it with math.

Ya that’s right, I can math. I can also write good and dance gooder (don’t ask me to do either plz).

Let’s use a $450,000 house as the example. This is roughly the median home price in the U.S.

First, downpayment. The MINIMUM in the U.S. is 3%.

If you put less than 20% down, you have to pay mortgage insurance (we’ll get back to that).

But let’s assume 3% downpayment for now, which on a $450,000 house…

Oh, GOD NO.

Next is closing costs. These cover lender fees, appraisal, government records, home inspection blah blah blah. A bunch of random things.

These can be as much as 2-5% of your house purchase value.

Or in this case…

Hell nah.

Next is moving costs. Of course this ranges - do you have a pack of selfless (borderline fool-hardy) friends who are willing to blow up an entire Saturday lugging heavy stuff for you with the promise of beer and pizza?

Me neither.

Even for a local move, costs can be…

Sorry, pal. Here’s what’s left:

House emergency repair fund: budget 1-3% of your home value annually…

Furniture and other necessities can be…

(do you aspire to Versailles or a more stoic style?)

That’s already…

73% of first-time home buyers put down 15% or less.

With the median downpayment around 9%.

So it seems most people aren’t practicing the “20% downpayment mantra”.

Actually, you kind of do.

Trying to save up $90,000 for a downpayment (with our $450,000 house example) means you’ll lose more to rising home prices that you would save on private mortgage insurance.

Private mortgage insurance costs 0.3% to 1.2% on average:

While home price increases have far exceeded that in recent years:

So what should I do?

Target 15% of the price of your home - that’s your real savings goal.

That will comfortably cover a basic downpayment and all closing costs. It’ll get you in the market and on the scoreboard.

Is this genius or chaos? Let me know!