Low down payment helps you get into a house sooner, but:

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1. Your monthly payment will be slightly higher

2. You usually have to pay something called PMI (mortgage insurance) until you own about 20% of the home.

3. You don’t need to save for years

4. You can stop renting sooner

5. You start building home equity earlier

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What is PMI (Private Mortgage Insurance)

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PMI is an extra monthly cost that is added to your mortgage payment when you buy a home with a low down payment (usually less than 20%).

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Why does PMI exist?

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The lender is taking more risk because you are borrowing more money.
PMI is basically insurance for the lender — not for you.

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How long do you pay it?

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You pay PMI only until you own about 20% of the home.

After that:

• PMI is removed

• Your monthly payment goes down

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Example:

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• Home: $400,000

• Down Payment: 3%

• PMI might add: $100–$250/mo

But once your loan balance drops or the home value rises enough, PMI goes away.

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Why people still choose low down payment + PMI:

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Because PMI lets them get into a home sooner, instead of waiting years to save $50k+.