First-Time Homebuyers: Is It Better to Save for a Large Down Payment or Buy Now?

For first-time homebuyers, the excitement of purchasing a new home often comes with big questions—especially when it comes to saving for a down payment. Should you wait a few more years to save up a larger down payment, or should you jump into the market now? While both options have their advantages, understanding the pros and cons will help you make the best financial decision. At Morris Bank, we’re here to provide you with the guidance needed to make your homeownership journey smoother.

The Benefits of Saving for a Larger Down Payment

Saving for a bigger down payment has its advantages. Typically, the more money you can put down upfront, the lower your monthly mortgage payments will be. This is especially appealing for buyers aiming to keep their budgets manageable. A 20% down payment, for example, may allow you to avoid paying for private mortgage insurance (PMI), which can save hundreds of dollars each month.

Additionally, a larger down payment may give you access to better loan terms. Lenders often reward buyers who can make significant down payments with more favorable interest rates, which can translate to thousands of dollars saved over the life of the loan.

However, waiting several years to save more also comes with potential drawbacks—most notably, the rising cost of real estate. In many markets, home prices are steadily increasing, which could mean that by the time you've saved the down payment you wanted, you’re paying more for the same home.

The Case for Buying Now

On the other hand, choosing to buy a home now can have its own advantages—especially if you're ready to take advantage of current mortgage rates. Waiting a few years to save more could result in missing out on low rates, potentially costing more in interest over the life of the loan.

Additionally, by purchasing a home now, you can start building equity sooner. Real estate is a long-term investment, and the sooner you begin paying off your mortgage, the sooner you'll benefit from the appreciation of your home’s value. That equity can help you in the future when you're ready to move or if you want to borrow against it for home improvements or other financial goals.

Many first-time buyers also discover that there are several low down payment options available to them, such as FHA loans or VA loans, which make homeownership more accessible without requiring the traditional 20% down. At Morris Bank, our conventional loan program offers options with as little as 3% down. We also offer a conventional loan with just a 5% down payment, making homeownership even more accessible. Many people mistakenly believe a 20% down payment is required, but that's not the case. These lower-down-payment options make it easier for you to get into your new home sooner than you might have thought possible.

Should You Buy or Wait?

If you're still on the fence about whether to wait or buy now, try using this Buy Now vs. Wait Calculator. It allows you to compare the financial impacts of buying a home now versus waiting a few years to save up a larger down payment. This tool takes into account factors like rising home prices, mortgage interest rates, and your savings goals, giving you a clearer picture of which option might be best for you.

So, What's the Right Move?

Ultimately, the decision of whether to wait or buy now comes down to your personal financial situation and goals. If you can comfortably afford a home with a lower down payment today, buying now might be the best option, especially in a competitive market. If your financial plan allows you to save for a larger down payment over the next few years, then waiting could help you avoid PMI and secure better terms.

At Morris Bank, we’re confident that our expert mortgage advisors can help you weigh the pros and cons and find a solution that’s just right for you. Whether you're ready to buy now or still saving for that dream home, we’re here to support you every step of the way. Contact Morris Bank today to discuss your home buying options and let us help you take the next step with confidence.