20% down doesn’t always make sense — Am I missing something?

We’re getting ready to purchase a home and I created a model in Excel that calculates outcomes (in dollars) comparing two scenarios: putting 20% down vs. <20% down and investing the rest in an index fund (returning 8%/yr).

There are a ton of variables which I’ll spare but I’m curious if anyone has done anything similar? There *are* scenarios where 20% doesn’t make sense, especially when you’re not investing the difference between higher and lower mortgages. This compounds exponentially over time and the major difference is seen at 30 years. The 10yr difference typically favors 20% down but there are scenarios where that doesn’t make sense either.

I’m having trouble believing the numbers because conventional wisdom is 20%, low interest rate, avoid PMI. In my scenario PMI generally isn’t the biggest factor (interest is).

submitted by /u/ne2i
[link] [comments]

We’re getting ready to purchase a home and I created a model in Excel that calculates outcomes (in dollars) comparing two scenarios: putting 20% down vs. <20% down and investing the rest in an index fund (returning 8%/yr). There are a ton of variables which I’ll spare but I’m curious if anyone has done anything similar? There *are* scenarios where 20% doesn’t make sense, especially when you’re not investing the difference between higher and lower mortgages. This compounds exponentially over time and the major difference is seen at 30 years. The 10yr difference typically favors 20% down but there are scenarios where that doesn’t make sense either. I’m having trouble believing the numbers because conventional wisdom is 20%, low interest rate, avoid PMI. In my scenario PMI generally isn’t the biggest factor (interest is). submitted by /u/ne2i [link] [comments]

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