Down payments generally range from 0% - 20%. If you fall into the group of people that has no money for a down payment then your challenge is to qualify for a loan that doesn’t require a down payment. Everyone else needs to decide how much of their available funds should be used.

While you may be inclined to choose a lower down payment in order to buy a more expensive house there are some benefits to making a larger down payment. First you’ll have lower interest rates. The more of your own money you put into the house the less likely a lender feels you are to walk away from it and because of that they’ll reward you with a lower rate.

You’ll also enjoy lower monthly payments. Since your loan amount is smaller, but will still be spread over the same amount of time it will equate to less money out of your pocket each month.

Beyond that, putting extra money into your down payment is equivalent to putting money in a savings count; it’s a return on your investment. And if your home’s value increases by 4% per year, your down payment is earning an additional 4% on top of the interest rate savings. With a 6% mortgage, your down payment could be earning 10%, a rate that could be hard to beat with other similarly secure investments.

The bottom line is that you should put down as much as you can afford, rather than the minimum allowed. The investment is a smart use of your money.