Unlock Your Home’s Superpower: Using Equity for a Bigger Down Payment

Did you know? Your home might just be your secret financial weapon. If you're planning to upgrade, downsize, or swap zip codes, your equity could make it easier to put down more cash on your next dream home. Homeowners are cashing in on record-high equity, and as a result, down payments are going up too.

According to Redfin, the average down payment in the U.S. hit $67,500 this year, an increase of nearly 15% from last year—and the highest ever recorded (see graph below):

So, what’s the deal with equity? Over the past few years, home prices have skyrocketed, fattening up equity for current homeowners. That’s great news because when you sell your house, you can roll that equity right into a larger down payment on your next one. And trust us, there are some sweet perks to doing just that.

But wait—a big down payment isn’t mandatory. There are loans that only need 3% down, or even 0% if you qualify. But hey, if you have the funds and flexibility, putting more money down can unlock some game-changing benefits. Let’s take a look!

Why a Bigger Down Payment Is a Total Win-Win

1. Borrow Less = Save More ????

When you put down more cash upfront, you don’t need to borrow as much. And the less you borrow, the less interest you’ll pay over the life of your loan. Think of it this way: it’s like giving future-you a raise by keeping more money in your pocket every month.

2. Score a Lower Mortgage Rate ????

A larger down payment sends a clear message to lenders: “Hey, I’ve got this.” The more confidence they have in your finances, the better your mortgage rate will likely be. And lower interest rates mean even more savings over time. That’s what we call a financial win-win!

3. Enjoy Lower Monthly Payments ???????

A bigger down payment doesn’t just shrink the amount you borrow—it also means your monthly payments could be lower. That gives you some breathing room in your budget for life’s little joys (like coffee dates, weekend getaways, or that Peloton you’ve been eyeing).

4. Ditch PMI and Save Even More ??????

Here’s the cherry on top: if you put down at least 20%, you can skip Private Mortgage Insurance (PMI) altogether. Freddie Mac sums it up perfectly:

“For homeowners who put less than 20% down, Private Mortgage Insurance or PMI is an added insurance policy for homeowners that protects the lender if you are unable to pay your mortgage. It is not the same thing as homeowner's insurance. It’s a monthly fee rolled into your mortgage payment.”

No PMI means one less bill to worry about each month. You’ve got enough going on already—why add more?

Bottom Line: Your Equity, Your Power

Equity is at an all-time high, and savvy homeowners are using it to boost their down payments and unlock the perks that come with borrowing less.

Thinking about selling your current place? Let's chat! We’ll help you figure out exactly how much equity you have—and how it can give you more buying power in today’s market. Your dream home is waiting, and your equity might just be the key to getting there faster.