Should You Put 20% Down on a Home in Sioux Falls, SD? 4 Reasons It Can Pay Off

Author Amy Stockberger | Founder, Amy Stockberger Real Estate | Creator, Lifetime Home Support™ Academy | Ranked the #1 Real Estate Team in South Dakota since 2017 and #33 in the Nation by Real Trends

If you’re planning to buy your next home in Sioux Falls, SD, you’ve probably heard the familiar advice that you should put 20% down.

But here’s the important part: you usually don’t have to put 20% down to buy a home.

There are mortgage programs that allow qualified buyers to purchase with significantly less. Still, many repeat buyers are choosing to make larger down payments when they have the financial flexibility to do so.

According to the National Association of REALTORS®, the median down payment for repeat buyers was 23%, compared with 10% for first-time buyers.

For homeowners who have built equity over several years, that equity may create an opportunity to make a larger down payment when moving into their next home.

Why This Matters When Buying a Home in Sioux Falls, SD

If you already own a home in Sioux Falls, SD, the amount of equity you have accumulated may significantly affect what you can do next.

Home equity is essentially the difference between your home’s current value and what you still owe on your mortgage.

As you pay down your mortgage and your property value changes, your equity can grow. When you sell, some of that equity may become available to put toward the purchase of your next property.

That means homeowners considering moving up, downsizing, relocating, or simply finding a home that better fits their current lifestyle may have more purchasing power than they realize.

Before assuming your next move is financially out of reach, it makes sense to answer one important question:

How much equity do you actually have in your current home?

 

4 Benefits of Putting 20% Down on Your Next Home

Putting 20% down isn’t automatically the right decision for every buyer. Your cash reserves, other investments, monthly budget, loan program, and long-term plans all matter.

But if a 20% down payment is comfortably within reach, there are several advantages worth considering.

1. You Can Lower Your Monthly Mortgage Payment

The larger your down payment, the less money you have to finance.

For example, putting 20% down instead of 5% means borrowing 80% of the purchase price rather than 95%.

A smaller mortgage balance generally means a smaller principal-and-interest payment, which may give you more breathing room in your monthly household budget.

For move-up buyers in Sioux Falls, SD, using equity from an existing home toward a larger down payment may help make the payment on a more expensive property more manageable.

2. You May Pay Less Interest Over Time

Borrowing less money also means there is less principal on which interest can accumulate.

While your exact savings will depend on your mortgage rate, loan term, and financing structure, reducing the amount borrowed can lower the total interest paid over the life of the loan.

That’s why your down payment decision shouldn’t be based on a percentage alone.

Ask your lender to compare different scenarios so you can see the potential difference between putting 5%, 10%, 15%, and 20% down.

3. You Can Potentially Avoid Private Mortgage Insurance

One of the biggest reasons buyers consider putting 20% down is private mortgage insurance, or PMI.

On many conventional mortgages, buyers who put less than 20% down may be required to pay PMI. The Consumer Financial Protection Bureau confirms that with a conventional loan, PMI generally isn’t required when you make a 20% down payment.

Freddie Mac also notes that lower-down-payment options are available, including certain loans requiring as little as 3% down, so 20% should never be treated as a universal requirement for buying a home.

Eliminating PMI may reduce your monthly housing expense and make the overall payment more comfortable.

4. A Larger Down Payment Can Strengthen Your Financial Position

A larger down payment means beginning homeownership with more equity and a smaller mortgage balance.

It can also demonstrate strong financing when you’re putting together an offer, although sellers evaluate many factors beyond the size of the down payment.

The important thing is not simply putting down the largest amount possible.

The goal is finding the balance between:

You don’t want to put every available dollar into the home and leave yourself without adequate cash after closing.

Your Current Home Could Help Fund Your Next One

For repeat buyers, home equity can change the entire conversation.

NAR’s most recent Profile of Home Buyers and Sellers reported a median 23% down payment among repeat buyers, showing how differently established homeowners may approach their next purchase compared with first-time buyers.

If you’ve owned your current property for several years, determining its market value is an important first step.

Knowing approximately what your home could sell for, what you still owe, and what selling expenses may look like gives you a clearer picture of the funds that could potentially be available for your next purchase.

That’s especially valuable if you’re trying to coordinate selling one home and buying another in Sioux Falls, SD.

How Amy Stockberger Real Estate Can Help

Buying your next home involves more than finding a property and choosing a down payment.

At Amy Stockberger Real Estate, we help homeowners understand how their current home can fit into the bigger picture of their next move.

We can help you evaluate your current property’s potential market value, develop a selling strategy, coordinate your purchase and sale, and connect you with trusted local professionals who can help you evaluate financing options.

And our relationship doesn’t end when you get the keys.

Through Lifetime Home Support™, our clients have continued access to resources, local expertise, trusted Home Support Team Partners, homeownership tools, moving support, and connections designed to make owning a home easier long after closing.

Ready to Take the Next Step?

You do not need to put 20% down to buy your next home.

But if you already own a home and have built substantial equity, putting 20% or more down may help reduce your mortgage balance, lower your monthly costs, potentially eliminate PMI on a conventional loan, and make your next move more financially comfortable.

The right number is different for every buyer.

Before deciding, talk with a trusted lender who can compare your financing options. Then, let our team help you determine what your current home could contribute toward your next purchase.

If you’re considering buying or selling a home in Sioux Falls, SD, Amy Stockberger Real Estate can help you build a strategy around both sides of the move.

Our team is here to serve — before, during, and forever.

Have More Questions About Real Estate in Sioux Falls, SD?

Ask our 24/7 Sioux Falls, SD Real Estate Help Center AI Assistant or contact Amy Stockberger Real Estate for a personalized selling strategy.