What is the recommended savings percentage for a down payment on a home?

The recommended savings percentage for a down payment on a home is often cited as 20%. This figure is considered the ideal down payment amount for a number of reasons. When buyers put down 20%, they typically avoid private mortgage insurance (PMI), which lenders require when the down payment is less than 20%. PMI can add a significant cost to monthly mortgage payments, so by saving 20%, borrowers can reduce their overall housing expenses.

Additionally, a 20% down payment can demonstrate to lenders that the buyer is financially responsible and serious about their investment, which may lead to better mortgage terms and interest rates. Moreover, a larger down payment can also reduce the amount of the loan needed, resulting in lower monthly payments and less paid in interest over time. Overall, aiming for a down payment of 20% can be beneficial for long-term financial stability when purchasing a home.