One of the most common questions homebuyers ask is: Should I buy a home now, or wait until I’ve saved a 20% down payment? It’s a fair question and one that has been repeated for decades in the real estate market.

The idea that you must put 20% down before buying a home is deeply ingrained, but today’s housing environment has changed. In many cases, waiting to save that full 20% down payment can actually cost buyers more over time. Let’s walk through why, and how this decision can impact your home buying journey, especially in competitive markets like Hawaii, Arizona, and California.

Understanding the 20% Down Payment Rule

Traditionally, a 20% down payment was seen as the gold standard in homeownership. It reduces the loan amount, can eliminate private mortgage insurance (PMI), and gives buyers immediate equity.

What often gets overlooked, however, is why that rule existed in the first place. It was designed for a very different real estate market, one with slower price growth, lower competition, and fewer flexible loan options.

Today, PMI is not the financial burden it once was. In many cases, it’s a relatively small monthly cost that allows buyers to enter the market sooner rather than waiting years to save a full 20%.

Rising Home Prices in the Real Estate Market

In fast-moving markets like Arizona and California, home prices have consistently outpaced income growth. The longer buyers wait to buy a home now, the more likely they are to face higher prices than when they first started saving.

What often happens is this: As buyers save, home values rise faster than their down payment. The target keeps moving, and the goal becomes harder to reach.

This is especially true in high-demand areas where limited inventory and strong buyer competition continue to push prices upward.

How Interest Rates Affect Your Home Buying Journey

Interest rates are another critical factor many buyers underestimate. Even a small increase in interest rates can significantly affect monthly payments and total loan cost.

Waiting to save a 20% down payment may expose buyers to higher interest rates in the future. In some cases, a lower interest rate today with a smaller down payment can result in a similar, or even lower, monthly payment than waiting for 20% and financing at a higher rate.

Over the life of a loan, locking in a favorable interest rate sooner can save tens of thousands of dollars.

Renting vs. Buying: The Hidden Cost of Waiting

Many buyers choose to keep renting while they save, believing it’s the safer option. But rent is not a neutral expense.

In cities like Los Angeles and Phoenix, rent continues to rise, often faster than inflation. Every dollar paid in rent is a dollar that does not build equity.

Meanwhile, mortgage payments contribute to ownership and long-term financial stability. Even with PMI, buying a home now can begin building equity sooner instead of delaying progress while rent increases.

Buying a Home Now with Less Than 20% Down

Today’s loan programs offer far more flexibility than many buyers realize. Options such as conventional loans with lower down payments, FHA loans, and VA loans for eligible military families make homeownership accessible without waiting years to save 20%.

Buying earlier allows homeowners to benefit from appreciation, tax advantages, and equity growth, even if PMI is part of the equation initially. In many cases, PMI can be removed later as equity increases.

Personal and Economic Factors to Consider

Market conditions matter, but so do personal circumstances. Job stability, family plans, lifestyle needs, and long-term goals should all play a role in deciding when to buy.

Inflation also plays a role in affordability. Over time, rising costs tend to make housing less accessible, not more. Waiting for the “perfect” moment can sometimes mean missing a financially advantageous one.

Building Equity Sooner Changes the Equation

Buying a home now allows buyers to start building equity earlier, which is one of the most powerful financial benefits of homeownership.

Whether it’s a condo in Santa Barbara, a home in Scottsdale, or a property on the Big Island, real estate remains a tangible asset that historically keeps pace with or outperforms inflation. The earlier you start, the longer that equity has time to grow.

If you’re thinking about buying in Hawaii, Arizona, or California, let’s connect and explore the smartest path forward together.