Perhaps no single decision in
a real estate purchase has more variables as "How much money do I put
down?". All of the conventional wisdom centers around either putting down
as much as you can or as little as the lender allows.
If you put down a large payment, you get some
leverage with the lender: little or no mortgage insurance, a good equity
position, and perhaps a preferred mortgage deal. You will also have lower
mortgage payments. A disadvantage of a large down payment is that you will be
using after-tax dollars on which you could be earning interest. You will also
have less tax-deductible interest.
The advantages of a low down payment are not
insignificant. You will have more tax deductible interest, and your investment
value percentage will increase faster. Contrary to the effects of a large down
payment, you will have little equity at the outset, and your payments (and
perhaps your interest) will be higher. You will also keep more of your own money
in hand to potentially earn more interest in other investments.