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How to expect the unexpected, home-buying edition

A smaller down payment allowed one experienced homebuyer to reserve cash for renovations – both surprise and planned.

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No matter how thorough your home inspection, odds are your new house will reveal a surprise shortly after you move in – and it won’t be the house-warming party!

That’s why Andrea was prepared the second time she bought a house. Andrea is a digital marketing manager who relocated to Wisconsin from Royal Oak, Michigan. Although she had enough saved from the sale of her home for a 20% down payment, she opted for 10% and financed with a conventional loan and private mortgage insurance.

She explained: “I wanted to have some cash on hand for unexpected expenses. After all, if I wanted to, I could always pay down the principal on my mortgage later with that cash.”

The inevitable “unexpected expense” was a surprising one. Andrea closed on her house in March, and when the snow melted later that spring, it revealed a yard completely bare of landscaping. “It never occurred to me to ask for photos of the house from another season!” she noted.

Consequently, Andrea used some of her cash for a retaining wall, bushes, flowers, patio pavers, gravel and a fire pit. “It was a blessing in disguise,” she said. “Building it up from nothing gave me the chance to make the outdoor space completely my own and perfect for my two older dogs.”

Renovations were the main reason she wanted to make a smaller down payment. She was excited to put her own stamp on the house and had always wanted to explore DIY projects. It took her 5 months to find the 1950s ranch home of her dreams in Milwaukee’s Bay View neighborhood. “It’s a fixer upper, but I am using that chunk of savings as my own revolving line of home renovation credit,” she said.

Right after closing, some of those funds went toward common new homeowners face, like lawn-care equipment. Then she replaced all the carpet, tore out a partial wall in the kitchen that was blocking full use of her French doors and replaced the ugly painted-over tile backsplash. She hired experts when necessary, but did as much as possible herself to maximize her budget.

For Andrea, there’s always another project on the horizon. She enjoys the process as much as the results. And she’s thankful a smaller down payment gave her those renovation options.

Run the numbers to see if buying a home now with a smaller down payment makes sense for you with our Buy Now vs. Wait calculator.