Real Estate the Ramsey Way - Should I Put More Than 20% Down on My Home?

Episode Date: March 23, 2026

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Dave Ramsey here and welcome to another episode of Real Estate, the Ramsey Way, where you'll learn how to make smart home decisions, avoid costly mistakes, and navigate home ownership with confidence. Let's go to May, who joins us in Raleigh, North Carolina. May, how can we help? Hi, sir, how are you doing today? Great. How are you? Good.

A reason I'm calling is I wanted to ask, so me and my husband are looking at buying a house next year. And we're looking at buying a house between $350 to $400,000. And we have about a $200,000 nest eggs for the down payment. So my question is, does it ever make sense to put down more than 20% even if you'd be able to afford the mortgage with that 25% of your take-home rule taking into account? Yes. So I want to make sure I understand. So you could, you're obviously putting down almost half.

Did I understand that correctly? Yes, yes. And you're saying you don't need to put down half. put down 20% and it would still be okay for you. Exactly. My thing, my only, the only thing that I might say no to that would be if you have consumer debt and if that money would be better spent paying off your debt ahead of time. But if you don't have consumer debt, then I'm like, yeah, because the best way to pay for a house is if you could put everything down, right? So I would love if you could get as close to that as possible. And if that means putting down almost 50%, that's amazing. So do you have any other

debt to speak of? No, we're totally debt free. No student loans, no car debts, no debt whatsoever. So the only other thing, only other thing would be if it's a place that really needs a lot of renovation or a lot of work, you might want to reserve some of that money to do, you know, some, you know, renovations on the house. Is there anything like that to speak of? No, but that was part of my question was we have an emergency fund outside of that $200,000. That's about five months of expenses. But I've heard that you're supposed to have another like bucket of savings once you buy a house for things that could just naturally break. So I wasn't sure how you figure out how much of that, like how much you should save for a house for just like in case the HVAC system or roof or something like that needs.

No, I mean, that's what your emergency fund is for. And this keeps coming up, Ken. We've talked about this every hour of the show today. Your emergency fund is for things that are unexpected, urgent, and necessary. And so if that happens to be your AC going out in the middle of summer, then yeah, you dip into the emergency fund and paid off. If you've got five months of expenses, if it would make you feel better to have six months, then go ahead and do that. But yeah, I don't,

I think that you're good to go. I think that what's happening here, and this is your choice to make with your husband, but I think what's happening is $200,000 is a lot of money. And in your mind, you're just weighing out the opportunity cost of, do I want to put all of this on the mortgage? Or could there be something else

that this money should go towards? is there, right? And I think it's smart that you're just weighing out all your options. So if there were something that you were going to do with that money other than put it on the house, in your mind, what would it be? So really the only other thing I could think of is putting it in the marketing and letting it grow. So that way maybe in the future we have the ability to buy like a rental property with putting more than 50% down or trying to buy it fully in cash while only having a mortgage on the house. So we don't have any hard set plans. It would just be, does it make more sense to let it grow in the market? and maybe buy a real estate property in full later for something like a rental property. Well, the only reason I wouldn't do that is I kind of like, it's almost,

and we've used this analogy for other things before, but it's almost like when you're flying on the plane and they tell you to put the oxygen mask on you first before you put it on the kids or the people who are next to you, there's part of me that says if it's my primary residence, that's me. And I want to protect me first and put myself in the best possible situation first, like my residence. Because let's think about this, Ken, when the rubber meets the road, when COVID happens, when somebody loses a job, when somebody has a diagnosis, the number one thing they think about

is, am I going to be able to keep my home? That's where the security valve is, right? And so right now we're not thinking about that. But if we put ourselves in a scenario, like I mentioned, that's the first thing we think about is, is my home secure? And so for that reason, I would say I would achieve. let me put as much down as possible so I can get this thing as paid for and as secure of a place as possible. And then I can put, you know, the mask on these other things.

Then I can start thinking about real estate. Then I can start thinking about these other properties that I may or may not pay for in cash. I think that's a really good exercise, May. Have you actually sat down and said, okay, if we put $200,000 in it, what is our payment? What's our mortgage payment versus if we put 20% down? Yeah, I have done that a bit just. kind of online playing with like mortgage calculators and stuff. And really what it seems to be coming down to you,

when I try to figure out doesn't make sense to put it to the mortgage or to put in the market as mortgage rates and how much you expect the market to return. But from my understanding, you're not really supposed to put things in the market that are short-term investors because it's so volatile. So I don't know if that's really a smart analysis, too, but I have to play around with those. No, that's right.

But what is the difference? What is the monthly payment difference on the mortgage? It's only, I mean, I say only, it's a couple hundred dollars. So maybe $300, $400. Yeah. But you could think of it like I'm getting the best of both worlds because if I put the $200,000 down, I'm getting the security on the home front, but I also have $400 freed up that I can still go ahead and invest that. And there is something to be gained from that.

So I'm almost doing the best of both worlds in that way. Yeah. I was thinking of that in the scenario that you gave us, Jade. It's smart. You know, if things were to get crazy, you go, what would be like a, like, I just wouldn't have to worry. That's right. On this house, you know, if you have the mortgage.

And so, you know, I think it's a good question, really glad you called. And wow, I must say the fact that you guys have been so disciplined to save up $200,000, we don't talk to many people that have saved up that kind of money. So I say kudos to you. You guys are in great shape. And I would ask on the investment question, what is your retirement situation? What's your nest egg right now? So a retirement between us, two, total is at $2.95, and we're both 26 years old, so almost $300,000.

Way to go. Oh, see, I'm going to tell you something. You guys are 26. If you did nothing, and I know that's not what you're saying, nor are we recommending it. But if you did nothing at this age, that $2.95 is going to be a lot of money. So just your normal baby step four, you're going to be in phenomenal shape. Well, tell us about your income, because income alone is telling you. The fact that you can do this is telling me you guys are high-income earners.

What do you earn? Yeah, so right now, so I recently switched jobs. So right now, together, we earned 200. I was at a previous job where my base salary was about 100 where it is now, but I got very large bonuses. And so I've been taking those bonuses and investing them and putting them in retirement and things like that. So that's kind of how we built this nest egg.

So I have kind of made that switch now that I have the nest egg, which I was a bit much. So I did kind of say, okay, so I've made enough to kind of find a little bit more. sustainable job. I was still able to put stuff away, but not as quickly as I did at the beginning of my 20s. Can I ask what your field is and what your husband's field is? Yeah, we are civil engineers, so I went to kind of the project management side of civil engineering, and he went into the design aspect of civil engineering. Love it.

Love it. That matches up, by the way, with our Ramsey Millionaire study. It does, yeah. Engineers were in the top five. Yeah. And there's two 26-year-olds. Killing it. You know, listen, I know they have great jobs, but they're in phenomenal shape.

So this idea that, oh, I can't be done in today's world and I'm not minimizing how expensive things are. But, man, they're doing it. And what a great place to be in. But yeah, yeah, put it on the house. Put it on the house. That's an asset. Let's not forget about that. Absolutely.

And it's, yeah, it's an investment. There's more than one way to invest. One ways to stock market and other ways in real estate. Hey, guys. Thanks for listening to Real Estate the Ramsey Way. Now, if you're here, you're probably thinking about buying or selling a house. It's exciting, and one of the biggest financial decisions you'll ever make. But you don't want to do it with an inexperienced agent who will rush you into costly mistakes,

like the ones some of our callers find themselves in. You need a pro who knows what the flip they're doing and will keep you on track with your financial goals. That's why we only recommend Ramsey trusted real estate agents. These are vetted, hand-picked, pros who actually listen to your needs, guide you through the process, and fight to get you the best deal. To find a Ramsey trusted agent near you, go to Ramsey Solutions.com slash trusted agent. That's Ramsey Solutions.com slash trusted agent. James is in Rhode Island. Hi, James. How are you?

Good, Dave. How are you guys doing? Better than I deserve. What's up? All right. So I'm a 40-year-old guy. I got a fiance and a baby who turned two in July. And my The fiancee and I, we have three Airbnbs that are doing really well. Four years into it, last year we grossed about $102,000. This year we're forecasting to do about $127,000 gross on the three Airbnbs, with a 62% profit margin. Day job is hospitality sales. I make about $100,000,000 a year.

She is a psychologist. She makes about $110. So our issue is there are these microloughs, and another one is available, but it's in a super historic old building. And I'm thinking about getting a fourth Airbnb. But the banks are telling me that I got to put 40% down. They're going for about two and a quarter. So I want to hear your take if I should get another profitable Airbnb and have it under the same roof as all my other. other ones? Or is that considered maybe too high risk?

Well, I'm not sure you called the right show. I'm not sure that you know what we do. But the, so I own several hundred million dollars in real estate. Okay. I love real estate as an investment. I went broke in the real estate business in my 20s, if you haven't heard the story. And the way I did that was I borrowed too much money. and the bank's called our notes because we were in a high-risk scenario. The Airbnb business is basically the hotel business. It's a very high labor intense, you know, a lot of hassle. So the money that you're earning on those Airbnb's,

you're working your heinie off to get that money. And you're probably working. Yeah, I am. You're working some other people's heinie off because it's a lot of hassle. I'm the maintenance man. I'm the housekeeper. I'm the guy checking him in. Yep.

Yeah. And you have a two year out. Yep. Yeah. Why don't you pick up golf too? Oh, my God. You know, I mean, you ain't got time to do nothing. So I don't know that you have the bandwidth to add another one on your personal, number one.

Number two, the risk with Airbnb's is, as you probably know, and I don't know where it stands in Providence in Rhode Island, but many HOA's, many neighborhoods, many entire municipalities are passing zoning to stop it because they're disruptive to the neighborhood. And so I know a lot of people that have lost the ability to run an Airbnb on a property they bought for an Airbnb. And in a historic setting, that's very possible. Right. It's in a unique building. It's the oldest mall in America where there's retail on the first floor, and the second and third floor was repurposed to Airbnb.

So it is in a commercial zone. Okay. So that means the risk of them rezoning it and keeping you from doing it is less? To my understanding, yes. Or it's going to take one new tenant downstairs that's a big tenant that says, I don't want people living upstairs. Well, we're all on the board. No, they're already got residential in there.

It's just a matter whether it's nightly rental residential because it's a hotel in a sense. So I don't know. You're doing some things I don't want to do and I don't recommend people do things I don't want to do. So number one thing you're doing is you're buying property with someone you're not married to. Very dangerous. Number two, you're going in debt to do it. Very dangerous. Number three, you have a high risk business model that's dependent upon someone,

else called Airbnb. Very dangerous. Number four, you have to do all the freaking work and you're getting ready to add 25% of the workload going from three to four. And you have a two-year-old. Very dangerous. So that's what I meant by. I don't know if you've been around as much. And I'm not trying to be mean to you. I just think that all you have seen in this is the upside. You've not considered any of the downsides. And that's the way I was in my 20s. And it's what caused me to go broke. And so now I'm always looking, I'm not negative thinker. I buy, I mean, like I said, I own hundreds of millions of dollars of real estate. I love real estate, but I have low hassle real estate. I don't own a single Airbnb, and we've got enough residential. I easily

could do that, but we don't want to screw with it. It's just too deadgum much work for the money, too much drama for the money. And so we'd rather make the money, you know, a little slower and with a lot less hassle factor and we don't borrow money. 100% of our real estate's paid for. I don't borrow money to buy real estate. So I'm a fan of the category of real estate, but after that I've kind of given you some things to think about. So until you've thought through all of those things and make sure that you've decided

how you're going to own, what ownership vehicle you're going to own this in with someone that you're not married to, oh, real dangerous. you know, that, you get yourself into all kinds of messes here. And I think that's what the bank is smelling, and that's why they're wanting a huge downstroke. But, you know, a good way to look at any business opportunity, too, James, is to scale it in your mind. And if it doesn't scale, then don't grow it. Meaning, if it works for 40 Airbnbs, we might do four. If it works for four but not five or not ten, then maybe we shouldn't do four.

Why is that? Well, because it's going to, the idea is not scalable to where you get out of being the maintenance man. You just have to keep absorbing more work and more work and more work. And pretty soon you're going to go, I want to quit my job and be Mr. Airbnb. Right. And that's not scaled. Then your one Airbnb app chance. or one Airbnb municipality change or your one.

Yeah. Apple decides they're not going to support the app anymore. That's right. With 13 point whatever. Oh, my crap. You know, I mean, all kinds of people. I mean, that call it that little move right there cost us about $20 million two years ago. So, you know, just because Apple decided to cough. And so, you know, all that stuff.

So these are things you can't anticipate and you leave yourself vulnerable to it. when you're just living right on the wire, when you're around the edge, and then you just keep adding to it. Keep adding to the plate until the food falls off. And that's what I heard here is a really super busy guy, ambitious guy. You said this, and man, this has become increasingly, I felt it heavier and heavier. I have a very real lived experience being in the workforce during 2008, 2009. And there seems to be a lot of folks who have entered into 2010 to 2025.

and it's been seemingly mostly upside. It's just been win after win after win after win. Plus or minus COVID. Yeah, plus or minus COVID. And there's the assumption that's just going to keep going that way. And there's no, I mean, it's tough to tell somebody, hey, you have to be prepared for when this thing goes south a little bit or when the roller coaster takes, you know, goes down and man, people don't have the psychology for it right now.

Yeah. I mean, if you've got your thing based on the Airbnb income before and suddenly they don't rent for four, months, you're in bankruptcy. Whereas if you own them all in cash, you're annoyed. Exactly. You're really annoyed. Or you put renters in. Yeah.

And you get it out of the Airbnb business and you move on, you know. And that's, it's not a big deal. Right. You know, but yeah, this is a problem. Yeah. So, no, I'm, I like James because he's ambitious and he's going after. He's going for it. I want to support that.

But I believe in being a nightmare killer, not a dream killer. You know.