10% or 20% down? The real cost of a smaller down payment

"I don't need 20%, I'll put 10% down and get in faster." Sounds reasonable. Less saving, earlier homeownership, and the difference — well, it just gets spread across the monthly payments.

The problem is that this "small difference" grows silently over 25 years. And when you add it all up, the decision not to wait another 12 months may have cost you 27,000 EUR in extra interest. Literally — the price of a new car, handed to the bank.

What 10% more down payment actually changes

When you put less money down, three things happen simultaneously:

1. The principal is larger. On a 200,000 EUR apartment, the difference between 10% and 20% down is 20,000 EUR more debt — 180,000 instead of 160,000. Every euro of that carries interest for 25 years.

2. The interest rate is often higher. Banks assess risk through LTV (loan-to-value) — the ratio of loan to property value. At LTV 85% (15% down), the rate is noticeably higher than at LTV 80% (20% down). UBB, for example, explicitly requires over 20% down payment for their best terms at 2.95%.

3. Insurance costs more. At higher LTV, banks insist on full-value property insurance and sometimes life insurance too. On a 180,000 loan instead of 160,000, the annual premium is proportionally higher.

These three factors multiply — a larger principal at a higher rate for 25 years.

Important: Bulgaria's central bank caps financing at 85%

Since October 1, 2024, the Bulgarian National Bank (BNB) has imposed macroprudential requirements on residential mortgages. The maximum loan-to-value ratio (LTV) is 85%, meaning a minimum 15% down payment. Additionally, monthly payments cannot exceed 50% of monthly income (DSTI), and the maximum term is 30 years.

In practice, 10% down is no longer a standard option — banks may deviate on up to 5% of new loans, but that's the exception, not the rule. The 10% row in the tables below is shown for comparison, but keep in mind it's hard to achieve.

The real 25-year math

Here's what happens to interest costs at different down payment levels. We use the average Bulgarian mortgage rate from January 2026 — 2.47% (BNB data) — as the baseline at 20% down. Higher LTV means a higher rate.

200,000 EUR apartment, 25-year term:

*10% down — not standard since October 2024 (BNB LTV cap at 85%). Shown for illustration.

300,000 EUR apartment, 25-year term:

The difference speaks for itself: on a 200,000 EUR apartment, 15% instead of 20% down costs you an extra 14,592 EUR in interest (28,531 BGN) over the life of the loan — and 82 EUR more per month.

And 10% instead of 20%? An extra 27,115 EUR (53,028 BGN) — roughly the same as the down payment you "saved."

On a pricier 300,000 EUR apartment, the numbers get scary: 40,673 EUR in extra interest for choosing 10% over 20% down.

When putting less down actually wins

Let's be honest — maximum down payment isn't always the right move. Here are three situations where less down makes sense:

Liquidity and emergency buffer. If you drain all your savings for the down payment and enter your new home with zero buffer, the first unexpected bill pushes you into a consumer loan at 8-10%. Better to keep a 6-12 month reserve and put 15% down instead of 20%.

Day-one renovation. Many apartments in Sofia sell without a kitchen, without flooring, with outdated plumbing. If renovation will cost 15,000-25,000 EUR, it's better to set that aside and put less down than to take a consumer loan after the deal.

Investment alternative. If the extra 20,000 EUR can work for you at a return above the mortgage rate (e.g., a broad ETF with historical 6-7% annual returns), the math may favor putting less down. But this requires discipline and risk tolerance — and it's not for everyone.

How to make the trade-off

There's no universal answer — it depends on your savings, income, and risk profile. But you can see exactly what each option means for you:

See the calculation at 10% down →

Now compare it with 20% →

The calculator shows not just the monthly payment, but the full picture — cash needed for the deal, total interest, stress tests for income loss, and even a partner cost split. Try it with your real numbers and make a decision based on facts, not gut feeling.

Because "10% is enough" might be the most expensive sentence of your life.