I would not be worried about using more capital just for the sake of saving a little interest, at the beginning of the loan. Especially being first time homebuyers you probably know very little about the hidden costs of homeownership, especially in the first few years. Let things settle down. The upgrades you want to do are only what you plan to do; houses have a way of throwing in their own plan. For example, how old is the roof? Your insurance company may be requiring you to replace it in the next few years, like they did for me. They gave me six months to replace an $8000 roof. When I was forced to switch insurance, they determined I needed to rewire the house. That was another eight grand. None of it was my plan, at least not at that particular time. Things will happen likely, in the next few years, that will make any attempt to save 3.75% seem trivial. And you will wish you had the cash instead. Or you will find yourself borrowing it back at a higher rate through a HELOC.