House down payment

MtnChickaD · August 2014

It's 1am and I am at work and browsing zillow to stay awake. I have never owned a home and was curious how much people usually save for a down payment. So, what percent did you have for your down payment.

Eta- WTF bump, first option is <5%

shelley1002 · August 2014

20% is standard. Not what everyone does. I think 20% or more is needed to avoid PMI (don't remember hear that stands for at the moment).

MtnChickaD · August 2014

shelley1002 said:
20% is standard. Not what everyone does. I think 20% or more is needed to avoid PMI (don't remember hear that stands for at the moment).

I know 20% is the standard recommended amount but just curious if most people actually do it.

megs1409 · August 2014

When I bought my first house, we probably only had 6-8%. When we sold and bought the 2nd house, we made enough on the sale of the first house that we had the 20%. Got divorced. (These houses were purchased with my EX).

When I bought my condo I had 20% to put down. DH and I sold the condo and bought the house we currently live in. We had 12-14% to put down, but got a VA loan so we only put down what we had to (I think it was around 3%, but no PMI for us due to the VA loan). The rest we have in an investment account for any improvements we want to make to the house.

PinkDahLia44 · August 2014

5% with an FHA loan.

Slap8out · August 2014

I heard about a loan called "rural development" loan. It's buying a house outside certain city limits. There is 0$ down with this type of loan. We are currently looking into this, we want to live out away from people anyways!

MtnChickaD · August 2014

We are hoping to buy a house soon and stop throwing money away on rent. We are only looking to spend around 150k and we have 17k already saved but it still seems like so far to 20%.

The real problem is our rent is too goddamn high it's making it hard to save. FU dog unfriendly city with no rental options.

carawasa · August 2014

I think I put 5k down. My house was 165, financed 160K. Idk what %that is lol

sweettooth87 · August 2014

We only had to do 3% due to an fha program where we live, but we ended up putting 5% (20k) down. We bought our house when I was 20 for 400k. If I had to put 20% down, we would have had to wait significantly longer to buy the house. It worked for us. We no longer have PMI.

bkeane619 · August 2014

We have FHA, homes here are ridic.

hlb622 · August 2014

Slap8out said:
I heard about a loan called "rural development" loan. It's buying a house outside certain city limits. There is 0$ down with this type of loan. We are currently looking into this, we want to live out away from people anyways!

This is what we did. It's the Rural Development Loan Program to motivate people to buy out in the sticks. 0% down and the seller covered all closing costs, inspections, and prepaids. We paid for an appraisal and one of the inspections.

PinkDahLia44 · August 2014

MtnChickaD said:
We are hoping to buy a house soon and stop throwing money away on rent. We are only looking to spend around 150k and we have 17k already saved but it still seems like so far to 20%.

The real problem is our rent is too goddamn high it's making it hard to save. FU dog unfriendly city with no rental options.

We did 5% on a $150k house with our FHA loan. Altogether we paid $11k with our down payment and closing (we got closing back from DHs job). Everything included (PMI, mortgage, homeowners insurance, property taxes) we pay less than $1400 (with an escrow acct). So depending on how much you pay in rent and renters insurance, it may benefit you to buy before you get to 20%. The PMI goes away when we reach 20% equity anyway.

BlessUrHeart29 · August 2014

We did 5% so we've got that damn PMI payment every month. It sucks but that was our only option. Even with that we're only paying about $60 more per month than when we were renting.

ballygirl · August 2014

We bought our house last year for $380K and put 20% down. I am a compulsive saver and have always put away money each month, even if it was only a small amount, and so by the time we got married, I had a small chunk to start us off. We started aggressively saving for the down payment after we got married. We moved out of Cambridge to Worcester MA which helped because it was so much cheaper than living in the city, and it was much closer to our jobs. After that I basically put away half my take home salary for about 3 years to save for it. We lived pretty frugally on just DHs salary. I paid for my own personal expenses (gas, student loans etc) and then saved everything else I had left over at the end of the month. Its hard though. I never would have been able to do this when I was younger because I simply did not make enough money to save so much until I was in my 30's and further along in my career.

MtnChickaD · August 2014

Part of our issue as a couple is that we were both in school up until a couple years ago. Considering that, the fact we have moved twice and had a baby in that time I feel like we have done pretty well.

I just really want to be done renting already!

huntjul · August 2014

We haven't bought a house yet but are saving and planing to do 20%. The no or super low down payment loans scare me for the reasons that @beernifer 's story shows. Real estate values fluctuate, and I don't want to end up upside down on a loan. I've watched that happen to several friends, all of whom made what seemed like good decisions at the time. 20% down pretty much ensures that won't happen, as well as negating the need for PMI and making my monthly payment less. There's a reason it was the standard.

hlb622 · August 2014

We were 0-down buyers and closed juuuust as the market was turning in favor of sellers. Our house already appraises for higher than what we paid for it, so it's sliiightly less terrifying.

Still terrifying though. :-S

sleepy33 · August 2014

huntjul said:

We haven't bought a house yet but are saving and planing to do 20%. The no or super low down payment loans scare me for the reasons that @beernifer 's story shows. Real estate values fluctuate, and I don't want to end up upside down on a loan. I've watched that happen to several friends, all of whom made what seemed like good decisions at the time. 20% down pretty much ensures that won't happen, as well as negating the need for PMI and making my monthly payment less. There's a reason it was the standard.

Not sure how a higher down payment means you wouldn't still lose money if your house devalued from the purchase price? You'd still have less equity, so you'd lose the money you paid as a down payment, whether or not it put you under water.

BeachCouple · August 2014

We did 0% down with an 80/20 loan and bought when the market was still high in PA (it turned less than a year after we bought). We are only half way through the 15 year ballon loan and will be looking to move soon as my husband took a job promotion and now commutes an hour. We were under water a couple years ago, but everyone was as well. We have some good equity now.

Do they still do 80/20 loans?

jennlin · August 2014

25% with my first house on a $302k house, 20% with my second house $515k.

we were absolutely not going to pay PMI! and since nobody mentioned it yet, it stands for private mortgage insurance. it's essentially to prove that you're able pay for the house, even though you weren't able to save the 20%.

jennlin · August 2014

sleepy33 said:

huntjul said:

We haven't bought a house yet but are saving and planing to do 20%. The no or super low down payment loans scare me for the reasons that @beernifer 's story shows. Real estate values fluctuate, and I don't want to end up upside down on a loan. I've watched that happen to several friends, all of whom made what seemed like good decisions at the time. 20% down pretty much ensures that won't happen, as well as negating the need for PMI and making my monthly payment less. There's a reason it was the standard.

Not sure how a higher down payment means you wouldn't still lose money if your house devalued from the purchase price? You'd still have less equity, so you'd lose the money you paid as a down payment, whether or not it put you under water.

super low down payments mean you have higher monthly payments..which can be harder to meet if something were to happen to your income. if your house value is less than you owe, there's no chance you can sell it to move, and you cannot refinance to a lower interest rate (which interest rates usually lower when markets crash).

huntjul · August 2014

jennlin said:

sleepy33 said:

huntjul said:

We haven't bought a house yet but are saving and planing to do 20%. The no or super low down payment loans scare me for the reasons that @beernifer 's story shows. Real estate values fluctuate, and I don't want to end up upside down on a loan. I've watched that happen to several friends, all of whom made what seemed like good decisions at the time. 20% down pretty much ensures that won't happen, as well as negating the need for PMI and making my monthly payment less. There's a reason it was the standard.

Not sure how a higher down payment means you wouldn't still lose money if your house devalued from the purchase price? You'd still have less equity, so you'd lose the money you paid as a down payment, whether or not it put you under water.

super low down payments mean you have higher monthly payments..which can be harder to meet if something were to happen to your income. if your house value is less than you owe, there's no chance you can sell it to move, and you cannot refinance to a lower interest rate (which interest rates usually lower when markets crash).

Exactly. I'd rather lose money I have tied up in a down payment (painful situation) than lose money I don't have (impossible situation). I'm not saying that <20% down loans don't have a place in the market, but this is why I hope to avoid them when we buy.

stephl3055 · August 2014

We put about 11% down, but we refinanced 3 years later and got rid of PMI.

kimbo1216 · August 2014

We have an FHA loan and only did the required 3.5%.

ajjf1026 · August 2014

hlb622 said:
We were 0-down buyers and closed juuuust as the market was turning in favor of sellers. Our house already appraises for higher than what we paid for it, so it's sliiightly less terrifying.

Still terrifying though. :-S

This. Michigan has a Rural Development loan where you don't have to put any money down and that's what we did. We actually got money back when we closed on our house. Now our house is worth at least $20k more than what we paid and we are starting to consider selling.

vvg28 · August 2014

Loan officer stepping in. :P My particular office has always been on the more conservative end and we require 25% down, but the standard is 20% at most places. There are some programs with USDA that require little to nothing for a down payment. And there are programs, too, for first time home buyers that also have lenient standards. I mostly deal with farmers' home loans and our loans stay in house, so I don't work with these programs. I know of them, however, because we have a secondary market program that does offer them.

Amjoy25 · August 2014

I think generally it's 20%. We put 20% down on our first home, and couldn't on our second....maybe we out down 5% or our bank loves us so much they just let us buy it? Who knows. USAA is good people.

huntjul · August 2014

Amjoy25 said:

I think generally it's 20%. We put 20% down on our first home, and couldn't on our second....maybe we out down 5% or our bank loves us so much they just let us buy it? Who knows. USAA is good people.

Truth.

Ajoyd · August 2014

We did a special type of FHA loan (203k) where we financed the cost of the home plus renovations. We put 5% down but after the renovations we're complete we were able to refi and drop the PMI because the value of our home increased enough to give us 20% equity.

PinkDahLia44 · August 2014

baconface said:

huntjul said:

We haven't bought a house yet but are saving and planing to do 20%. The no or super low down payment loans scare me for the reasons that @beernifer 's story shows. Real estate values fluctuate, and I don't want to end up upside down on a loan. I've watched that happen to several friends, all of whom made what seemed like good decisions at the time. 20% down pretty much ensures that won't happen, as well as negating the need for PMI and making my monthly payment less. There's a reason it was the standard.

Putting 5% down doesn't automatically mean you get a scary loan. We got a normal 30 yr fixed loan with an excellent interest rate.

Yes, you need to understand your loan and what you are getting into, but you can do just fine with putting down less than 20%.

ETA: Just read the rest of the comments. Seriously, people, stop implying that if you put less than 20% down you get some type of weird loan. There are "normal" low-interest, fixed rate loans for all levels.

^ this. We also have a 30 year fixed interest. We made sure we could afford a house before we bought it, and we planned to stay in this house for 5 to 10 years before deciding whether or not to buy. We've been here 3 years so far and have no plans to move in the near future.

finnybooboo · August 2014

Slap8out said:

I heard about a loan called "rural development" loan. It's buying a house outside certain city limits. There is 0$ down with this type of loan. We are currently looking into this, we want to live out away from people anyways!

We did this. We really didn't have much to put down on the house, so it was a good option for us. I know some people think it's stupid not to put a down payment on a house (which, maybe it is), but IMO it's better then just throwing out $1000+ a month in rent. At least we're putting our money into an investment. Hopefully when (if) we decide to purchase again, we'll be able to have a down payment.

alimama33 · August 2014

jgslr said:

25% with my first house on a $302k house, 20% with my second house $515k.

we were absolutely not going to pay PMI! and since nobody mentioned it yet, it stands for private mortgage insurance. it's essentially to prove that you're able pay for the house, even though you weren't able to save the 20%.
I was wondering what the hell pmi was. We got an fha loan and I can't remember how much we down % wise, it was like 10-12k, houses are cheap in Texas. 4bdrm/3 bath 140k. We bought the house based off dh's salary alone, and we didn't even spend what we were pre-approved for. We wanted to build up our savings and have the option for me to be a sahm later (sooo glad we did that). We're big on living way below our means and building up our nest egg.

Ahahaha this is funny to me because I live in Austin...and a house like that typically goes for around $300k+ around me. Which makes me sad. We're currently trying to save up 10%, maaaaybe 15%.

ashleymarie512 · August 2014

We did 5% on this new house with a conventional loan. We had some program available to us because my credit score was so high that we didn't have to pay PMI. Our interest rate is 1/2 percent higher with this program, but it beats paying PMI each month!

Our last house was 3.5% with a FHA loan.

citygirl17 · August 2014

We did 20% because we wanted to avoid PMI. We are in the process of refinancing and taking some cash out at the same time for home improvements. The interest rate on the refi is so much lower, we're refinancing for a lesser term, adding on the cash out, and our monthly payment will actually be lower than what we're paying now.

PinkDahLia44 · August 2014

jgslr said:
@ alimama33, oh yeah, everywhere except austin and a couple metro areas. But for the most part $150k gets you lots of house.

Our $150k got us 2200 sq ft. If we had stayed in Md, we still wouldn't be able to afford a decent home in a decent area. I do miss basements, though.

muffyvonmuff · August 2014

3.5% for our 1st and 5% for our second. There's no guarantee you will sell a house for what you paid. For that reason I put the minimum down and keep my savings acct high.... This will also allow us to buy another investment property next year.

huntjul · August 2014

muffyvonmuff said:

3.5% for our 1st and 5% for our second. There's no guarantee you will sell a house for what you paid. For that reason I put the minimum down and keep my savings acct high.... This will also allow us to buy another investment property next year.

@muffyvonmuff I understand putting less down means more capital to buy another--that makes sense to me. But can you explain why the house dropping in price is why you want to put less down? Not being assured of a selling price is exactly why I would consider putting MORE down.

MissLauraPants · August 2014

We were able to put down the minimum of 5% with a conventional loan (you do not have to put down 20%) and not pay anything extra in our monthly installments. It was still a lot up front with escrow etc but it was worth it.

dovetail223 · August 2014

The FHA rules changed last June and you no longer automatically get rid of FHA when you reach 20% vestment. You actually have to refinance out of the FHA (and it's really like 22%). Also, with the FHA now it's 3.5%, there's a one time mortgage insurance premium (I don't know the exact % but it gets rolled into the loan) and then you pay the monthly PMI on top of that. We just bought a house for 328k and the cost for the FHA is almost $400 more a month. If you can swing 20% to avoid that it's better. Our mortgage company had its own first time home buying program that required 5% down and no PMI, but we fell in love with a house and couldn't swing the 5% on top of closing.

Sorry for the long paragraph!

muffyvonmuff · August 2014

huntjul said:

muffyvonmuff said:

3.5% for our 1st and 5% for our second. There's no guarantee you will sell a house for what you paid. For that reason I put the minimum down and keep my savings acct high.... This will also allow us to buy another investment property next year.

@muffyvonmuff I understand putting less down means more capital to buy another--that makes sense to me. But can you explain why the house dropping in price is why you want to put less down? Not being assured of a selling price is exactly why I would consider putting MORE down.

This will be Tl;Dr

I guess I'll use my recent client as an example. He purchased his condo 5 years ago for $135,000 with 20% down but was pre approved for a 3.5% FHA 30 year fixed.Therefore he put down about $22,000 EXTRA then the $4,700 he was required. This lowered his monthly payment by about $160 a month. 160(per month saved)x60 (months of ownership)=$9,600 total saved in 5 years with monthly payments.

20% down:

$27,000 down payment-

$9600 saved on monthly payments =

$17400 still invested in property out of pocket at time of sale

IF he would have gone with 3.5% down:

$4700 down payment +

$9600 (added to monthly payments)=

$14,300 total spent with down payment and additional charges per month.

His job moved and he needs his condo to sell asap but in this market I have it listed at $120 and honestly hoping It will sell at $115. This final price on the loan was $108,000 with his 20% down ($135,000 list price). If the condo sells at $115 and then you add in the cost of real estate agents(6%) $6,900 He will have made $108,100 on the sale. Leaving him with $100 more then his loan but never seeing his 20% returned.

jennlin · August 2014

Doing this via mobile so forgive me--

If he did 3.5%, 4700 down, means he owes 130,000 still. If he sells his house, he will get 108,000 as you say. He still owes the bank 22k, and will need to pay that just so he can move.

@muffyvonmuff

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