Just discussing this with some people at work, as it seems as if we all are on the verge of buying houses. (relatively young guys age 25-32) with incomes ranging from $45k to $89k.
How much of a down payment do you realistically need to buy a $320k house?
- Thread starter tnitsuj
- Start date
I believe the FHA restriction is that you must have 3% of your skin in the game. This is the lowest possible down payment.
Preferably, at least $64k - 20%.
Although if you are single and making under $50k, you'd be nuts IMO.
Although if you are single and making under $50k, you'd be nuts IMO.
Absolutely. Gotta make that 20% to get out of paying PMI. On a mortgage that big, PMI alone could add hundreds to your monthly note.
Could you even get an FHA loan for a $320k house?
I believe they go off median prices in the area but $320k as a median price?
Hmm...maybe so:
FHA Mortgage limits
EDIT: Link fixed...didn't realize it was https.
There are ways around PMI as well. 20% is of course ideal, but very few people have that kind of savings. I seriously doubt that very many people put down 20% in this day and age, at least without some help from someone else. If you have the savings, definitely put down 20%, but there are other things that you can do, especially if you're making a good salary.
It differs from bank to bank, but in general, PMI kicks in when you borrow more than 80% of the price of your home, but you could always borrow 80% as your mortgage, and take out a 15% short term loan, and put down 5%. That's what one of my coworkers did, his mortgage company (Wells Fargo) suggested it to him.
It differs from bank to bank, but in general, PMI kicks in when you borrow more than 80% of the price of your home, but you could always borrow 80% as your mortgage, and take out a 15% short term loan, and put down 5%. That's what one of my coworkers did, his mortgage company (Wells Fargo) suggested it to him.
Same thing with a first time home owner. With good credit, there are a few options that make buying a home possible with 0% down. They aren't great options, but they can get you out of renting, and into your own home.
FeathersMcGraw
Diamond Member
- Oct 17, 2001
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If there's a choice between completely depleting your savings and paying PMI, PMI is not necessarily the greater evil. I'd much rather have a PMI payment and have a financial buffer than lose my job, not be able to make a payment, and face foreclosure.
As others have mentioned, financing the shortfall between 20% and your down payment may be a better option than waiting until you have 20% for a down payment, particularly if you believe mortgage interest rates are going up in that time frame.
I don't know the first thing about what I'd have to do / what to look for in buying a house.
I am 24. Is this bad?
I am 24. Is this bad?
alkemyst
No Lifer
- Feb 13, 2001
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Buying a house has to do with what you can afford and what the bank is willing to do for you.
Customary is no longer 20% down.
PMI is not the monster many say it to be....sure as insurance it does nothing for equity and over years the money adds up (every $100 extra monthly you can put to principal takes years off a mortgage, assuming normal homes)
Interest rates have fallen so your dollar may stretch more, but 2.5x Gross income used to be a good indication of comfortable home purchase.
at $45k $112,500 and at $89k $222,500....most people do it on two incomes and typically the second income is about 1/2 to 2/3 the first
at the $45k lowend that'd give another $56k-75k to play with and at the $89k mark another $111k to $150k (homes in the $333k to 470k range).
These are just models based on people with average bills, average car payments, etc. The Mercedes most want to stick in the new 4 car garage really cuts into many's home dollar.
Sometimes it's smarter to pay down the house and take the equity back out for large purchases
Customary is no longer 20% down.
PMI is not the monster many say it to be....sure as insurance it does nothing for equity and over years the money adds up (every $100 extra monthly you can put to principal takes years off a mortgage, assuming normal homes)
Interest rates have fallen so your dollar may stretch more, but 2.5x Gross income used to be a good indication of comfortable home purchase.
at $45k $112,500 and at $89k $222,500....most people do it on two incomes and typically the second income is about 1/2 to 2/3 the first
at the $45k lowend that'd give another $56k-75k to play with and at the $89k mark another $111k to $150k (homes in the $333k to 470k range).
These are just models based on people with average bills, average car payments, etc. The Mercedes most want to stick in the new 4 car garage really cuts into many's home dollar.
Sometimes it's smarter to pay down the house and take the equity back out for large purchases
alkemyst
No Lifer
- Feb 13, 2001
- 83,769
- 19
- 81
Originally posted by: Spooner
I don't know the first thing about what I'd have to do / what to look for in buying a house.
I am 24. Is this bad?
I bought my first house at 23. Age is not important as long as you are an adult.
The first thing is to check out rates in your area (in the newspaper easily found usually) and see if any have first time home buyer programs (usually a little more higher in interest, but more lenient with restrictions and money down).
You can also be a first time home buyer if sufficient time has passed between owning homes.
- Oct 28, 1999
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That's what we did. No PMI, but the interest on the second loan is smidge higher. Our payments are a bit higher by a few bucks, but instead of paying in $60-$90 a month in PMI, we pay it interest that is tax deductable. Obviously not paying anything on that is the most preferable, but out of the two - PMI or Interest, I'd rather get $.30 back on the dollar instead of $.00 on the dollar.
Vic
Elite Member
- Jun 12, 2001
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As Conjur pointed out with FHA, a $320k loan would exceed the VA loan limit for a single-family in virtually all areas. Fannie/Freddie will do it for only 3% down, but restrictions would be a bit tighter than FHA/VA. Portfolio banks, like US Bank, will go 0% down but you better bring your 700+ score and expect to pay maybe a point or so higher than market -- oops, edit: but you wouldn't have to pay PMI with US Bank even with 0% down with easily offsets that higher rate.
Ameriquest is the debbil!
Not necessarily.
If there's pretty much no other debt and the rate is low enough and enough of a down payment, it's entirely possible.
That was about my "personal" income from my business I had going and I was in a mortgage with a rather high interest rate and I was figuring if I had a really good rate how much would my monthly payment afford and it was about $250-270k.
Now, that may not be the wisest decision as they will mean little room for other debt (credit card, kids' education, cars, etc.)
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