How much of a down payment do you realistically need to buy a $320k house?

[vi edit]

Yes, I know that regional pricing is a huge factor, but buying a 320k house for your first house is just nuts, IMHO.

Buy below your means the first time, build up equity from both your payments and appreciation, then after ten years you might have $50k-$100k in equity built up. THEN take that money and put twords the nice home.

Don't blow your nest egg and make yourself house poor when you are young. I've seen too many of my friends do this. Gotta buy the big house, gotta furnish it with 10k in furniture and carpet, gotta have a nice car in the garage. Then guess what...they don't have money to go out to eat when they want to. A $300 repair on the car or fix of the furnace has to be "financed" on the credit card for 6 months. A vacation is out of the question because they can't afford it. On so on and so forth.

Yes, it is nice to have a big home...but if you can't afford to leave it on occasion, then what's the point?

A bank will tell you what can *cough* afford *cough*. Their idea of afford is a bit on the extreme side. Yes, you can probably make the payments and afford it that way...but you do that at the cost of everything else you would like to have.

 

[Vic]

Assuming a 3% down Fannie loan, a person with an annual income of $89k would qualify easily with a 32% front debt ratio. I don't think I would like the ~$2,350/mo. payments though but to each his own. Hey, I've done loans with MUCH high debt ratios... It would be wise to have a minimum of other debts and to already have some cash set aside for emergencies. Living month-to-month to own your dream house is not very smart.

 

[Ausm]

Originally posted by: conjur

Originally posted by: Garet Jax
I believe the FHA restriction is that you must have 3% of your skin in the game. This is the lowest possible down payment.

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.

Noway can you buy an FHA house worth 320K....FHA houses are built with cheap materials and are for low income people...

Ausm

 

[Ausm]

Originally posted by: FeathersMcGraw

Originally posted by: geno

What he said. My mom had to learn that lesson the hard way. Do it right and put down the biggest down payment you can, you won't regret it if you avoid that PMI

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 agree, I have seen alot people go under who buy a house put to much down and then whenI finacial emergency comes up they are screwed.

Ausm

 

[daclayman]

Noway can you buy an FHA house worth 320K....FHA houses are built with cheap materials and are for low income people...

I didn't know the FHA built houses... I'm gonna let the others rip you up on this one.

I have a question for the group. Me and the woman have a gross of $32K/yr (that shows up on paper), $28K in cash and no monthly debt. I am a former homeowner with 29 1's and 1 nine (uncollectable over $250/not my fault) on my credit report and she has perfect credit. We want a condo priced at $106K. Can we get the best rates that are out there for a 5/1 ARM or 7/1 ARM?

 

[SagaLore]

200k.

 

[SagaLore]

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?

Well not too bad. I'm 23 and have had our house for over 2 years. But I'm not your typical 23 year old.

 

[CrazyDe1]

I'm single and just bought a 225k house...

3% minimum downpayment if you don't want to pay private mortgage insurance...which will rape your monthly payments you need 20%...I put 5% down with no closing costs...

If some of you remember there weas a thread about living at home a few monthes ago and I said I'd live at home for 2 years to save money...well that was a bad idea because I saw how much houses were costing and how much they were appreciating so I said screw it, I'm buying one now.

There's also something called a 90 advantage plan that you can do that will raise your interest rate .5% and makes it so there's no PMI for 2 years. After that your interest rate drops .5% and you pay PMI if you don't have 20% into your home. I did this with a 5 year arm..in 2 years I'll heave 20% into my home so I'll just have a lower payment....in 5 years I probably don't intend on being here.

 

[DurocShark]

Originally posted by: Vic

Originally posted by: Amused

Originally posted by: Garet Jax
I believe the FHA restriction is that you must have 3% of your skin in the game. This is the lowest possible down payment.

Well, not actually. If you're a veteran, you can get VA financing with 0% down.

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.

Originally posted by: DurocShark
Ameriquest requires a minimum of 5%, higher depending on credit.

Ameriquest is the debbil!

Not really... At least your taxes and such get paid... *cough*WaMu*cough*

Besides, that's the name on the top of my paychecks!

 

[CrazyDe1]

Originally posted by: Skoorb
If 89k is the only income of the family a 320k house is ludicrous.

I'm doin a 225k home on 45k of income...

 

[sillymofo]

Originally posted by: CrazyDe1

Originally posted by: Skoorb If 89k is the only income of the family a 320k house is ludicrous.

I'm doin a 225k home on 45k of income...

How many people do you have living with you and pitching in?

 

[CrazyDe1]

Originally posted by: cr4zymofo

Originally posted by: CrazyDe1

Originally posted by: Skoorb If 89k is the only income of the family a 320k house is ludicrous.

I'm doin a 225k home on 45k of income...

How many people do you have living with you and pitching in?

My friend is paying rent...500 a month + splitting the utilities. It makes it so I save about 650 a month after all expenses...basically I barely cut it if he's not here, but I'm doin pretty alright with him payin me rent. I figure in a year or 2 when he wants to move out I'll be making more. THat and he's got nice stuff...HDTV nice home theater setup, he bought the couches...works out well.

The house has appreciated 6k since may. Once the area is done within the next year it should go up more. That and they're building a new shopping mall a mile away and they're running a major highway a few miles away that allows easy access to the airport.

 

[GasX]

Originally posted by: Maggotry

Originally posted by: Jzero
Preferably, at least $64k - 20%.

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.

You can get around that by getting a 5% down 15% personal loan (for down payment) and 80% mortgage

 

[V00DOO]

I heard if you are a first time home buyer you can use your Simple IRA as a down payment and not pay a penalty. Is this true? If it's true, what is the maximum you can use as house down payment and are there any stipulation? I am looking to buy a house myself.

 

[DT4K]

Originally posted by: ausm
Noway can you buy an FHA house worth 320K....FHA houses are built with cheap materials and are for low income people...

Ausm

Three possibilities here:
1. This is a joke
2. Ausm is a complete idiot
3. Ausm enjoys spreading ridiculous information around the web.

It is true that there is no way you could get an FHA loan for 320k.
Even in San Fran, the FHA limit is 280k.
And in San Fran, that might get you a 500 sq. ft studio condo if you are lucky.

But to clarify, the FHA does NOT build houses. In fact, they don't lend money either. When you get an FHA loan, you get it through a bank. The FHA guarantees the repayment of that loan. Because of this, the FHA is the one who decides whether or not to approve you.

The only requirements for a house to be considered a "FHA house" is that the seller must provide at least a one year warranty and must agree to pay certain mandatory closing costs. So really, there is no such thing as an "FHA house". It just depends on whether the sellers are willing to do an FHA loan and if the loan amount will be under the FHA limit. The majority of sellers are perfectly willing to do FHA loans because the additional cost to them in terms of which closing costs they must pay is pretty minimal. So again, ausm is either joking or talking out his a$$.

The advantage of an FHA loan is that the credit requirements are more lenient and they only require a 3% down payment. By taking a slightly higher interest rate, it is possible to actually get a rebate back on the loan to cover all the closing costs. This rebate cannot be used for the down payment, but the down payment can be a gift from a relative or from one of the down payment gifting programs like Nehemia Program. This is basically a way to have the the down payment added to the cost of the loan without it looking like the seller paid the down payment.

Our credit had been absolutely terrible for years. After I got my degree and started working full-time, I started paying all our bills on time. When we bought the house, we had perfect credit for the previous 18 months, but tons of late payments and charge-offs for years before that. The FHA approver said that it was obvious that we had made a great deal of progress in cleaning up our credit and that was why we were approved. The FHA does not have any hard and fast requirements for credit score. At the time of our approval, my score was around 500. Instead, they pay far more attention to the most recent 2 years of credit history. We had been really worried that we wouldn't even be able to get a loan, so we were very surprised that we were approved.

We got an FHA loan on a 145k house one year ago. We are at 6.5% and ended up with only about 800$ out of pocket for down payment and closing costs, etc.

If you look at the online tools that try to tell you how much home you can afford, they are not even close to being accurate. There are a ton of creative ways to get home loans. I used tons of the online estimators and they told me I could afford a house anywhere from 45k to 92k. I make 50k a year and my monthly payment of $1200 on my 145k house is very affordable. So I don't know why they are so far off, but I would stay away from them.

As a general rule, I would say most people could afford a house around 3 times their annual income.

 

[CrazyDe1]

Originally posted by: V00DOO
I heard if you are a first time home buyer you can use your Simple IRA as a down payment and not pay a penalty. Is this true? If it's true, what is the maximum you can use as house down payment and are there any stipulation? I am looking to buy a house myself.

That's what I did...I took 15k out of my roth IRA with no penalty for a downpayment...

 

[Ameesh]

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 hate these kinds of questions.

i am stupid and ignorant is that bad? of course it is you sh!t, go search the web and learn something, talk to you family whoever, if you have no clue about an obviously important subject get off your ass and learn about.

 

[CrazyDe1]

Originally posted by: Ameesh

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 hate these kinds of questions.

i am stupid and ignorant is that bad? of course it is you sh!t, go search the web and learn something, talk to you family whoever, if you have no clue about an obviously important subject get off your ass and learn about.

Why is that bad? If you never have to deal with it obviously it doesn't matter and you wouldn't know anything about it. Most people don't sit there in their free time and decide oh, I'm going to go learn how to invest in a house and what it takes. Hell, I didn't know anything but the basics and the only reason why I knew that was I was fortunate to have parents who were very good with this stuff and kept telling me to get a place. I didn't truly know the ins and outs until I had to do it and started doing research.

Who cares if you're stupid and ignorant if you don't have to deal with it? I don't have the first clue about where places in Africa are, and I won't until I have to go there, at which time I'll look at it. Until then, who wants to spend their free time with useless knowledge?

 

[StageLeft]

Originally posted by: CrazyDe1

Originally posted by: Skoorb
If 89k is the only income of the family a 320k house is ludicrous.

I'm doin a 225k home on 45k of income...

Christ! I know you could likely have been approved for more but you admit that without your friend there you'd be fairly well screwed. it's good you've appreciated $6k since May, but many think that there is a price bubble on houses now due to the low interest rates of the past while and house prices will stagnate or even drop in the near future.

--

All, when in doubt follow vi_edit's advice when it comes to money.

I still think that a $320k house on an $89k income is crazy. It comes down to personal preferences and what sort of safety zone you want, but my general feeling is get a house worth twice your yearly gross. Of course if you gross $20k/year you may have to stretch that because a 40k house is probably garbage, but if you're makig a comfortable $89k/year going more than $200k isn't really necessary. What happens if you're out of work or come down with a long term issue? What happens if you want to go on vacation before you're 45?!

Being house poor in some ways is worse than buying a car that you can barely afford, because in the latter case if things get rough you can sell the thing and take a hit and reasonably quickly recover, but with a house you're locked in for a long time and even making $89k if you're paying $2k/month - rain or shine - if something happens you can drown quickly.

 

[dirtboy]

20%

 

[Ameesh]

Originally posted by: CrazyDe1

Originally posted by: Ameesh

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 hate these kinds of questions.

i am stupid and ignorant is that bad? of course it is you sh!t, go search the web and learn something, talk to you family whoever, if you have no clue about an obviously important subject get off your ass and learn about.

Why is that bad? If you never have to deal with it obviously it doesn't matter and you wouldn't know anything about it. Most people don't sit there in their free time and decide oh, I'm going to go learn how to invest in a house and what it takes. Hell, I didn't know anything but the basics and the only reason why I knew that was I was fortunate to have parents who were very good with this stuff and kept telling me to get a place. I didn't truly know the ins and outs until I had to do it and started doing research.

Who cares if you're stupid and ignorant if you don't have to deal with it? I don't have the first clue about where places in Africa are, and I won't until I have to go there, at which time I'll look at it. Until then, who wants to spend their free time with useless knowledge?

looks like you cant read on top of being stupid. good job.

 

[CrazyDe1]

Originally posted by: Skoorb

Originally posted by: CrazyDe1

Originally posted by: Skoorb
If 89k is the only income of the family a 320k house is ludicrous.

I'm doin a 225k home on 45k of income...

Christ! I know you could likely have been approved for more but you admit that without your friend there you'd be fairly well screwed. it's good you've appreciated $6k since May, but many think that there is a price bubble on houses now due to the low interest rates of the past while and house prices will stagnate or even drop in the near future.

--

All, when in doubt follow vi_edit's advice when it comes to money.

I still think that a $320k house on an $89k income is crazy. It comes down to personal preferences and what sort of safety zone you want, but my general feeling is get a house worth twice your yearly gross. Of course if you gross $20k/year you may have to stretch that because a 40k house is probably garbage, but if you're makig a comfortable $89k/year going more than $200k isn't really necessary. What happens if you're out of work or come down with a long term issue? What happens if you want to go on vacation before you're 45?!

Being house poor in some ways is worse than buying a car that you can barely afford, because in the latter case if things get rough you can sell the thing and take a hit and reasonably quickly recover, but with a house you're locked in for a long time and even making $89k if you're paying $2k/month - rain or shine - if something happens you can drown quickly.

Well, I don't have a car payment and I calculated that I'd spend 2600 in a worst case scenario...this is budgeted for car repair money and with everything at a worst case scenario. If he's not in here I save like 50-100 dollars a month which I'm barely scraping by. I figure by the time he's out though I'll have more income.

The only reason why I got approved was cause my mom cosigned...I have like 2 months work history at a "real" job. It was just a good situation because I have him living here and in december anothe frined of mine will graduate at which time I'll have about 1000 a month to save. I also have about 10k in the bank for emergencies.

Considering the alternative was a town home or condo, I didn't really want to do that.

 

[CrazyDe1]

Originally posted by: Ameesh

Originally posted by: CrazyDe1

Originally posted by: Ameesh

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 hate these kinds of questions.

i am stupid and ignorant is that bad? of course it is you sh!t, go search the web and learn something, talk to you family whoever, if you have no clue about an obviously important subject get off your ass and learn about.

Why is that bad? If you never have to deal with it obviously it doesn't matter and you wouldn't know anything about it. Most people don't sit there in their free time and decide oh, I'm going to go learn how to invest in a house and what it takes. Hell, I didn't know anything but the basics and the only reason why I knew that was I was fortunate to have parents who were very good with this stuff and kept telling me to get a place. I didn't truly know the ins and outs until I had to do it and started doing research.

Who cares if you're stupid and ignorant if you don't have to deal with it? I don't have the first clue about where places in Africa are, and I won't until I have to go there, at which time I'll look at it. Until then, who wants to spend their free time with useless knowledge?

looks like you cant read on top of being stupid. good job.

It's only important in YOUR OPINION. If you're happy renting and don't have the income to buy a house the knowledge is pretty much useless to you. That and at least he doesn't know anything but he's reading this thread and learning something he didn't know before.

 

[Ameesh]

Originally posted by: Skoorb

Originally posted by: CrazyDe1

Originally posted by: Skoorb
If 89k is the only income of the family a 320k house is ludicrous.

I'm doin a 225k home on 45k of income...

Christ! I know you could likely have been approved for more but you admit that without your friend there you'd be fairly well screwed. it's good you've appreciated $6k since May, but many think that there is a price bubble on houses now due to the low interest rates of the past while and house prices will stagnate or even drop in the near future.

--

All, when in doubt follow vi_edit's advice when it comes to money.

I still think that a $320k house on an $89k income is crazy. It comes down to personal preferences and what sort of safety zone you want, but my general feeling is get a house worth twice your yearly gross. Of course if you gross $20k/year you may have to stretch that because a 40k house is probably garbage, but if you're makig a comfortable $89k/year going more than $200k isn't really necessary. What happens if you're out of work or come down with a long term issue? What happens if you want to go on vacation before you're 45?!

Being house poor in some ways is worse than buying a car that you can barely afford, because in the latter case if things get rough you can sell the thing and take a hit and reasonably quickly recover, but with a house you're locked in for a long time and even making $89k if you're paying $2k/month - rain or shine - if something happens you can drown quickly.

i think a person making 89k could probably afford 275k with the way interest rates are now depending on making a resonable down payment.

 

[Vic]

$6k of appreciation in a $225k house is a meaningless figure, I thought I would point out.
The ONLY time a home has a concrete figure of value is when it is bought and sold. Otherwise, it is all conjecture and opinion.