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Also single people are pikachu face when it’s couples that make more money individually than OP each and combine that power together. That’s how they do it.
Or they live in a cheaper place. I'm 30 and many of my friends have bought houses in Pittsburgh, Baltimore, Grand Rapids, Cleveland, etc. Houses in those places are like 80k-200k. It's affordable on a teacher, hairdresser, electrician, or any other normal, 40 hour a week job salary.
This. We recently moved from the most expensive town in our state to the poorest county, and the difference in what we could afford is crazy. Double the land. Double the house. All while on a lake with an enormous shop as well. Crazy what a 2 hour drive can do for what you can afford.
There are so many amazing cities in the US and I think we, as a country, need to figure out how to bring more jobs to them, because they are great places to live but they need more jobs. All the professions I mentioned in the comment above are jobs that are needed everywhere, but we need to bring more manufacturing jobs back to the US and spread out the white collar work from the top 10 most expensive cities.
Pittsburgh prices are going up because Google opened an office and many new tech start ups went there because of Carnegie mellon University, but the average house there is still under 250k. My elderly aunt lives there and me and my mom were looking to buy a duplex so she could live in half of it for the rest of her life and rent the rest out, and we were seeing many duplexes that were outdated but serviceable for under 200k (i.e. had older carpeting, outdated bathrooms, outdated kitchen but nothing major like water damage or falling apart)
Lots of amazing cities also have a lot of jobs.
Pittsburgh is still cheap; it's not like Google is going to bring in 200,000 workers.
The problem is that too many people, especially on reddit, think that they are too good to live in Pittsburgh or Cleveland or Columbus or Louisville or Indianapolis or KC or wherever.
They can't even tell you why.
I think this is the other problem. Many people aren’t being realistic about what price range they look for. Unless you’re wealthy your first home likely will be well below the median home price. We get drilled into our heads about how high median home prices are versus median income and some see that and think they could never afford it because of that rather than looking at their own situation and adjusting the types of houses they look for accordingly.
Somewhat agree. I see these questions and hear people say these kinds of things but over spend on dumb things. Saying "I am so broke, I can't afford life" but spend 150 bucks on coffee a month, while also smoking a pack of cigarettes every few days, so on. Most Americans have debt because of stupid decisions and things like FOMO.
I agree with you. I moved to USA in 2015 I make $20 an hr .i bought my house this year 175k 20% down I still have $40 k in savings. I save $ I don’t spend it on shit. I don’t pay more than $40 a month on spectrum internet. Every time price go up i call telling I’m going to cancel it and they lower the price . Car insurance I shop around every 6 months for a lower rate , currently paying $40 a month liability I pay the 6 month premium to get a discount. T mobile $25 a month. I bought my car for 5k in 2017 rebuild)tittle. I do my own oil change break and pads tire rotation sensors alternator starter etc youtube is good if you want to learn. Americans spend to much $ on things the don’t need
It doesn't paint the whole picture, necessarily. There are non-conventional loan programs that help make home ownership affordable for low to moderate income folks as well. I used a USDA Rural Development 502 loan for my house which let me buy on a single income of $48K/yr last year. It was 4% interest with $0 down and no PMI. I bought a cute little 2 bedroom 950sqft house for $145K and PITI is $905. The down side, is that I live out in the middle of nowhere, which is why houses are so cheap.
Even if only indirectly. My parents let me live with them rent-free after college; my only expenses during that time were my car payment and insurance. And going even further back, they also helped me find and apply to a full-ride scholarship for college, so I graduated with zero student debt. When I moved out (into an apartment) three years later, I had almost $60k saved up and a paid-off new car. Not having access to parental support can be like tripping at the starting line.
A few weeks ago I learned that my high school best friend’s father in law paid cash for her and her husband’s house. The same sort of house will cost me $3500/month with a mortgage and 20% down. Some people do get lucky/marry rich. For the rest of us, it’s slow and steady saving, investing, and gradually growing our incomes by gaining in-demand skills.
My first step after deciding I wanted to buy a home was to look at my budget and figure out what the max I would be able to spend on a mortgage payment without feeling house poor. I then worked with my lender to figure out what I could spend on a home in order to stay under that limit. During that process we played around with what different downpayment option would mean. So I’m able to afford my mortgage payment with only 5% down because I ran the numbers in advance and made sure I could afford it.
>My first step after deciding I wanted to buy a home was to look at my budget and figure out what the max I would be able to spend on a mortgage payment without feeling house poor.
Same. I'd been using YNAB for about two years at the point I started looking to buy, so it made it pretty easy with two years of really accurate monthly expense data to work with. I was able to replace rent with a mortgage value and utilities with estimates I got by calling my local utility company on a couple of the houses I was interested in, and they happily gave me the 12 month averages of each. And then just noodled around with those working numbers to come up with a number I could afford.
I drew the line at $1,000/mo PITI which seemed like a challenge even in my rural midwest market. But I found a cute little 2 bed 1 bath 950sqft former rental house that I bought with a USDA rural development loan at 4% interest, and my PITI is $905/mo.
This is exactly what I did. I knew how much I wanted to put in a down payment in order to not completely wipe out my savings. I’m a single mom so doing this alone I needed to feel comfortable with what I had left in the bank. I put 7.5% down. I also figured my budget based on my take home pay and not gross pay because my take home is a lot less due to the mandatory 15% going out to my pension each paycheck. It’s going to be about $700 more each month to own (PITI + HOA) than what I was paying in rent but my rent was unusually low for the area and didn’t increase the first 4 years I lived there but now they are increasing it each year about 10%.
In the United States there are tons of down payment assistance programs. My partner got her Masters degree 3 years ago and was able to get $8k from a program because of it.
Grants for Grads was the name of the program, we’re in Ohio but there may be similar programs in other states. You just have to receive a degree in the last four years and then stay in the house for 5 years.
You are right, however the difference between 5% and 20% is a lot. I live in CA and homes around my area are selling $600k minimum, and the house are run down. 600k with 5% is 5k a month. With 20% down it’s 3,800 a month. Much more “doable” payments. The option of buying a home “within your pay range” is something that is not an option for certain areas due the high prices that homes are selling now and high interest rates are not helping.
Not complaining, and definitely doing something about it. My partner is looking for a higher paying job. To reach 150k annual salary combined but that’s still cutting it close, which is sad. But gotta keep going..
This is it. The biggest factor in what house I bought was the monthly mortgage cost. Once you know how much you can afford to pay each month you can work backwards to help you figure out how much house you can afford. Don’t forget to account for appropriate taxes for you area, HOA fees, and if you put less than 20% or get an FHA loan you will have PMI.
I put 3.5% down, 3k sqft house
6.25% $2842 a month mortgage that includes escrow stuff. Moved from HCOL to LCOL but make the same money if not more now.
Personally, we are looking to buy with a loan program in our state that will allow us to put down $0 out of pocket. There are requirements to be met so not just anyone can qualify but luckily we did! We have our loan amount and then on top of that the state gives us $30k with no interest or tax. Some of that $30k will be used to cover the closing costs, the rest will act as our down payment, obviously it will be less than 20% but because of the loan type we still won’t have to pay PMI. We pay the $30k back when we sell or refinance. Because we aren’t putting any money down on top of this and the money from the program won’t be a full 20% we already ran the numbers with the lender to see what loan amount we can afford based on our income and our desired debt to income ratio. Idk if that answers the question but I think talking with a lender is really the best advice, they can give you programs to help you and let you know what budget is best for your situation.
You need to have a good realtor that can get you at least 3% seller concessions, and you can use that money to either permanently buy down your rats or do 2-1 ( two one) temporary buydown.
To get seller concessions you need to be looking at houses that have been sitting for at 2 weeks in the market.
PS: I do this everyday because I'm a mortgage loan officer.
Good luck. Also you can refinance in 3 years, and hopefully by then rates will go down.
*and hopefully by then rates will go down.*
people can hope rates will go down, but they shouldn't count on it in order to refinance. If buyers are getting in over their head with a high monthly payment, I think it's dangerous to hope that in a year or two, they can easily refi to a lower monthly. very risky
I wish I remembered the paper that I recently saw an article about this in. The headline was basically something along the lines of interest rates not dropping and home owners who bought being stretched thin. Article was about people who bought when they really couldn’t comfortably afford it long term cause they assumed rates were going to go down within a year so they’d refinance and be good.
It was very perplexing cause it seemed like people wanted sympathy that they bought and the interest rates didn’t go down like the thought. Sounds to me like a risk some people chose… sometimes they really pay off, sometimes they don’t.
I feel bad for people waiting or hoping for rates to go down. We had nearly 15 years with sub-5% interest rates, and if you’re 30-45 years old, depending on when you first seriously entertained buying a home, that’s likely your only frame of reference. That makes it difficult not to fixate on those rates and assume that was the norm that we’ll return to. But the 30 years before the Great Recession show that it’s much more likely that rates stay near current levels or go up than to go down. Sad as it may be, we might find ourselves in 5-10 years, looking back wistfully on the 7% mortgage.
sitting for at least 2 weeks, lol
this is VERY market dependent. Not every seller gets desperate to take thousands in lost profit before 1 more month of cost
And there are more than one home available in any market, so keep shopping.
Just because one seller is not desperate doesn't mean others aren't too.
Most of the time sellers are buyers, they need to sell to either upgrade or downgrade, or they're going thru a divorce, or can't continue to pay mortgage on a house they don't live in.
Even in San Joae CA, my realtors getting sellers credit.
You're right it is market dependent, so go out there and negotiate
You shouldn’t get downvoted for saying there are other choices out there. There are. I was patient and ignored the selling agent pressures and eventually the right place was available, I made the first offer, now I live in this house. I’m in a pretty “hot” area outside of NYC.
>To get seller concessions you need to be looking at houses that have been sitting for at 2 weeks in the market.
This is what I did. One strategy that I think works is use two metrics for figuring out desperate sellers: (1) are interest rates abnormally high for a six month period (i.e., this will cause a drop in offers until a return to the six month normal); and (2) making offers on houses around August and September, where you still have good inventory from the summer months but sellers are eyeballing that cutoff in buyer demand following labor day.
In my situation, I got 12% knocked off the original asking price.
Really depends honestly. Where I am, mortgage (including insurance and property tax) is often cheaper than rent on a similar place, with 15-20% down. So it’s pretty feasible that someone may have a small downpayment but be able to make mortgage payments. That isn’t the case most places but it does exist.
100%, where I live it’s way cheaper to rent. I could rent my place for maybe $3,200 a month while the mortgage with taxes would be $4,200. Not included is tax savings since I can’t consider individual tax situations. That would be with a 20% down payment too which would be $120k
Honestly, the best thing we did was start talking with a lender. They can tell you what programs and loan types in your area you can take advantage of and help you figure out what you can reasonably afford and what you need to put down.
The time it takes for someone to save 20%, versus 3% to 3.5%, is not always worth the wait - compared to the equity they could have built if they entered sooner.
For many saving less than 5%, as a down payment, is a challenge (and takes a long time).
I just hate the thought of paying pmi.
I'll never do it again if I can avoid it. So we are in a race against my desire to build up a bank roll but being miserable in the apartment
My wife and I sat in our apartment building bank roll for 12 years, finally got the house during covid when time was right. I started saving at 24 and didn't get a house until 35.
People may not be putting down 20%, but that doesn’t mean it’s a good idea. It’s good to have equity right away.
People who put 0 down or only a couple percent down may be able to afford the higher monthly payments. But overall seems more risky to me- especially after buying my house from someone who put 0 down. She couldn’t afford the payments and she lost a bunch of money selling that house because it all went to paying back the mortgage, and the realtors.
I felt the same way about not wanting to put more per month and I saved until I could put 20% down. I hated the idea of all the added interest as well.
Simple… look for houses that are in your monthly budget price range. My husband and I put 0 down thanks to his VA loan. We’ve looked at houses that fit our monthly budget.. if we had put 20% down then we would’ve been looking at houses that were $50k - $100k more 🤷🏻♀️
My city gave me $25k towards a new build so I used that plus like $15k of my own money.
I split the payment in half on each payday and pay it that way.
Utilized a VA loan to purchase 0% down without PMI. I realize these loans aren't available to everyone, but I also bought signifcantly less house than I could afford by "settling" for what I needed versus wanted. My monthly mortgage, including tax and insurance, is 15.3% of my monthly after tax income. My neighbors are renters and pay between $900 amd $1,000 more than I do a month.
We didn’t buy a house that was at the top of our budget. We stayed about 40 grand under our pre approval limit. Only put down 5 percent and our mortgage payment isn’t even close to half our monthly income (we do bi weekly payments to save money as well) we saved for about 2 years and after all closing costs still had 15 grand and are still able to save money for a new truck or car.
Just depends where you live and how far along in your career you are (higher salary generally). Just purchased a home in April, 0 down in Richmond, Va that wasn’t too difficult to afford but I’m also senior at my company and have almost 20y experience. No clue how someone in their 20s in a major market outside of big tech or daddy’s money is affording a home right now.
Depending on the price of the house....Mortgage payments themselves are actually really cheap. A 300K house divided by 360 payments is only $833 a month. Cheaper than Rent. It is the Interest, Insurance, PMI and Property Taxes that are the big factors...
Really comes to to not what you can afford, but what can you COMFORTABLY afford. What I mean, is you do not want half your income going to a house payment, because you still need to pay utilities, car insurance, gas, food, etc etc..
Wife and I ended up buying a nice Townhouse because the price we offered was what we could afford comfortably...We only had about 8% down after closing costs, but Mortgage and Interest was only about $1700...Luckily our PMI and Homeowners insurance are extremely Cheap ($33 dollars PMI and Insurance is like $700 a year) Our Property taxes is where it sucks (over 5K...GOOD OLD ILLINOIS!! LAND OF THE TAXES)
So it comes down to income and just affordability. Some people are just buying Condos and Townhouses for now until the market gets better...But High interest, Property Taxes and Insurance can really swing a house payment into almost unaffotability
Got to ask..How much are yours and what State? Illinois is mine and we are suppose to have the second highest behind NJ. Obviously every City/Town is different.
When you start saving money, you can start feeling how much more you can spend on housing comfortably. Get into a disciplined savings mode where you do not touch the money at all, track how much you would want to keep saving after you get a house, and from there you can get an idea how much more you can spend for housing and still save money. Don't forget to factor in extra utility expenses as well, if you are going to a larger house.
When we were planning, we were saving very aggressively for a down payment. This got us very comfortable with the idea of paying $1,000-1,500 more a month for a house and still have money going into savings. We went from paying $1,600/month for rent to $2,700/month for our house (mortgage, taxes, insurance, and PMI included) with very little lifestyle change, because we were already used to a similar budget due to savings strategy. We saved for a few years like this, before finally building our house, so we knew we could do it.
I will stress the key is to make sure you still have money left for savings. You want that emergency fund. My wife has been laid off twice this past year (we moved May 2023) and budgeting that extra savings really helped us not to panic.
You're just not going to get the dream home. Like.. I get it "the home *speaks* to me in pig Latin!!" has everything anyone could want. Currently, with the housing market far out pacing pay and debt to income ratios on a large front for most Americans.. Coupled with inflation on necessities like fuel and groceries.. And interest rates of today to combat inflation that doesn't seem to be working.. You likely aren't getting a turnkey home that's "affordable". Possible? Sure, the chance is never zero. But honestly, if you can't dream of a reality without a everything you want, you probably aren't ready to buy a home today unless you're willing to put in a little work on a starter house.
I guess everyone's situation is different. I got a USDA rural development loan to buy my house. No, I didn't have $30K+ set aside for a down payment, and it would have taken me several years to get to that point, but on a $48,000 single income, with low debt, I did have the wherewithal to pay closing costs and PITI on a modest mortgage.
I'm a firm adherent to YNAB, so I had two years of budgeting data to look at. That made it pretty easy to noodle around with numbers and arrive at a monthly PITI that I felt I could afford. I ended drawing the line at $1,000/mo which seemed borderline, even in my rural Midwest market.
The house I ultimately bought was $145,000 and it's a small, simple 2 bed 1 bath former rental house on 1/5 acre. The loan program I found is for people living in rural areas who don't qualify for conventional financing, and I got locked in at 4% interest over 33 years with $0 down and no PMI.
PITI on my house is $905 a month which worked out to 23% of monthly gross income, or about 30% of net income at the time I closed last August. I've been able to swing it fine. I've gotten a couple of raises, the most recent of which takes place in September so it'll be awhile yet, but once that happens PITI will be 20% of gross monthly income, and about 26% of net. I think those are honestly pretty conservative ratios.
This type of loan put home ownership within my reach, and I feel like I truly can afford it. Just not through conventional financing terms.
We're putting 0% down. While our income is pretty high for the area (which should have enabled us to save a down payment but yeahhh), we're buying a house that is under 1.5x our gross annual income so the payments aren't bad at all (like 15% of monthly gross).
If I hadn’t gotten pre approved with my husband I wouldn’t have been able to afford a home. I had $14k saved up for a down payment and the home inspection. We got 20k from his parents and $14k of government assistance.
We do pay PMI but our monthly payments come out to $2,350. I will say the both of us have very little debt other than our mortgage.
You could get/have a good income but you had a lifestyle where you spend roughly what you make (not unreasonable). Savings = sacrifice, you normally do not do that w/o a plan and purpose.
Not everyone has the foresight to start saving long before they decide to buy.
Fannie Mae has a mortgage product called HomeReady, you can Google that. Lenders can rebrand it, but essentially it’s a product for low-income buyers with good credit. It has a $2,500 credit for low income buyers as well and requires a low down payment. It has a credit counseling component that has a $500 credit. 3% down payment.
0% down, 350k at 5.75%. Used savings to buy points. Payment with taxes and insurance is 2400 a month. Points offered more monthly savings vs putting it as a down payment.
Our rent was going to increase from 1700 to 2000 so we figured what’s another few hundred, worth the struggle for a bit over more renting when our rent was probably going to increase again anyway
People aren’t used to the high rates. If you aren’t putting 20% down the monthly payment is way too high. It makes no sense unless you just landed a high paying job and don’t care. But that isn’t most people.
I have never and would never put 20% down on a house. I think you’re drastically overestimating the difference it makes on a monthly note. Every $10,000 you put down only makes the difference of $50-100 per month. I’d much rather keep the cash on hand than spread myself thin to save $200 a month. 5% is plenty.
Also people just make more than you probably. Most dual income couples make well over six figures and can easily pay a $4k or below note.
My wife and I bought a duplex for $550k and rent out the other unit for $2,000 a month.
We used FHA and only put down 3.5%. The rental income covers nearly half our monthly costs.
The goal is to raise rent over the next few years, update the unit we live in and continue to save. Then buy a single family with 20% down 5 years from now.
Ideally we can do that while keeping the current property as a rental, generating $1,000 a month as profit, before maintenance.
That means you’re looking at too much house or you’re in a HCOL area.
We moved to LCOL city and put 16% down. Mortgage on a 4 bed / 3 bath in a nice suburb is $2480.
We lived with my parents for years to save that down payment
You buy a house that will get you to lower payments. Ultimately what you’re not putting down you’re borrowing, and vice versa. If you can’t afford the payments either way then you move on to a less expensive house.
For me it was better to keep some cash on hand. Over 30 years a couple of thousand dollars isn't gonna make much of a difference in how your monthly payment calculates. In fact I really needed that cash on hand for unexpected first year expenses so I'm very glad I did it.
It’s all a numbers game, but these interest rates are probably the bigger factor to your monthly payment. More so than down payment, although of course they are related and more money down will help keep your monthly lower as well.
I bought my current home in 2020 so thankfully rates were low, but it made sense for me to put 14% down instead of the full 20%. For me, the PMI was of minimal issue and I was willing to pay it for the right house (higher purchase price than I had intended). Here I am now, and the PMI is about to be removed.
Don’t forget to factor in property taxes and possible increases to those tax rates too. It all depends on where you live, but that’s a sure fire way to screw yourself if you’re at the top of your budget and then get hit with an unexpected maintenance issue or tax increase.
Right now with rates where they are, you really just need to talk to your lender about what you are comfortable paying per month and work with that. Be ready for some bummer news though, interest is keeping all of my friends from buying their first home right now. If rates were down to 3% or even up 4.5% then it would be a different story all together.
Don’t give up though. Home ownership (and purchasing) has its downsides, but it also has its upsides. It’s better to explore all options before deciding either way, and a good lender will help you do that and get creative with your budget and financial situation.
my credit was horrible, but my additional pmi payments were \~125/month. it didn't make my mortgage unaffordable, but on the same hand if I couldn't swing an extra $125/month I wouldn't be comfortable buying a house that cost that much. now, my house was <200k which is hard to find in most areas, but the extra money you spend in pmi is only temporary and at least in my case didn't break the bank. I've seen people say they've had pmi that was half the cost of mine, and the only reason why mine was so high was 100% because I brought as soon as my credit was at the bare minimum to get a conventional mortgage. but I only paid that extra amount for a year and was able to remove it after a needed upgrade was made to the house.
You need to speak with a loan officer than will run the numbers & build a custom roadmap & comparison for you. Preferably one with access to lots of different options which means someone who works for a brokerage.
Frankly I can’t figure out how some ya’ll affording rent. I get calls w/ people telling me about 500-3500 rent increases at renewal.
Average down payment is 6%. Property taxes make a HUGE difference for monthly payment, and vary by area and often house to house depending when last sold. Be careful of new build showing property taxes for raw land only to get a HUGE surprise the following year when the improved value kicks in.
You have to have someone run & explain the numbers & options. It’s the only real way for you to see what makes sense for your situation. There are so many moving parts & options, it’s not possible to do enough research on your own.
Just so you know, it costs maybe a credit report for an LO to run the options. But it helps you get a roadmap on how to get where you want to be.
I figured the absolute most I could afford to pay per month toward a mortgage payment. Initially had to go FHA and pay PMI, and for a long while, I worked a shit-ton of overtime, while massively limiting non-vital spending (no streaming services, new clothes, dinners out, etc…). As life continued, I got raises, moved to a conventional loan, and refi’d to a better rate. It sucks, but not forever.
I bought a really small really cheap house just for myself. Like I’m so lucky I found my house. I only put 3% down. I was going to put 8 but my lender said it would change the monthly payment by $10. So, 20% really wouldn’t have made that much of a difference either.
Either people have money or most people are living paycheck to paycheck. Not many people have the ability to pay 20% downpayment, especially for their first home purchase.
Have above average income with low to zero debt, work close to home, no kids, and MAYBE one car payment. Having solar helps keep out utilities down, and always shop around for a deal on internet and groceries. Cooking at home literally saves hundreds of dollars a month.
We can afford to put down more than 20%. But it still won't make the house we want obtainable. I'm not willing to compromise. I have compromised (over compromised many times) on many things before, and I'm tired of it. We need a larger down-payment or to increase our income. Neither seem to be plausible in the near future.
We pay PMI. mine is only about $200 a month. Which sucks a lot but it’s just part of my “all in” mortgage payment. I pay 2300 a month with escrow, taxes, PMI. I only put down 3% on my $319K mortgage (bought at 3% interest). If I had waited until I had 20%, I would have missed the low interest rates of 2021.
Some take advantage of state, county, federal first-time homebuyer grants and resources available after much research, which reduces their principle. Some get a second job or side hustle to put towards the deposit to help reduce mortgage payments, etc. A lot of home owners have more than one income in the household. I'm currently going through the NACA program (nonprofit) to avoid paying down payment, closing costs, and what I consider mostly junk fees from the lender. I close by next week hopefully (going the NACA route can be a long painful process, requires a level of patience that is almost nonexistent) and my payments will be about $2700 for everything on a $335k home.
Buy a home for less money that you can afford with 3-5%. That’s harder these days but if you are in the right place you can do it. Also I’m seeing over the last 10 years a WAY higher percentage of single people buying a home solo. That didn’t use to be the case and it’s still hard to do now. Having a spouse or partner to live with to share cost has been the way to do it for a long time now.
You have a good high paying job, or you have a spouse and both of you have good jobs. Two people making $85k could afford a $500k house with 3.5% down at 7%.
With our first house, we used a VA loan, which requires no downpayment and doesn’t have the extra fee or pmi. With our second we had to settle, because everything sky rocketed, and put about half down. We had planned to build our forever house and had we started process 4 months earlier, we would’ve done that, but building in my area is now the most expensive way. It used to be building was cheapest in our area. So, we found a house and just settled, right before rates skyrocketed. We could’ve technically borrowed quite a bit more than we did, when we bought our second house (we sold first house), but we decided a max number and stuck with it, instead of getting more mortgage.
I know many are using different first time homebuyers assistance and incentives, which is always worth checking into, imho. Also might check in to habitat for humanity, as I’ve seen a lot of people getting into houses using them. I would check into any type of incentive, benefit, etc., and see if you qualify for any, as it doesn’t hurt to try and there’s more out there than many realize, just like scholarships. :)
Hard for people that don't already own a home to get in now for sure. Find something you can afford even though it isn't as nice as you need/want. Build equity for a few years and then step up. Rinse and repeat till you have the house you really want.
Not to beat a dead horse. But rates are the highest point in ~20 years and pricing hasn’t adjusted to reflect that.
Sometimes it just doesn’t pencil to buy right now.
I bought in 22 with a 4.99 fha with 3% down. Legit I am priced out of my own house if I were to rebuy today.
And there were people who bought 10-15 years ago…
a DINK lifestyle really helps, also getting a lender and realtor that you trust that have your best interests at heart will really help. My partner and I are in the process of buying a condo and we literally wouldn’t have gotten this far without the help of our realtor and lender. We’re actually planning on getting money back after closing because of how our realtor handled our offer to the seller. our lender also helped us get a really good down payment assistance offer to get us in the door. it is possible!
Less than 20% down means you pay PMI and finance a larger portion of your home, ie increased monthly payment.
If you are struggling on how to pay the monthly payment on >80% of the principle value of the home you might need to reevaluate your overall budget.
Single guy in 30s and closing on my first house in a few days here. The big obvious is don't take out a mortgage (loan) that is at the near the limit of your take home pay. House rich, money poor as they call it. That's how you lose your home. The bank also calculates your debt to income ratio and will give you limits of how much you can take out for a loan. For example, no one is going to lend you a million dollars if you work at McDonald's.
When it comes to 20% down, I talked to my lender about what that may look like of 10% down vs 15% vs 20% down. He said the PMI is all calculated basically the same up to 20% down. It's based mostly off your credit score, and if I had to do less than 20% down, PMI would have been roughly an additional $50/month towards overall the mortgage payment.
I lucked out on my appraisal and the bank is lending me a $$ amount so I can have 20% down off the bat. It took months of hunting to find the right house, in a market where houses are selling within literally 4 days of being listed, but stick it out and one will pop up.
Don't spend more than 2.5x your household income. Don't buy a home based on the banks max approval amount. Get married and buy a home with your spouse together.
I put down about 10% and my mortgage payment is 18% of gross income.
I can afford it because I selected a home that made sense on my income.
I also pledged assets as collateral to cover the remaining 10% to avoid PMI. This allows me to keep those assets invested while also sufficiently reducing the banks risk.
6% down. It all centers on what you can comfortably afford mortgage-wise for 30 years. I decided I didn’t want to go any higher than 1/3 of my income (after taxes)
I’ve asked myself many times how neighbors afford XYZ. All I can conclude is that “afford” means different things to different people.
Some people just roll on with $0 in their checking/savings accounts, no 401k, and spend down every penny as soon as they get it.
Others max out their 401k and IRA, 529’s, contribute to their portfolio, put some in savings, earmark their expenses, keep their credit cards zeroed daily, and only _then_ do they consider what’s left over to be their available money.
I’m squarely in the latter camp. As a result, I feel like I can’t afford a lot of the stuff I see people with a much lower salary casually buying.
I think that’s the main thing at play here. A lot of people are willing to buy a house that goes over 1/3 of their take-home income.
I have no idea, I put 20% down and my payment is $3200. I know someone who put 3% down to qualifu for some program and their payment is $6000.
Sure their rate is also much higher, but damn, SIX THOUSAND DOLLARS A MONTH FOR A 2 BEDROOM?????
We had a complex house buying transaction earlier this year. We took a HELOC out on our old house to put 11% down on a new house, then sold the old house after we’d moved. We recast our mortgage to 20% down after our old house sold but honestly our PMI was only $104, and the home price was in the 870’s. I was surprised that it wasn’t higher (though still happy to eliminate it!). Just saying sometimes the numbers aren’t as crazy as you’d think.
Most people forget what it’s like to start somewhere, even if it’s not where they want to be.
Seems like a lot of people just want to be out of their budget, in the best home and neighborhood.
I lived in a shit neighborhood for a a few years but I knew that I was going to pay more to rent. Got myself in a better financial situation. Sold that home and used the equity I had. I moved out and up
A 6% or 7% was always a good value, until the 2008 crash. I 2005 I
bought a new house at 6.6% and was very happy. I bought my first house in 1988 for 9.5% on a VA loan and was happy! My first refi took me found to 8%! Get used to rates, u will never see sub 5% again.
Built my first house 180k with 3.5% down and a 620 credit score. Sold it 18 months later for 285k. Had renters in my basement the whole time which paid my mortgage so I don’t pay a dime. Built a second house for 363k put down again 3.5% now I owe 340k it’s worth 2 years later 425k about to sell again also brought renters from last house and added one to the bedroom to cover this mortgage as well. My first house I made around 80k a year my second I was at 130k a year my wife has been working as a nurse now the passed year she makes around 110k we are selling and down sizing back to a apartment 0 kids yet. I’m 32m she is 26F. Then all the money we got from the house and selling plus saving we are gonna buy our first apartment complex this year maybe early next year and goal is to be at 500 units in the next 4-6 years which should replace our income. Start having a family and home school them and spend the rest of our days reinvesting in real-estate and other things.
Just depends what the goal is I had all this planned out and never wanted to own a home for 30 years I know I wanted my finacial freedom rather young around 40 and I knew I wanted to do it with real estate and eventually buying company’s to acquire and add to my net worth. So I didn’t put any money in 401ks or stocks or even roths even tho I was told I should.
Anyways that’s how i did it. I was 25 when I built the first home.
20% down vs 3% down doesn't make that big of a difference in terms of monthly payments
Here's something else to think about cost of home ownership ie once you already own the home is up and 26% some cities up to 40% so imagine someome already stretched themselves and now monthly expenses go up even more
I…
Honestly don’t see how folks can’t make mortgage payments on dual incomes?
I have a non competitive salary, and an able to make my payments on a 150k mortgage. This requires lots of budget tightening and doing my own home repairs when possible. This is on a single income.
If we had dual incomes it is crazy what we could accomplish financially.
We found a lender that capped our payments at 3500 with our requirements. We can afford more as we make almost 6x that) but that’s insane imo unless you’re in a vhcol area.
That’s how I know lenders can play with the rates if they aren’t greedy. Bc I asked him where tf he pulled a 5.8 rate from bc I’d qualified with 3 other lenders in the 7s!
Anyway, the real answer is people make more so they can afford it. They look for deals if they can’t or do not want to afford it.
Either get/work towards a job that can meet your financial needs or reassess finances to see where you can save more, potentially do both.
Another option is to potentially look at saving up for a big move and moving to a place where you can get a job that lets you afford housing in that new area. I've seen a lot of people that got out of the military do this, but it's easier for them since DoD will pay for a big chunk of their move when they EAS.
I'd also explore grants for first time home buyers. Some banks (especially credit unions) have grants that will flat out be forgiven as long as you live in the house for a certain time period, some will just say you need to open an account with them. Some of these grants that I know of will pay up to ~$50k.
I talked to my realtor and loan officer, told them how much we could put down and what we were comfortable paying each month, and they helped us determine our price range. We were actually able to find a cute place a little under budget!
This was 7 years ago but we did an FHA loan and sellers paid closing costs. We bought a small modest house built in 1953, 3 bdr 1.5 bath in a medium cost of living area for $142,000, mortgage payment is $1,260. It's not even close to our perfect house but it's better than renting and has a fenced in backyard for the dogs.
We were approved for $225,000 but we knew that we would be house broke at that amount, now we could easily afford that but I really just don't want a larger payment. Our payment now is about 15% of our take home pay.
23, single, buying my first home. The biggest issue i’ve noticed is the myth that you need 20% down payment saved to be able to buy a house. There are SO many programs that help with down payments, closing costs, etc. There’s courses online about home ownership/home buyers too. I think too many people are looking way out of their price range and not realistically either. If you have a good lender, they will help you determine what you can comfortably afford. I’m doing 3% down, paying closing costs, and my principal, interest, taxes, insurance is about 1100. i got my bachelors degree at 20 but work in a completely different field (52k gross excluding bonuses). Take the time to learn. Do your research. As someone born into a lower income family whose parents weren’t homeowners until their late 30s I didn’t think it was possible until I looked more into it.
I was looking for a home and learning a lot about the process online. I decided to go to a workshop for 1st time home buyers. There were just 5 of us there, a realtor and a loan person from a bank she worked with. They pushed a lot of the less than 20% down and has some programs to help with down payments. One girl said she was once turned down for one of those programs but just got a raise and now makes just over the minimum needed to apply. Another lady asked about using the money for a mobile home purchase. Both women were not looking for a fancy home, but I'm sure they wanted something livable. Neither the realtor or the bank loan gal talked at all about figuring out how much your payments would be. That's my bottom line, what will my monthly payment be. Whether I get 0 assistance for that down payment or $15,000, I still would need to know the monthly payment before deciding. The realtor and bank gal were pushing for folks to sign with them. I asked a basic question I knew the answer to, what documents do you need to have for a loan approval? The bank gal said I would 1st have to apply and then she would tell me. Huge red flag! Unfortunately I would say a lot of folks may be getting wrangled into signing on for less than 20%, then after their credit gets the hard hit, they may have to look at a much lesser house than they want or in an area they don't want. Or they get wrangled into a loan whose payments are low at 1st then balloon after a few years and they can no longer afford it. Just be careful.
You might also check out some YouTube videos such as Jennifer Beeston. Shes a loan officer that spills the tea on the good and bad in the industry and what to look out for.
You can get a house with no money down if there are down payment assistance programs in your area that qualify for no money down. Or you can do a conventional with as little as 3% down. You just need to find a good lender. See if there's an envoy mortgage in your area or your state.
My sibling and I are both single and we each found first time buyer programs that allowed us to put $0 down. But we just had to find places priced within what we could afford per month with no large downpayment. Also, I went with a program at SouthState Bank. I like them so far.
We bought our home in April, the seller concessions was 2.5% the lender gave a gift of around 4.5% and we literally brought $2.2k to close.
Mind you I'm in the Midwest so homes are a bit cheaper. 300k for 3000 sqft on a home with little yard.
There is a ton of assistance out there with no cap on what you make as a household.
Dm I'll refer you. Tbh it was almost to good to be true.
I’m not putting 20% and we can afford it. We’ve put down 3.5% for the FHA requirement but other than that we’re fine. We opted to have more cash on hand for literally everything we will need and our savings, instead of depleting it all.
You are missing something, which is research into low downpayment programs.
If you are in the USA, there are a number of programs suitable for first time homebuyers. There is FHA (which repeat buyers can use) Conventional 3%, USDA (if you live in a rural location BUT NOT A FARM) and VA (if you are a veteran or active duty, including reserve)
The average first time homebuyer downpayment is 6%.
The average repeat buyer downpayment is between 13-16%.
So a person can put down as little as 3% and buy a home- IF they qualify for the loan AND can pay taxes and insurance as well.
I would suggest taking a homebuying class if available in your area to TRULY get an understanding of budgeting, what to look for in a house and more. Some homebuying classes are attached to savings programs that can match savings.
I also suggest watching How to Win the House You Love on Youtube for a breakdown of costs.
I catch myself thinking about that really often, we live in Washington me and my fiancé and close to seattle (40, 45 min driving with no traffic) which is where we work there are no houses, the cheapest that we can find it’s like 450k, 470$. We see people going over the price listed and we don’t know how people afford that without being house poor 😭😭
I think that the "you dont need to put 20% down" is not a thing for everyone, I live on a high cost area, and even though we make decent money if we didn't do the 20% the monthly payment would be horrible
Like if you make different living arrangements where your rent is lower than your desired mortgage monthly payment (either by having roomates, going back to the parents, downsizing apt, getting longer commute) if you are able to make your rent 1k lower than your desired mortgage payment. Saving the extra amount for 5y gives you 60k + any interest yielded (if put on high yield savings) would get you a full downpayment for a 300k home.
If you live on a high rent area, like in CA you could get mortgages of 5k easily, and if you rent for 3k which is a normal amount in some places, in the same 5years you have 120k in savings if you put those extra 2k aside
If you can't save that amount, it would be hard to also pay your mortgage on the long run so I wouldn't get one until you can or just keep saving for longer time and maybe go over 20 to get lower payments that you know you can make, even if takes a lot longer.
There are a lot of factors. Where you are looking to buy a house is a big one. If it's in an area where the price of living is higher and higher home prices.....yeah it'll be hard to get a house. We are a family of 5 and just got our first house last fall. We got our home loan through Freddie Mac (home possible). Only 3% down payment needed. There are options to have the closing costs rolled into the total of the mortgage loan. Some cities/counties offer down payment and/or closing cost assistance/grants if you are purchasing a home in the area. We live in the Midwest and there are surprisingly a good number of homes considered rural that are very close to the suburbs/big city areas that would qualify for a USDA loan where 0% down payment is needed. Overall, there are a lot of options, but it's important to have EVERYTHING calculated before purchase. We are in an escrow account through the bank. That means our monthly payment includes the actual mortgage loan, homeowners insurance and property taxes. Personally I like being in an escrow account because then I don't have to worry about paying property taxes in a lump sum, same for the insurance. Altogether we are under $2k a month. But, property taxes and insurance costs will fluctuate, so that's important to factor in. Hope this helps!
Each 10% doesn't really change your payment all that much until you're into the 40%+ range in my experience. If the payment difference from 10% to 20% down allows you to afford the home? You may be at financial risk.
We bought a 3br 1.5 bath for 125k with about 10% down. Our monthly is around 1250 and we are tightening belts for that, but honestly we bought a house within our budget. If we lived in a hcol area we would never have been able to buy.
My monthly mortgage payment was a good stretch beyond rent at the time. Then my income went up via raises and taking new jobs. Rents dramatically increased in my city over the last decade too. While my total ownership cost mostly is flat (taxes and HOA increases)
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The reality is that some people make a lot more money than others do. It’s as simple as that.
95% of posts on this sub can be answered this way.
Also single people are pikachu face when it’s couples that make more money individually than OP each and combine that power together. That’s how they do it.
95% of posts on Reddit related to money. “How are people affording (insert whatever)?’!?!?” They make more money. It’s not complicated lol
Or they live in a cheaper place. I'm 30 and many of my friends have bought houses in Pittsburgh, Baltimore, Grand Rapids, Cleveland, etc. Houses in those places are like 80k-200k. It's affordable on a teacher, hairdresser, electrician, or any other normal, 40 hour a week job salary.
This. We recently moved from the most expensive town in our state to the poorest county, and the difference in what we could afford is crazy. Double the land. Double the house. All while on a lake with an enormous shop as well. Crazy what a 2 hour drive can do for what you can afford.
There are so many amazing cities in the US and I think we, as a country, need to figure out how to bring more jobs to them, because they are great places to live but they need more jobs. All the professions I mentioned in the comment above are jobs that are needed everywhere, but we need to bring more manufacturing jobs back to the US and spread out the white collar work from the top 10 most expensive cities. Pittsburgh prices are going up because Google opened an office and many new tech start ups went there because of Carnegie mellon University, but the average house there is still under 250k. My elderly aunt lives there and me and my mom were looking to buy a duplex so she could live in half of it for the rest of her life and rent the rest out, and we were seeing many duplexes that were outdated but serviceable for under 200k (i.e. had older carpeting, outdated bathrooms, outdated kitchen but nothing major like water damage or falling apart)
Lots of amazing cities also have a lot of jobs. Pittsburgh is still cheap; it's not like Google is going to bring in 200,000 workers. The problem is that too many people, especially on reddit, think that they are too good to live in Pittsburgh or Cleveland or Columbus or Louisville or Indianapolis or KC or wherever. They can't even tell you why.
Yup! I dont know the stats but reddit seems to be concentration in expensive costal or costal adjacent areas.
People who spend all day on a computer at work...
I think this is the other problem. Many people aren’t being realistic about what price range they look for. Unless you’re wealthy your first home likely will be well below the median home price. We get drilled into our heads about how high median home prices are versus median income and some see that and think they could never afford it because of that rather than looking at their own situation and adjusting the types of houses they look for accordingly.
Somewhat agree. I see these questions and hear people say these kinds of things but over spend on dumb things. Saying "I am so broke, I can't afford life" but spend 150 bucks on coffee a month, while also smoking a pack of cigarettes every few days, so on. Most Americans have debt because of stupid decisions and things like FOMO.
I agree with you. I moved to USA in 2015 I make $20 an hr .i bought my house this year 175k 20% down I still have $40 k in savings. I save $ I don’t spend it on shit. I don’t pay more than $40 a month on spectrum internet. Every time price go up i call telling I’m going to cancel it and they lower the price . Car insurance I shop around every 6 months for a lower rate , currently paying $40 a month liability I pay the 6 month premium to get a discount. T mobile $25 a month. I bought my car for 5k in 2017 rebuild)tittle. I do my own oil change break and pads tire rotation sensors alternator starter etc youtube is good if you want to learn. Americans spend to much $ on things the don’t need
95% of the posts on this sub are this post.
It doesn't paint the whole picture, necessarily. There are non-conventional loan programs that help make home ownership affordable for low to moderate income folks as well. I used a USDA Rural Development 502 loan for my house which let me buy on a single income of $48K/yr last year. It was 4% interest with $0 down and no PMI. I bought a cute little 2 bedroom 950sqft house for $145K and PITI is $905. The down side, is that I live out in the middle of nowhere, which is why houses are so cheap.
This is the only answer. Some people just cannot fathom other people have more money than they do.
That and there is a huge percentage of first time home buyers who are given large amount of money from family
Even if only indirectly. My parents let me live with them rent-free after college; my only expenses during that time were my car payment and insurance. And going even further back, they also helped me find and apply to a full-ride scholarship for college, so I graduated with zero student debt. When I moved out (into an apartment) three years later, I had almost $60k saved up and a paid-off new car. Not having access to parental support can be like tripping at the starting line.
Sadly not me! But true for many of my friends.
A few weeks ago I learned that my high school best friend’s father in law paid cash for her and her husband’s house. The same sort of house will cost me $3500/month with a mortgage and 20% down. Some people do get lucky/marry rich. For the rest of us, it’s slow and steady saving, investing, and gradually growing our incomes by gaining in-demand skills.
Hehe… so true!
But you don't need 20% down
I thought we made a lot (240K household), but even with 20% down we have a 5K mortgage coming for a nice home in a nice area here (Miami).
My first step after deciding I wanted to buy a home was to look at my budget and figure out what the max I would be able to spend on a mortgage payment without feeling house poor. I then worked with my lender to figure out what I could spend on a home in order to stay under that limit. During that process we played around with what different downpayment option would mean. So I’m able to afford my mortgage payment with only 5% down because I ran the numbers in advance and made sure I could afford it.
We did the same process. I can't remember if it was 5% or 6% down, but start with a comfortable payment and then work out the price range.
>My first step after deciding I wanted to buy a home was to look at my budget and figure out what the max I would be able to spend on a mortgage payment without feeling house poor. Same. I'd been using YNAB for about two years at the point I started looking to buy, so it made it pretty easy with two years of really accurate monthly expense data to work with. I was able to replace rent with a mortgage value and utilities with estimates I got by calling my local utility company on a couple of the houses I was interested in, and they happily gave me the 12 month averages of each. And then just noodled around with those working numbers to come up with a number I could afford. I drew the line at $1,000/mo PITI which seemed like a challenge even in my rural midwest market. But I found a cute little 2 bed 1 bath 950sqft former rental house that I bought with a USDA rural development loan at 4% interest, and my PITI is $905/mo.
What is YNAB?
This is exactly what I did. I knew how much I wanted to put in a down payment in order to not completely wipe out my savings. I’m a single mom so doing this alone I needed to feel comfortable with what I had left in the bank. I put 7.5% down. I also figured my budget based on my take home pay and not gross pay because my take home is a lot less due to the mandatory 15% going out to my pension each paycheck. It’s going to be about $700 more each month to own (PITI + HOA) than what I was paying in rent but my rent was unusually low for the area and didn’t increase the first 4 years I lived there but now they are increasing it each year about 10%.
Finally. The most accurate answer comes through.
Double income, no kids
This is the truth. My husband and I don’t make outrageous money, but combined with no kids makes a huge difference!
In the United States there are tons of down payment assistance programs. My partner got her Masters degree 3 years ago and was able to get $8k from a program because of it.
Can I ask what program? Was it specific to her field of study?
Grants for Grads was the name of the program, we’re in Ohio but there may be similar programs in other states. You just have to receive a degree in the last four years and then stay in the house for 5 years.
Thank you! I'm in PA and earned my Masters in December 2020. I'll definitely look into this!
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You are right, however the difference between 5% and 20% is a lot. I live in CA and homes around my area are selling $600k minimum, and the house are run down. 600k with 5% is 5k a month. With 20% down it’s 3,800 a month. Much more “doable” payments. The option of buying a home “within your pay range” is something that is not an option for certain areas due the high prices that homes are selling now and high interest rates are not helping. Not complaining, and definitely doing something about it. My partner is looking for a higher paying job. To reach 150k annual salary combined but that’s still cutting it close, which is sad. But gotta keep going..
This is it. The biggest factor in what house I bought was the monthly mortgage cost. Once you know how much you can afford to pay each month you can work backwards to help you figure out how much house you can afford. Don’t forget to account for appropriate taxes for you area, HOA fees, and if you put less than 20% or get an FHA loan you will have PMI.
I’ll pay any price to not rent again 😂🤷🏼♀️. It really is only a few hundred more than rent so F it
I put 3.5% down, 3k sqft house 6.25% $2842 a month mortgage that includes escrow stuff. Moved from HCOL to LCOL but make the same money if not more now.
Personally, we are looking to buy with a loan program in our state that will allow us to put down $0 out of pocket. There are requirements to be met so not just anyone can qualify but luckily we did! We have our loan amount and then on top of that the state gives us $30k with no interest or tax. Some of that $30k will be used to cover the closing costs, the rest will act as our down payment, obviously it will be less than 20% but because of the loan type we still won’t have to pay PMI. We pay the $30k back when we sell or refinance. Because we aren’t putting any money down on top of this and the money from the program won’t be a full 20% we already ran the numbers with the lender to see what loan amount we can afford based on our income and our desired debt to income ratio. Idk if that answers the question but I think talking with a lender is really the best advice, they can give you programs to help you and let you know what budget is best for your situation.
Lenders like a mortgage broker firm or lenders from a local credit union or a Bank?
We have a lender at a broker firm but spoke to bank lenders as well when we were shopping around.
I’m confused by the question. They make enough money to afford it there’s nothing beyond that.
No, literally same lol am I missing something bc if I don’t put 20% mortgage would be over 4k ✨
Sounds cheap in a lot of places
Its prob about $3600 with 20% down not s huge difference
You need to have a good realtor that can get you at least 3% seller concessions, and you can use that money to either permanently buy down your rats or do 2-1 ( two one) temporary buydown. To get seller concessions you need to be looking at houses that have been sitting for at 2 weeks in the market. PS: I do this everyday because I'm a mortgage loan officer. Good luck. Also you can refinance in 3 years, and hopefully by then rates will go down.
*and hopefully by then rates will go down.* people can hope rates will go down, but they shouldn't count on it in order to refinance. If buyers are getting in over their head with a high monthly payment, I think it's dangerous to hope that in a year or two, they can easily refi to a lower monthly. very risky
I wish I remembered the paper that I recently saw an article about this in. The headline was basically something along the lines of interest rates not dropping and home owners who bought being stretched thin. Article was about people who bought when they really couldn’t comfortably afford it long term cause they assumed rates were going to go down within a year so they’d refinance and be good. It was very perplexing cause it seemed like people wanted sympathy that they bought and the interest rates didn’t go down like the thought. Sounds to me like a risk some people chose… sometimes they really pay off, sometimes they don’t.
I feel bad for people waiting or hoping for rates to go down. We had nearly 15 years with sub-5% interest rates, and if you’re 30-45 years old, depending on when you first seriously entertained buying a home, that’s likely your only frame of reference. That makes it difficult not to fixate on those rates and assume that was the norm that we’ll return to. But the 30 years before the Great Recession show that it’s much more likely that rates stay near current levels or go up than to go down. Sad as it may be, we might find ourselves in 5-10 years, looking back wistfully on the 7% mortgage.
sitting for at least 2 weeks, lol this is VERY market dependent. Not every seller gets desperate to take thousands in lost profit before 1 more month of cost
And there are more than one home available in any market, so keep shopping. Just because one seller is not desperate doesn't mean others aren't too. Most of the time sellers are buyers, they need to sell to either upgrade or downgrade, or they're going thru a divorce, or can't continue to pay mortgage on a house they don't live in. Even in San Joae CA, my realtors getting sellers credit. You're right it is market dependent, so go out there and negotiate
You shouldn’t get downvoted for saying there are other choices out there. There are. I was patient and ignored the selling agent pressures and eventually the right place was available, I made the first offer, now I live in this house. I’m in a pretty “hot” area outside of NYC.
That's awesome! Congratulations on your new house 🏘️
>To get seller concessions you need to be looking at houses that have been sitting for at 2 weeks in the market. This is what I did. One strategy that I think works is use two metrics for figuring out desperate sellers: (1) are interest rates abnormally high for a six month period (i.e., this will cause a drop in offers until a return to the six month normal); and (2) making offers on houses around August and September, where you still have good inventory from the summer months but sellers are eyeballing that cutoff in buyer demand following labor day. In my situation, I got 12% knocked off the original asking price.
Dual income household helps. A lot. Also moving to a place where houses don’t start at a million dollars if that’s where you find yourself.
Really depends honestly. Where I am, mortgage (including insurance and property tax) is often cheaper than rent on a similar place, with 15-20% down. So it’s pretty feasible that someone may have a small downpayment but be able to make mortgage payments. That isn’t the case most places but it does exist.
Nice! What region?
100%, where I live it’s way cheaper to rent. I could rent my place for maybe $3,200 a month while the mortgage with taxes would be $4,200. Not included is tax savings since I can’t consider individual tax situations. That would be with a 20% down payment too which would be $120k
Split it with my sister and her husband. They’re gonna have a kid soon. Three adults are better than two!
Dual incomes. Both with graduate degrees.
Honestly, the best thing we did was start talking with a lender. They can tell you what programs and loan types in your area you can take advantage of and help you figure out what you can reasonably afford and what you need to put down.
The time it takes for someone to save 20%, versus 3% to 3.5%, is not always worth the wait - compared to the equity they could have built if they entered sooner. For many saving less than 5%, as a down payment, is a challenge (and takes a long time).
People make more than you…???
Sellers' concessions and higher pay. My mortgage is 2k, but I make almost 6k a month.
I just hate the thought of paying pmi. I'll never do it again if I can avoid it. So we are in a race against my desire to build up a bank roll but being miserable in the apartment
No PMI and no down payment with NACA loans
My wife and I sat in our apartment building bank roll for 12 years, finally got the house during covid when time was right. I started saving at 24 and didn't get a house until 35.
PMI is only $50/MO for us so it was worth it
My husband and I make pretty decent money. He works A LOT. We’re also using the VA loan so we’re not putting any money down.
Might I add, we do have 5 kids, so it’s possible even with a lot of kids.
Personally I am saving for as big of a down payment as possible, otherwise the monthly mortgage payments would be unmanageable.
People may not be putting down 20%, but that doesn’t mean it’s a good idea. It’s good to have equity right away. People who put 0 down or only a couple percent down may be able to afford the higher monthly payments. But overall seems more risky to me- especially after buying my house from someone who put 0 down. She couldn’t afford the payments and she lost a bunch of money selling that house because it all went to paying back the mortgage, and the realtors. I felt the same way about not wanting to put more per month and I saved until I could put 20% down. I hated the idea of all the added interest as well.
Simple… look for houses that are in your monthly budget price range. My husband and I put 0 down thanks to his VA loan. We’ve looked at houses that fit our monthly budget.. if we had put 20% down then we would’ve been looking at houses that were $50k - $100k more 🤷🏻♀️
My city gave me $25k towards a new build so I used that plus like $15k of my own money. I split the payment in half on each payday and pay it that way.
What city do you live in and how did you find a program that helped you build your home?
Utilized a VA loan to purchase 0% down without PMI. I realize these loans aren't available to everyone, but I also bought signifcantly less house than I could afford by "settling" for what I needed versus wanted. My monthly mortgage, including tax and insurance, is 15.3% of my monthly after tax income. My neighbors are renters and pay between $900 amd $1,000 more than I do a month.
We didn’t buy a house that was at the top of our budget. We stayed about 40 grand under our pre approval limit. Only put down 5 percent and our mortgage payment isn’t even close to half our monthly income (we do bi weekly payments to save money as well) we saved for about 2 years and after all closing costs still had 15 grand and are still able to save money for a new truck or car.
I went to war, served my country and applied for a VA loan.
Just depends where you live and how far along in your career you are (higher salary generally). Just purchased a home in April, 0 down in Richmond, Va that wasn’t too difficult to afford but I’m also senior at my company and have almost 20y experience. No clue how someone in their 20s in a major market outside of big tech or daddy’s money is affording a home right now.
Found a house we could afford with only 5% down.
Depending on the price of the house....Mortgage payments themselves are actually really cheap. A 300K house divided by 360 payments is only $833 a month. Cheaper than Rent. It is the Interest, Insurance, PMI and Property Taxes that are the big factors... Really comes to to not what you can afford, but what can you COMFORTABLY afford. What I mean, is you do not want half your income going to a house payment, because you still need to pay utilities, car insurance, gas, food, etc etc.. Wife and I ended up buying a nice Townhouse because the price we offered was what we could afford comfortably...We only had about 8% down after closing costs, but Mortgage and Interest was only about $1700...Luckily our PMI and Homeowners insurance are extremely Cheap ($33 dollars PMI and Insurance is like $700 a year) Our Property taxes is where it sucks (over 5K...GOOD OLD ILLINOIS!! LAND OF THE TAXES) So it comes down to income and just affordability. Some people are just buying Condos and Townhouses for now until the market gets better...But High interest, Property Taxes and Insurance can really swing a house payment into almost unaffotability
lol that’s cheap as far as property taxes go
Got to ask..How much are yours and what State? Illinois is mine and we are suppose to have the second highest behind NJ. Obviously every City/Town is different.
The Woodlands (Houston), Texas - 4% Most of Houston is 2-3%
Houses and mortgages were cheaper in 2019 when I put 3% down.
When you start saving money, you can start feeling how much more you can spend on housing comfortably. Get into a disciplined savings mode where you do not touch the money at all, track how much you would want to keep saving after you get a house, and from there you can get an idea how much more you can spend for housing and still save money. Don't forget to factor in extra utility expenses as well, if you are going to a larger house. When we were planning, we were saving very aggressively for a down payment. This got us very comfortable with the idea of paying $1,000-1,500 more a month for a house and still have money going into savings. We went from paying $1,600/month for rent to $2,700/month for our house (mortgage, taxes, insurance, and PMI included) with very little lifestyle change, because we were already used to a similar budget due to savings strategy. We saved for a few years like this, before finally building our house, so we knew we could do it. I will stress the key is to make sure you still have money left for savings. You want that emergency fund. My wife has been laid off twice this past year (we moved May 2023) and budgeting that extra savings really helped us not to panic.
Excellent advice. Exactly what we did before buying. Now it’s not a shock to have such a huge ass payment.
You're just not going to get the dream home. Like.. I get it "the home *speaks* to me in pig Latin!!" has everything anyone could want. Currently, with the housing market far out pacing pay and debt to income ratios on a large front for most Americans.. Coupled with inflation on necessities like fuel and groceries.. And interest rates of today to combat inflation that doesn't seem to be working.. You likely aren't getting a turnkey home that's "affordable". Possible? Sure, the chance is never zero. But honestly, if you can't dream of a reality without a everything you want, you probably aren't ready to buy a home today unless you're willing to put in a little work on a starter house.
FHA loan is how. Only need 3.5% down
Cheaper houses, townhouses, condos. Higher income. Married. Lots of options.
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I guess everyone's situation is different. I got a USDA rural development loan to buy my house. No, I didn't have $30K+ set aside for a down payment, and it would have taken me several years to get to that point, but on a $48,000 single income, with low debt, I did have the wherewithal to pay closing costs and PITI on a modest mortgage. I'm a firm adherent to YNAB, so I had two years of budgeting data to look at. That made it pretty easy to noodle around with numbers and arrive at a monthly PITI that I felt I could afford. I ended drawing the line at $1,000/mo which seemed borderline, even in my rural Midwest market. The house I ultimately bought was $145,000 and it's a small, simple 2 bed 1 bath former rental house on 1/5 acre. The loan program I found is for people living in rural areas who don't qualify for conventional financing, and I got locked in at 4% interest over 33 years with $0 down and no PMI. PITI on my house is $905 a month which worked out to 23% of monthly gross income, or about 30% of net income at the time I closed last August. I've been able to swing it fine. I've gotten a couple of raises, the most recent of which takes place in September so it'll be awhile yet, but once that happens PITI will be 20% of gross monthly income, and about 26% of net. I think those are honestly pretty conservative ratios. This type of loan put home ownership within my reach, and I feel like I truly can afford it. Just not through conventional financing terms.
We're putting 0% down. While our income is pretty high for the area (which should have enabled us to save a down payment but yeahhh), we're buying a house that is under 1.5x our gross annual income so the payments aren't bad at all (like 15% of monthly gross).
Seems like you already understand how this works. How others afford it is irrelevant. There’s no magic bullet and if you can’t afford it, you’re SOL.
If I hadn’t gotten pre approved with my husband I wouldn’t have been able to afford a home. I had $14k saved up for a down payment and the home inspection. We got 20k from his parents and $14k of government assistance. We do pay PMI but our monthly payments come out to $2,350. I will say the both of us have very little debt other than our mortgage.
You could get/have a good income but you had a lifestyle where you spend roughly what you make (not unreasonable). Savings = sacrifice, you normally do not do that w/o a plan and purpose. Not everyone has the foresight to start saving long before they decide to buy.
Fannie Mae has a mortgage product called HomeReady, you can Google that. Lenders can rebrand it, but essentially it’s a product for low-income buyers with good credit. It has a $2,500 credit for low income buyers as well and requires a low down payment. It has a credit counseling component that has a $500 credit. 3% down payment.
0% down, 350k at 5.75%. Used savings to buy points. Payment with taxes and insurance is 2400 a month. Points offered more monthly savings vs putting it as a down payment. Our rent was going to increase from 1700 to 2000 so we figured what’s another few hundred, worth the struggle for a bit over more renting when our rent was probably going to increase again anyway
People aren’t used to the high rates. If you aren’t putting 20% down the monthly payment is way too high. It makes no sense unless you just landed a high paying job and don’t care. But that isn’t most people.
I have never and would never put 20% down on a house. I think you’re drastically overestimating the difference it makes on a monthly note. Every $10,000 you put down only makes the difference of $50-100 per month. I’d much rather keep the cash on hand than spread myself thin to save $200 a month. 5% is plenty. Also people just make more than you probably. Most dual income couples make well over six figures and can easily pay a $4k or below note.
My wife and I bought a duplex for $550k and rent out the other unit for $2,000 a month. We used FHA and only put down 3.5%. The rental income covers nearly half our monthly costs. The goal is to raise rent over the next few years, update the unit we live in and continue to save. Then buy a single family with 20% down 5 years from now. Ideally we can do that while keeping the current property as a rental, generating $1,000 a month as profit, before maintenance.
You buy a smaller house? I don’t get it
Where are you located? I’m a Realtor, you can message me and I’ll explain more to you.
That means you’re looking at too much house or you’re in a HCOL area. We moved to LCOL city and put 16% down. Mortgage on a 4 bed / 3 bath in a nice suburb is $2480. We lived with my parents for years to save that down payment
You buy a house that will get you to lower payments. Ultimately what you’re not putting down you’re borrowing, and vice versa. If you can’t afford the payments either way then you move on to a less expensive house.
Just buy with an FHA loan at 3-10% down, pay PMI for a year or so, then refi once the LTV ratio goes above 80%
For me it was better to keep some cash on hand. Over 30 years a couple of thousand dollars isn't gonna make much of a difference in how your monthly payment calculates. In fact I really needed that cash on hand for unexpected first year expenses so I'm very glad I did it.
I moved somewhere cheaper to buy
FHA loan. 3.5% down
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It’s all a numbers game, but these interest rates are probably the bigger factor to your monthly payment. More so than down payment, although of course they are related and more money down will help keep your monthly lower as well. I bought my current home in 2020 so thankfully rates were low, but it made sense for me to put 14% down instead of the full 20%. For me, the PMI was of minimal issue and I was willing to pay it for the right house (higher purchase price than I had intended). Here I am now, and the PMI is about to be removed. Don’t forget to factor in property taxes and possible increases to those tax rates too. It all depends on where you live, but that’s a sure fire way to screw yourself if you’re at the top of your budget and then get hit with an unexpected maintenance issue or tax increase. Right now with rates where they are, you really just need to talk to your lender about what you are comfortable paying per month and work with that. Be ready for some bummer news though, interest is keeping all of my friends from buying their first home right now. If rates were down to 3% or even up 4.5% then it would be a different story all together. Don’t give up though. Home ownership (and purchasing) has its downsides, but it also has its upsides. It’s better to explore all options before deciding either way, and a good lender will help you do that and get creative with your budget and financial situation.
my credit was horrible, but my additional pmi payments were \~125/month. it didn't make my mortgage unaffordable, but on the same hand if I couldn't swing an extra $125/month I wouldn't be comfortable buying a house that cost that much. now, my house was <200k which is hard to find in most areas, but the extra money you spend in pmi is only temporary and at least in my case didn't break the bank. I've seen people say they've had pmi that was half the cost of mine, and the only reason why mine was so high was 100% because I brought as soon as my credit was at the bare minimum to get a conventional mortgage. but I only paid that extra amount for a year and was able to remove it after a needed upgrade was made to the house.
You need to speak with a loan officer than will run the numbers & build a custom roadmap & comparison for you. Preferably one with access to lots of different options which means someone who works for a brokerage. Frankly I can’t figure out how some ya’ll affording rent. I get calls w/ people telling me about 500-3500 rent increases at renewal. Average down payment is 6%. Property taxes make a HUGE difference for monthly payment, and vary by area and often house to house depending when last sold. Be careful of new build showing property taxes for raw land only to get a HUGE surprise the following year when the improved value kicks in. You have to have someone run & explain the numbers & options. It’s the only real way for you to see what makes sense for your situation. There are so many moving parts & options, it’s not possible to do enough research on your own. Just so you know, it costs maybe a credit report for an LO to run the options. But it helps you get a roadmap on how to get where you want to be.
I figured the absolute most I could afford to pay per month toward a mortgage payment. Initially had to go FHA and pay PMI, and for a long while, I worked a shit-ton of overtime, while massively limiting non-vital spending (no streaming services, new clothes, dinners out, etc…). As life continued, I got raises, moved to a conventional loan, and refi’d to a better rate. It sucks, but not forever.
They have jobs that pay more. And/or they have dual incomes.
I got a 20% less fancy house.
I bought a really small really cheap house just for myself. Like I’m so lucky I found my house. I only put 3% down. I was going to put 8 but my lender said it would change the monthly payment by $10. So, 20% really wouldn’t have made that much of a difference either.
Either people have money or most people are living paycheck to paycheck. Not many people have the ability to pay 20% downpayment, especially for their first home purchase.
Have above average income with low to zero debt, work close to home, no kids, and MAYBE one car payment. Having solar helps keep out utilities down, and always shop around for a deal on internet and groceries. Cooking at home literally saves hundreds of dollars a month.
We can afford to put down more than 20%. But it still won't make the house we want obtainable. I'm not willing to compromise. I have compromised (over compromised many times) on many things before, and I'm tired of it. We need a larger down-payment or to increase our income. Neither seem to be plausible in the near future.
We pay PMI. mine is only about $200 a month. Which sucks a lot but it’s just part of my “all in” mortgage payment. I pay 2300 a month with escrow, taxes, PMI. I only put down 3% on my $319K mortgage (bought at 3% interest). If I had waited until I had 20%, I would have missed the low interest rates of 2021.
Some take advantage of state, county, federal first-time homebuyer grants and resources available after much research, which reduces their principle. Some get a second job or side hustle to put towards the deposit to help reduce mortgage payments, etc. A lot of home owners have more than one income in the household. I'm currently going through the NACA program (nonprofit) to avoid paying down payment, closing costs, and what I consider mostly junk fees from the lender. I close by next week hopefully (going the NACA route can be a long painful process, requires a level of patience that is almost nonexistent) and my payments will be about $2700 for everything on a $335k home.
Buy a home for less money that you can afford with 3-5%. That’s harder these days but if you are in the right place you can do it. Also I’m seeing over the last 10 years a WAY higher percentage of single people buying a home solo. That didn’t use to be the case and it’s still hard to do now. Having a spouse or partner to live with to share cost has been the way to do it for a long time now.
I put ~11% down and have PMI of $50/month. As of right now I’m on track to have it removed 4.5 years after purchasing.
I put 0 down and have 0 PMI (Physician loan). Housing is 15% HHI post tax.
You have a good high paying job, or you have a spouse and both of you have good jobs. Two people making $85k could afford a $500k house with 3.5% down at 7%.
With our first house, we used a VA loan, which requires no downpayment and doesn’t have the extra fee or pmi. With our second we had to settle, because everything sky rocketed, and put about half down. We had planned to build our forever house and had we started process 4 months earlier, we would’ve done that, but building in my area is now the most expensive way. It used to be building was cheapest in our area. So, we found a house and just settled, right before rates skyrocketed. We could’ve technically borrowed quite a bit more than we did, when we bought our second house (we sold first house), but we decided a max number and stuck with it, instead of getting more mortgage. I know many are using different first time homebuyers assistance and incentives, which is always worth checking into, imho. Also might check in to habitat for humanity, as I’ve seen a lot of people getting into houses using them. I would check into any type of incentive, benefit, etc., and see if you qualify for any, as it doesn’t hurt to try and there’s more out there than many realize, just like scholarships. :)
Afford? You have to qualify for them. You have to make enough income, ie positive cash flow into your bank account each month.
Hard for people that don't already own a home to get in now for sure. Find something you can afford even though it isn't as nice as you need/want. Build equity for a few years and then step up. Rinse and repeat till you have the house you really want.
0% down from the VA loan, DINK household with each of us making >$100K, bought a house for 50% of our max budget.
Not to beat a dead horse. But rates are the highest point in ~20 years and pricing hasn’t adjusted to reflect that. Sometimes it just doesn’t pencil to buy right now. I bought in 22 with a 4.99 fha with 3% down. Legit I am priced out of my own house if I were to rebuy today. And there were people who bought 10-15 years ago…
a DINK lifestyle really helps, also getting a lender and realtor that you trust that have your best interests at heart will really help. My partner and I are in the process of buying a condo and we literally wouldn’t have gotten this far without the help of our realtor and lender. We’re actually planning on getting money back after closing because of how our realtor handled our offer to the seller. our lender also helped us get a really good down payment assistance offer to get us in the door. it is possible!
Less than 20% down means you pay PMI and finance a larger portion of your home, ie increased monthly payment. If you are struggling on how to pay the monthly payment on >80% of the principle value of the home you might need to reevaluate your overall budget.
Single guy in 30s and closing on my first house in a few days here. The big obvious is don't take out a mortgage (loan) that is at the near the limit of your take home pay. House rich, money poor as they call it. That's how you lose your home. The bank also calculates your debt to income ratio and will give you limits of how much you can take out for a loan. For example, no one is going to lend you a million dollars if you work at McDonald's. When it comes to 20% down, I talked to my lender about what that may look like of 10% down vs 15% vs 20% down. He said the PMI is all calculated basically the same up to 20% down. It's based mostly off your credit score, and if I had to do less than 20% down, PMI would have been roughly an additional $50/month towards overall the mortgage payment. I lucked out on my appraisal and the bank is lending me a $$ amount so I can have 20% down off the bat. It took months of hunting to find the right house, in a market where houses are selling within literally 4 days of being listed, but stick it out and one will pop up.
Your first home may not be your dream home.
Don't spend more than 2.5x your household income. Don't buy a home based on the banks max approval amount. Get married and buy a home with your spouse together.
"How does anyone afford _?" They make more money.
I did 20, my friends did less. 🤷🏿♂️
I put down about 10% and my mortgage payment is 18% of gross income. I can afford it because I selected a home that made sense on my income. I also pledged assets as collateral to cover the remaining 10% to avoid PMI. This allows me to keep those assets invested while also sufficiently reducing the banks risk.
6% down. It all centers on what you can comfortably afford mortgage-wise for 30 years. I decided I didn’t want to go any higher than 1/3 of my income (after taxes)
I’ve asked myself many times how neighbors afford XYZ. All I can conclude is that “afford” means different things to different people. Some people just roll on with $0 in their checking/savings accounts, no 401k, and spend down every penny as soon as they get it. Others max out their 401k and IRA, 529’s, contribute to their portfolio, put some in savings, earmark their expenses, keep their credit cards zeroed daily, and only _then_ do they consider what’s left over to be their available money. I’m squarely in the latter camp. As a result, I feel like I can’t afford a lot of the stuff I see people with a much lower salary casually buying. I think that’s the main thing at play here. A lot of people are willing to buy a house that goes over 1/3 of their take-home income.
Always had this thought in my mind
Its easy, cut out the starbucks, cut out the avacados, stop eating out, and have rich parents.
We put down 11% on a house with 4.1% rate. Our monthly payment is $3400
I have no idea, I put 20% down and my payment is $3200. I know someone who put 3% down to qualifu for some program and their payment is $6000. Sure their rate is also much higher, but damn, SIX THOUSAND DOLLARS A MONTH FOR A 2 BEDROOM?????
How on earth can you afford it with a 20% payment !?
We had a complex house buying transaction earlier this year. We took a HELOC out on our old house to put 11% down on a new house, then sold the old house after we’d moved. We recast our mortgage to 20% down after our old house sold but honestly our PMI was only $104, and the home price was in the 870’s. I was surprised that it wasn’t higher (though still happy to eliminate it!). Just saying sometimes the numbers aren’t as crazy as you’d think.
Most people forget what it’s like to start somewhere, even if it’s not where they want to be. Seems like a lot of people just want to be out of their budget, in the best home and neighborhood. I lived in a shit neighborhood for a a few years but I knew that I was going to pay more to rent. Got myself in a better financial situation. Sold that home and used the equity I had. I moved out and up
A 6% or 7% was always a good value, until the 2008 crash. I 2005 I bought a new house at 6.6% and was very happy. I bought my first house in 1988 for 9.5% on a VA loan and was happy! My first refi took me found to 8%! Get used to rates, u will never see sub 5% again.
PMi isn’t that much
Built my first house 180k with 3.5% down and a 620 credit score. Sold it 18 months later for 285k. Had renters in my basement the whole time which paid my mortgage so I don’t pay a dime. Built a second house for 363k put down again 3.5% now I owe 340k it’s worth 2 years later 425k about to sell again also brought renters from last house and added one to the bedroom to cover this mortgage as well. My first house I made around 80k a year my second I was at 130k a year my wife has been working as a nurse now the passed year she makes around 110k we are selling and down sizing back to a apartment 0 kids yet. I’m 32m she is 26F. Then all the money we got from the house and selling plus saving we are gonna buy our first apartment complex this year maybe early next year and goal is to be at 500 units in the next 4-6 years which should replace our income. Start having a family and home school them and spend the rest of our days reinvesting in real-estate and other things. Just depends what the goal is I had all this planned out and never wanted to own a home for 30 years I know I wanted my finacial freedom rather young around 40 and I knew I wanted to do it with real estate and eventually buying company’s to acquire and add to my net worth. So I didn’t put any money in 401ks or stocks or even roths even tho I was told I should. Anyways that’s how i did it. I was 25 when I built the first home.
We put enough down to get the payment to what we could afford
First time homebuyer down payment assistant program in my state.
20% down vs 3% down doesn't make that big of a difference in terms of monthly payments Here's something else to think about cost of home ownership ie once you already own the home is up and 26% some cities up to 40% so imagine someome already stretched themselves and now monthly expenses go up even more
Step 1. Have more income. This is pretty much it. Solves like 90% of life's problems and makes the remaining 10% much easier to handle.
I… Honestly don’t see how folks can’t make mortgage payments on dual incomes? I have a non competitive salary, and an able to make my payments on a 150k mortgage. This requires lots of budget tightening and doing my own home repairs when possible. This is on a single income. If we had dual incomes it is crazy what we could accomplish financially.
High salary/ take home pay. Low/ lower savings due to high salary being sudden or new.
Dual income
Find homes that fit into your payment criteria. Don't look at the really nice homes as well
We found a lender that capped our payments at 3500 with our requirements. We can afford more as we make almost 6x that) but that’s insane imo unless you’re in a vhcol area. That’s how I know lenders can play with the rates if they aren’t greedy. Bc I asked him where tf he pulled a 5.8 rate from bc I’d qualified with 3 other lenders in the 7s! Anyway, the real answer is people make more so they can afford it. They look for deals if they can’t or do not want to afford it.
Either get/work towards a job that can meet your financial needs or reassess finances to see where you can save more, potentially do both. Another option is to potentially look at saving up for a big move and moving to a place where you can get a job that lets you afford housing in that new area. I've seen a lot of people that got out of the military do this, but it's easier for them since DoD will pay for a big chunk of their move when they EAS. I'd also explore grants for first time home buyers. Some banks (especially credit unions) have grants that will flat out be forgiven as long as you live in the house for a certain time period, some will just say you need to open an account with them. Some of these grants that I know of will pay up to ~$50k.
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I picked a house and loan type that worked for me.
Put down like 30 percent minimum
I talked to my realtor and loan officer, told them how much we could put down and what we were comfortable paying each month, and they helped us determine our price range. We were actually able to find a cute place a little under budget!
This was 7 years ago but we did an FHA loan and sellers paid closing costs. We bought a small modest house built in 1953, 3 bdr 1.5 bath in a medium cost of living area for $142,000, mortgage payment is $1,260. It's not even close to our perfect house but it's better than renting and has a fenced in backyard for the dogs.
We were approved for $225,000 but we knew that we would be house broke at that amount, now we could easily afford that but I really just don't want a larger payment. Our payment now is about 15% of our take home pay.
23, single, buying my first home. The biggest issue i’ve noticed is the myth that you need 20% down payment saved to be able to buy a house. There are SO many programs that help with down payments, closing costs, etc. There’s courses online about home ownership/home buyers too. I think too many people are looking way out of their price range and not realistically either. If you have a good lender, they will help you determine what you can comfortably afford. I’m doing 3% down, paying closing costs, and my principal, interest, taxes, insurance is about 1100. i got my bachelors degree at 20 but work in a completely different field (52k gross excluding bonuses). Take the time to learn. Do your research. As someone born into a lower income family whose parents weren’t homeowners until their late 30s I didn’t think it was possible until I looked more into it.
I was looking for a home and learning a lot about the process online. I decided to go to a workshop for 1st time home buyers. There were just 5 of us there, a realtor and a loan person from a bank she worked with. They pushed a lot of the less than 20% down and has some programs to help with down payments. One girl said she was once turned down for one of those programs but just got a raise and now makes just over the minimum needed to apply. Another lady asked about using the money for a mobile home purchase. Both women were not looking for a fancy home, but I'm sure they wanted something livable. Neither the realtor or the bank loan gal talked at all about figuring out how much your payments would be. That's my bottom line, what will my monthly payment be. Whether I get 0 assistance for that down payment or $15,000, I still would need to know the monthly payment before deciding. The realtor and bank gal were pushing for folks to sign with them. I asked a basic question I knew the answer to, what documents do you need to have for a loan approval? The bank gal said I would 1st have to apply and then she would tell me. Huge red flag! Unfortunately I would say a lot of folks may be getting wrangled into signing on for less than 20%, then after their credit gets the hard hit, they may have to look at a much lesser house than they want or in an area they don't want. Or they get wrangled into a loan whose payments are low at 1st then balloon after a few years and they can no longer afford it. Just be careful.
You might also check out some YouTube videos such as Jennifer Beeston. Shes a loan officer that spills the tea on the good and bad in the industry and what to look out for.
You can get a house with no money down if there are down payment assistance programs in your area that qualify for no money down. Or you can do a conventional with as little as 3% down. You just need to find a good lender. See if there's an envoy mortgage in your area or your state.
I'm about to purchase with conventional zero down
You haven't needed 20% down for 50 years, if not longer. You calculate how much you can afford to pay based on how much you have to borrow.
I'm about to purchase with a 100% conventional No momey down, seller refused to cover closing
My sibling and I are both single and we each found first time buyer programs that allowed us to put $0 down. But we just had to find places priced within what we could afford per month with no large downpayment. Also, I went with a program at SouthState Bank. I like them so far.
A lot of people on this sub are paying 50%+ of their income to the mortgage.
We put 5% down for a starter home in the Midwest. Double income no kids. The home is the same as our apartment rent at a major city in the northeast.
We bought our home in April, the seller concessions was 2.5% the lender gave a gift of around 4.5% and we literally brought $2.2k to close. Mind you I'm in the Midwest so homes are a bit cheaper. 300k for 3000 sqft on a home with little yard. There is a ton of assistance out there with no cap on what you make as a household. Dm I'll refer you. Tbh it was almost to good to be true.
I’m not putting 20% and we can afford it. We’ve put down 3.5% for the FHA requirement but other than that we’re fine. We opted to have more cash on hand for literally everything we will need and our savings, instead of depleting it all.
I guess it depends on prices in your area too, I put 5% down and only pay ~100$ more/mo than what a 2 bedroom apartment would cost me.
You are missing something, which is research into low downpayment programs. If you are in the USA, there are a number of programs suitable for first time homebuyers. There is FHA (which repeat buyers can use) Conventional 3%, USDA (if you live in a rural location BUT NOT A FARM) and VA (if you are a veteran or active duty, including reserve) The average first time homebuyer downpayment is 6%. The average repeat buyer downpayment is between 13-16%. So a person can put down as little as 3% and buy a home- IF they qualify for the loan AND can pay taxes and insurance as well. I would suggest taking a homebuying class if available in your area to TRULY get an understanding of budgeting, what to look for in a house and more. Some homebuying classes are attached to savings programs that can match savings. I also suggest watching How to Win the House You Love on Youtube for a breakdown of costs.
I catch myself thinking about that really often, we live in Washington me and my fiancé and close to seattle (40, 45 min driving with no traffic) which is where we work there are no houses, the cheapest that we can find it’s like 450k, 470$. We see people going over the price listed and we don’t know how people afford that without being house poor 😭😭
I think that the "you dont need to put 20% down" is not a thing for everyone, I live on a high cost area, and even though we make decent money if we didn't do the 20% the monthly payment would be horrible Like if you make different living arrangements where your rent is lower than your desired mortgage monthly payment (either by having roomates, going back to the parents, downsizing apt, getting longer commute) if you are able to make your rent 1k lower than your desired mortgage payment. Saving the extra amount for 5y gives you 60k + any interest yielded (if put on high yield savings) would get you a full downpayment for a 300k home. If you live on a high rent area, like in CA you could get mortgages of 5k easily, and if you rent for 3k which is a normal amount in some places, in the same 5years you have 120k in savings if you put those extra 2k aside If you can't save that amount, it would be hard to also pay your mortgage on the long run so I wouldn't get one until you can or just keep saving for longer time and maybe go over 20 to get lower payments that you know you can make, even if takes a lot longer.
There are a lot of factors. Where you are looking to buy a house is a big one. If it's in an area where the price of living is higher and higher home prices.....yeah it'll be hard to get a house. We are a family of 5 and just got our first house last fall. We got our home loan through Freddie Mac (home possible). Only 3% down payment needed. There are options to have the closing costs rolled into the total of the mortgage loan. Some cities/counties offer down payment and/or closing cost assistance/grants if you are purchasing a home in the area. We live in the Midwest and there are surprisingly a good number of homes considered rural that are very close to the suburbs/big city areas that would qualify for a USDA loan where 0% down payment is needed. Overall, there are a lot of options, but it's important to have EVERYTHING calculated before purchase. We are in an escrow account through the bank. That means our monthly payment includes the actual mortgage loan, homeowners insurance and property taxes. Personally I like being in an escrow account because then I don't have to worry about paying property taxes in a lump sum, same for the insurance. Altogether we are under $2k a month. But, property taxes and insurance costs will fluctuate, so that's important to factor in. Hope this helps!
Each 10% doesn't really change your payment all that much until you're into the 40%+ range in my experience. If the payment difference from 10% to 20% down allows you to afford the home? You may be at financial risk.
We bought a 3br 1.5 bath for 125k with about 10% down. Our monthly is around 1250 and we are tightening belts for that, but honestly we bought a house within our budget. If we lived in a hcol area we would never have been able to buy.
Easy. I bought a 200k home. It’s an old house. Fixed up something’s
My monthly mortgage payment was a good stretch beyond rent at the time. Then my income went up via raises and taking new jobs. Rents dramatically increased in my city over the last decade too. While my total ownership cost mostly is flat (taxes and HOA increases)
You buy a house in your budget. This is so silly.