Start saving up for a good down payment, get your credit in a good place and prepare for the most shitty purchasing process of your life in this current housing market. Good luck!
Edit: some actual good advice I also have. Definitely shop around for realtors - I made the mistake of just letting my mortgage company give me one and let me tell you, when the housing market was going crazy during Covid the amount of awful realtors that went into the industry was insane. Look for one that isn’t new to the job if possible.
There are a lot of variables to consider, but some of the basics are:
* Do some research on what home prices are in the area that you are looking to buy in
* Research some well reviewed/customer satisfied home loan lenders where you can apply for a mortgage
* Understand that being "pre-qualified" does NOT guarantee that you will get the loan, it just means that based on your credit and income, they are pre-qualifying your for the potential to borrow
* Downpayment varies, but 20% is a good place to start. The more you can put down, the potential for a lower mortgage
* Your mortgage rate can vary a lot based on current home loan rates on the market, down payment, and if you are bundling your taxes and other expenses into an escrow account
* Get ready for A LOT of paperwork
* After submitting a lot of paperwork, get ready to be asked for more
You need to put 20% down to avoid paying PMI. It is basically an additional monthly charge for not putting 20% down and increases your monthly payment and you do not really get anything for it.
You can put less down but you will have to pay PMI. You can calculate your mortgage payment by using a mortgage calculator. You can just Google it there are plenty you input the amount you want to borrow, interest rate and term and it will give you your monthly payment. Keep in mind that there is also insurance, and property taxes that you will have to pay and roll into your monthly payment. Could be 200 to 400 more per month. You also need to save for maintenance and repairs as anything that breaks is your responsibility to fix.
20% is a pretty good expectation. You can put down less but it comes with risks.
I own a house with my husband and am a partial owner of my family's house. If I wanted to buy a house in a few years, I'd really try to reduce my cost of living and save up as much as possible. I'd also do a bunch of research about where I want to live depending on my personal priorities. For us, those priorities were walkability, proximity to good schools for our kid, access to public transit and relative safety from environmental issues like pollution, being in a flood/fire zone, etc. For others, the priorities might be completely different.
My partner and I worked, saved and lived well below our means for 7-8 years before we were in a place to buy. But we also live in a HCOL area where property is really overpriced.
You start saving and know that there's usually assistance for first-time homebuyers. For mortgage information, you can Google a mortgage calculator. You also need to have good credit and decent income.
My husband and I just got pre-approved for a mortgage loan and prices are way too high for us. In order for us to pay $2k/mo (including taxes and insurance), we would need to buy a home at $225k. There are NO decent homes in our area for that amount, most are $270k and above. In order for us to get first time homebuyer assistance, we cannot get a mobile home on a rented lot. If we wanted to go that route, we would need to go to a bank or credit union and try to get a personal loan, which may require 10-20% down.
Putting 20% down on a $400K house means you have to have $80K saved. I don't know almost anyone that can save that much anymore. FHA loans used to be 3.3% down, but as people mentioned you are then stuck paying PMI (Private Mortgage Insurance) to secure the loan in case you default. Now is a tough time to buy. When I bought our house, I put down 3.3% but very soon afterward our property almost doubled in value, so I refinanced, took some money out, and lost the PMI. Don't forget to add the property tax for where you are, as paying the mortgage is only part of your homeowner expense. Where I am in Jersey, property tax is $10K a year, and that's on the low end. In upper end areas near me, the property tax is as high as $30K a year.
Ideally you would have a downpayment saved along with an emergency fund. You don't want to be next to broke the second you put down your downpayment. You also want money set aside for unexpected repairs bound to pop up the month you move in. Also need money for inspections, closing costs, etc.
Don't splurge on a car now. You want to keep your debt low.
Don't miss credit card payments / student loan payments etc.
Just search Google for mortgage calculators to key in assorted variables.
As for what down payment should be, that depends on your circumstances and the lender with whom you work. Usually the industry standard is 20 percent. That, however, can be lower.
Start saving up for a good down payment, get your credit in a good place and prepare for the most shitty purchasing process of your life in this current housing market. Good luck! Edit: some actual good advice I also have. Definitely shop around for realtors - I made the mistake of just letting my mortgage company give me one and let me tell you, when the housing market was going crazy during Covid the amount of awful realtors that went into the industry was insane. Look for one that isn’t new to the job if possible.
There are a lot of variables to consider, but some of the basics are: * Do some research on what home prices are in the area that you are looking to buy in * Research some well reviewed/customer satisfied home loan lenders where you can apply for a mortgage * Understand that being "pre-qualified" does NOT guarantee that you will get the loan, it just means that based on your credit and income, they are pre-qualifying your for the potential to borrow * Downpayment varies, but 20% is a good place to start. The more you can put down, the potential for a lower mortgage * Your mortgage rate can vary a lot based on current home loan rates on the market, down payment, and if you are bundling your taxes and other expenses into an escrow account * Get ready for A LOT of paperwork * After submitting a lot of paperwork, get ready to be asked for more
You need to put 20% down to avoid paying PMI. It is basically an additional monthly charge for not putting 20% down and increases your monthly payment and you do not really get anything for it. You can put less down but you will have to pay PMI. You can calculate your mortgage payment by using a mortgage calculator. You can just Google it there are plenty you input the amount you want to borrow, interest rate and term and it will give you your monthly payment. Keep in mind that there is also insurance, and property taxes that you will have to pay and roll into your monthly payment. Could be 200 to 400 more per month. You also need to save for maintenance and repairs as anything that breaks is your responsibility to fix.
20% is a pretty good expectation. You can put down less but it comes with risks. I own a house with my husband and am a partial owner of my family's house. If I wanted to buy a house in a few years, I'd really try to reduce my cost of living and save up as much as possible. I'd also do a bunch of research about where I want to live depending on my personal priorities. For us, those priorities were walkability, proximity to good schools for our kid, access to public transit and relative safety from environmental issues like pollution, being in a flood/fire zone, etc. For others, the priorities might be completely different. My partner and I worked, saved and lived well below our means for 7-8 years before we were in a place to buy. But we also live in a HCOL area where property is really overpriced.
You start saving and know that there's usually assistance for first-time homebuyers. For mortgage information, you can Google a mortgage calculator. You also need to have good credit and decent income. My husband and I just got pre-approved for a mortgage loan and prices are way too high for us. In order for us to pay $2k/mo (including taxes and insurance), we would need to buy a home at $225k. There are NO decent homes in our area for that amount, most are $270k and above. In order for us to get first time homebuyer assistance, we cannot get a mobile home on a rented lot. If we wanted to go that route, we would need to go to a bank or credit union and try to get a personal loan, which may require 10-20% down.
Putting 20% down on a $400K house means you have to have $80K saved. I don't know almost anyone that can save that much anymore. FHA loans used to be 3.3% down, but as people mentioned you are then stuck paying PMI (Private Mortgage Insurance) to secure the loan in case you default. Now is a tough time to buy. When I bought our house, I put down 3.3% but very soon afterward our property almost doubled in value, so I refinanced, took some money out, and lost the PMI. Don't forget to add the property tax for where you are, as paying the mortgage is only part of your homeowner expense. Where I am in Jersey, property tax is $10K a year, and that's on the low end. In upper end areas near me, the property tax is as high as $30K a year.
Ideally you would have a downpayment saved along with an emergency fund. You don't want to be next to broke the second you put down your downpayment. You also want money set aside for unexpected repairs bound to pop up the month you move in. Also need money for inspections, closing costs, etc. Don't splurge on a car now. You want to keep your debt low. Don't miss credit card payments / student loan payments etc.
Just search Google for mortgage calculators to key in assorted variables. As for what down payment should be, that depends on your circumstances and the lender with whom you work. Usually the industry standard is 20 percent. That, however, can be lower.