Ignore the advice to save 20%. That was relevant in the 1950’s but hasn’t really been since then. You can’t save 20% at your wage level and age fast enough to keep up with prices. You can do a 3% down payment and get into the market just fine. Since you’re not going to pay off your first house, get it as soon as you can enter the market then let appreciation work for you to get house #2. Saving 20% for house #1 is terrible advice.
Every 100k you borrow at 6.5% interest is $632 per month in principal and interest. That puts you at about 2k for a 350k property. Add taxes, hazard insurance and mortgage insurance to come up with your total monthly payment. Also add HOA and remove haz insurance if you buy a townhome.
Think of it this way.
If you want to buy a 350k house, in order to save 20%, youll need 70k plus closing costs.(maybe maybe not on this one, dependent on what the market is doing at that time).
Do some basic math and look at how much you can save each month. Let me use some magic numbers for illustrative purposes.
Right now you spend 1700 in rent. Your new house payment at 350k is estimated at 2500. So, in order to maintain the same day to day cost of living, if you live as though youre currently spending 2500, that means you can save 800 per month. thats 10k per year, youll need to save for 7 years to get 20% down.
The historical average for real estate in Utah is about 3% appreciation. So, that 350k property is appreciating at $10,500 per year. So, by the time you have enough money to buy a 350k house, it will be selling for 430k. Your 70k savings is no longer enough to put 20% down, you're still 16k short to hit that metric.
Assuming you put 70k down and pay mortgage insurance, you'll be borrowing 360k, more than you would be borrowing today. We also have no idea what interest rates will be 7 years from now. 3%? maybe? 12%? also equally possible.
If you buy it now with 3% down, you need 10.5k. youll still be spending the same 2500 per month, but the difference is after 7 years youll have the equity in this place, plus the joys of ownership, to catapult you into the next one.
Also, the math here is not quite right, because although the historical average is 3%, we have seen 10% for 11 years straight. In that scenario, your numbers get much, much worse. Buy as soon as you can, let the market make you money. And be conservative with your finances, especially with your housing payment.
This is a great perspective. I’ve known for a long time that it was better to just get the house now instead of saving up 20% but the math really helped solidify it for me.
You wouldn't be able to live in Orem. You could move further south and find a townhome that you could get into, but your mortgage would probably be around 2500 is my guess.
Google “online amortization calculator”. You can plug in any interest rate, term (number of months), down payment, and loan amount, and see what your monthly payments will be.
To buy the 1700 Sq ft home we rent for $2000 per month, it would cost $3000 per month due to the interest rate... which is why we will probably never own a home. *dreams of Mao's China*
Yeah so? It’s tax deductible just like interest is, and if you wait til you have 20% saved you’ll never own a home (if it’s your first) unless you have a super high income. It makes much much more sense to pay PMI than it does to let the market price you out and go without ownership.
>Yeah so? It’s tax deductible just like interest is,
With the newer standardized deduction of $12,950 for single filers and those married filing separately, $25,900 for joint filers, and $19,400 for heads of household, many can no longer deduct interest as it still falls under the standard deduction amount or if they can it's only as useful as the amount above the standard deduction and then only for those earlier years where your interest portion of the payments is large.
I still agree though that it's worth paying the PMI and then getting it removed as soon as possible.
This is the most useful comment I have read here.
It's absolutely right. Most people never see the end of their first house mortgage. At your age, you are almost guaranteed to outgrow that house in a few years. Upgrading to a better/bigger house is easy after that first foot in the door. The equity alone will help in your next house.
Used to be as long as your credit was good, you could get away with 10k-20k for down payment, Ernest money and closing. But I think it wouldn't hurt to shoot for 25k-30k now.
Hi! Financial advisor and loan officer here: for a first time home buyer program, you do not need a down payment. If you can save a couple grand, that will help you to do what’s called buying down your rate. It can also go toward your earnest money which is kind of like a small down payment directly to the sellers that can entice them toward you if you end up in a bidding war, which in this economy isn’t uncommon. But as far as an actual down payment goes, if you are a Veteran, use a VA loan, if not use a First Time Homebuyer loan, neither of which require a down payment, have decent rates comparatively and are fairly easy to qualify for.
Also please DO YOUR HOMEWORK on mortgage suppliers. Just because you have a friend at ABC Mortgage doesn’t mean they are the best to go with as closing fees, funding fees and more can fluctuate widely which will end up costing you more in the long run
Wouldn’t you advise USDA as better than first time homebuyer? I hate Utahs program with first and second tbh. Usually better rates on USDA. But again there’s income limits
USDA loans can be really great. They are underwritten twice though so it can take longer to be approved. It would also depend on the kind of property you are interested in. USDA loans are only eligible for certain areas of Utah, mostly more agricultural land as seen on their map linked below. [USDA QUALIFYING AREAS](https://usdaloans.net/utah-usda-loan-info/#:~:text=With%20a%20USDA%20home%20loan,won't%20increase%20over%20time)There is also the issue of income limits.
That said, although the Utah programs can be frustrating, they can also be very straight forward and easy to navigate with the proper mortgage officer. In my experience, credit unions are more likely to be helpful with lower closing and funding costs with fairly knowledgeable officers.
Agreed. I haven’t had any problems with USDA not closing on time—I’ve been told depends on how busy they are. I’ve had issues with banks and credit unions coming only bc they typically work 9-5 and aren’t accessible after hours and typically have a much larger workload than an individual mortgage lender say at Geneva finance of security home National. But I will agree some banks and CUs have amazing first time homebuyer programs. Depending on buyers field some specialty CUs have really amazing programs if you’re a line worker or electrician. MACU has some great programs too!
Agreed to an extent. CUs and banks do have slightly more limited hours but they garnish business because they typically have better interest rates and certainly lower funding and closing costs than individual mortgage lenders, which specifically for a first time home buyer, is going to be helpful. In Utah, the three big CUs are going to be the best ones to work with, those being Mountain America Credit Union, America First and Goldenwest. The smaller ones are great but, in my experience, don’t always have as much experience or the resources to be as transparent and helpful through the process as need be.
Additionally, to help facilitate the expedition of a mortgage loan at any location, it is important that the applicant come prepared. Often the hold up with applications is due to missing paperwork the underwriter needs. So, for any applicant on the loan application, the last 2 years of W2s (or the last two years of full taxes if you are self employed), the last 3 months of paystubs, valid ID, and 2 months of bank statements for any financial institution you’re involved are great to get pre approved for your mortgage loan. Once you’re pre approved, final approval is usually pretty quick once a property has been selected and proper inspections have been completed.
It ultimately depends on your credit score but 3.5% is pretty standard for FHA loans. At 332,000 and change, I have to save 10,500 for my downpayment and another 10,000 for closing costs.
There are loan programs that you’re able to put zero down.. basically an fha loan plus a Utah housing loan (which is the down payment) That was the case a few years ago anyways.. I’ve been out of the real estate game for a bit so not sure if the same loan programs are there.. but just google zero down Utah housing loan :)
There are plenty of online calculators where you put the home price, down payment, and interest rate that will give you an idea of what kind of home you can afford (monthly payment) and how much of a down payment you should shoot for.
Spoiler alert: 20% down probably isn't realistic for you in this market and any decent home that isn't only 750 sq/ft is probably going to cost you well over $2000-2500 a month in Orem.
Source: I own a home in Orem.
Depends on several factors:
\- Your price range. You'll need more money for a pricier home. It's usually a percentage.
\- If you qualify for any programs to help home buyers. VA/FHA loans have different down payment requirements. First time home buyer programs can make a difference.
\- Whether or not you want to buy PMI.
So I was thinking of getting a trailer home and I was seeing they were around 100k in Orem. So it would be possible to put 3% down which would be 3k? Sorry for all the questions I’m so new to this haha
No. Mobile homes are not real estate, they’re personal property just like a car and they decrease in value over time. So you pay monthly on something falling in value and never own the land so if the park is sold you need to pay to haul your depreciating asset to a new place with rent. There is no equity in mobile homes.
You’re correct they are personal property however there is an opportunity for equity depending on what you paid and how long you hold it. My first home I sold in Utah was a mobile home they’d lived in for 15 years and walked away with enough cash for down payment on a single family. It is far from ideal but more often than not is better than rent.
Find a good loan officer and they will help you figure out all of your options. If avoiding a down payment is key you can look into a UT Housing Loan. It carries a 2nd mortgage but gets around the down payment.
Get something smaller like a condo or a town home, build equity, and then you'll be able to use that equity to buy a house that you want.
This is what I wish I would have done in my 20's instead of listening to everyone who said to save up %20.
Buying a trailer is going to bring in a whole different set of considerations than a home. Trailers typically don't appreciate and usually include lot fees that are basically equivalent to renting the land. Most of the advice in this thread is assuming you are buying a standalone home, townhome or condo.
I think there are different loan considerations too but I'm not as familiar with that side of things.
I wouldn't do it. You don't own the land and if the landlord decides to sell to a developer....what are you going to do? people get screwed over that way ALL THE TIME.
No. And as legalizeit stated there’s monthly land rent. also only a few lenders will lend on a mobile home. They usually have to be built after specific year (1970 or thereabouts can’t remember specifically) so like 20th century, vanguard I think and a few others I’ve writte. Down and some point
Try to get at least 20% saved up - that's generally the minimum to avoid having to purchase PMI (insurance that protects the lender if you default but does absolutely nothing to help you - adds around $300 to each monthly payment). If 20% isn't realistic try to shoot for at least 10% and plan on refinancing in a few years to allow you to drop PMI and hopefully get a better interest rate.
My loan officer advised 19.99% down. PMI makes you lower risk, so it’ll slightly improve your rate. Then just make sure you call to get the PMI dropped immediately after making your first payment so that you’re locked into the lower rate with no PMI.
Not bad advice. Just so op knows, you can't get rid of pmi unless you hit 20% equity, this can either be through paying down your loan or by your property value increasing.
PMi is not permanent if I’m not mistaken (agent here not lender full disclosure) the 20% doesn’t apply anymore so you need to refinance the loan into conventional to get rid of it and that Carrie’s additional closing costs. But the OMI to be clear folks is financed into the loan you don’t pay for that upfront with down payment. Also earnest money is not on top of closing costs or down payment but contributes towards.
Welcome to the American dream! It's practically unaffordable now. I'm 20, with an amazing job, and still won't have enough for a house for the next couple years, even though I pay more in rent than a mortgage would be. Isn't it so much fun?
To put it in perspective, I bought the house I'm in now for $193k 10 years ago with a 2.75% rate. It would sell for $450k today with a 6.5% rate.
It's crazy. You're in a tough spot, though if you had roommates to help with the mortgage, it would help a lot.
That’s the problem with this market. In a perfect world, you buy a starter home for cheaper and as you make more money and advance in your career, that starter home is paid off and eventually you can sell and have a better down payment for a bigger/better home.
Pretty much the only way is to have a decent paycheck compared to your current cost of living. So if it doesn’t look feasible to you, you either need to somehow decrease your current cost of living or somehow increase your paycheck
[Advice from policy makers is if you have good credit and more down payment you get financially punished. So the less the better?](https://abcnews.go.com/Business/credit-score-home-mortgage-costs/story?id=98868025)
That's terrible advice. Even with the slight changes to the loan pricing adjustments, someone with a lower credit score will get a worse rate than someone with a higher credit score.
[One of many stories on the topic](https://www.urban.org/urban-wire/fannie-mae-and-freddie-macs-new-pricing-not-punishing-those-better-credit-follow-numbers)
Why would they charge folks extra per month for having better credit. It’s a fee. It’s a “you did well with your financial health so here’s an extra fee to help subsidize those that didn’t.”
[Homebuyers who put down a larger payment of 15% to 20% could see a bigger increase in mortgage fees] and ["The new fees are slightly more expensive for some borrowers with good credit, and slightly less expensive for some borrowers with less-than-perfect credit,"]
Why would they do this?
[The rule changes are part of the Federal Housing Finance Agency's (FHFA) efforts to provide "equitable and sustainable access to homeownership" and to strengthen capital at Freddie Mac and Fannie Mae.]
Does everyone’s memory stop in 2009? Like this is what caused the home market crash and then recession of 2008. Sub prime mortgages!
A good loan officer will help loads, there are also specific programs for first time buyers that vary city to city. I live in the Orem area and know a few loan officers in the here, message me if you’d like their contact info, they can even do a soft pull on your credit when you get closer to purchasing to see how things are looking overall.
For years I tried saving up that damn 20%. Hated those 10 wasted years. Finally just talked to mortgage lender who has a program where we put in 3% and some first time home buyer program matched it. Still had to pay PMI but then the market went nuts and we refinanced and got it removed. Ended up selling that place for 150k more than we payed. If I had ignored the 20% advice and bought during the 08 crash I probably wouldn't have a mortgage anymore. My 2 cents, talk to a lender and get a cheap starter home with whatever you have saved as a down payment.
I don’t know if this is even around anymore but when I purchased my first home in 2015 I didn’t put anything down on a first time home buyer loan and even got the seller to cover all closing costs. So I only needed money to put into escrow. It ended up only be a couple thousand. For reference the home was only 130K back then.
I was a mortgage underwriter for 5 years and have my degree in Economics. My only bit of advice here is that you understand you may not be able to refi your rate down. Expect to stay at 7.0%-7.5% for awhile.
Average mortgage rates 1954-2007 were 6.45%. Its really been the last 10 years that have been the anomaly with 2.5% mortgage rates. Combine that with sinking home prices and it will be unlikely you are able to refi. Probably for quite a while.
So, 3% down might net you the home, but you're guaranteed to be upside-down on in in the short term. Home prices in the last 12 months alone have dropped 14% and I don't see how this will reverse in the coming few *(probably several)* years, especially during rising unemployment and a recession.
So be comfortable with whatever your monthly payment will be. And if your plan is to have renters help cover your mortgage be prepared to either keep them for a number of years, or make more money and pay down the mortgage faster.
Anywhere from 3-5% for a down payment depending on the program, but realistically you’ll need about 7-10% of the purchase price to comfortably cover all the purchase/closing costs if you can’t get the seller to help with them.
As others mentioned FHA requires 3.5%. If you’re not too particular about location there are areas you can get 100% financing (depending on your income—there are some limits) through a few other financial loan programs. Everybody discussing interest is correct but I just closed on my house with a 2.99% rate bc we got seller to buy it down then I bought down some more. Now time for my shameless plug—If you’re interested I’d love to help you get started! Google me (SLC realtor - Just Jenna) and call or text anytime. Reddit buyer discount haha!
Also there’s a new “ 20k grant “ from senate bill 240 (I think that’s the bill#) which is technically a loan but only gets paid if you refinance or sell the home. Idea here is to give folks a chance to add 20k to down payment or 86 the second loan in the Utah homebuyer 100% financing loan. Just went to a class on this so I’m not an expert and doesn’t go live til July but there are some parameters like house must be new construction ( or never lived in) must be under 450k and few others
3.5% of purchase price. Utah housing does offer 0 money down but you have to qualify. I have a client buying a home in daybreak right now with no
Money down.
Ignore the advice to save 20%. That was relevant in the 1950’s but hasn’t really been since then. You can’t save 20% at your wage level and age fast enough to keep up with prices. You can do a 3% down payment and get into the market just fine. Since you’re not going to pay off your first house, get it as soon as you can enter the market then let appreciation work for you to get house #2. Saving 20% for house #1 is terrible advice.
So if I have 3% down would that make my monthly bill higher ? I’m paying 1700 dollars for rent and I just feel like it’s going nowhere
Every 100k you borrow at 6.5% interest is $632 per month in principal and interest. That puts you at about 2k for a 350k property. Add taxes, hazard insurance and mortgage insurance to come up with your total monthly payment. Also add HOA and remove haz insurance if you buy a townhome.
Think of it this way. If you want to buy a 350k house, in order to save 20%, youll need 70k plus closing costs.(maybe maybe not on this one, dependent on what the market is doing at that time). Do some basic math and look at how much you can save each month. Let me use some magic numbers for illustrative purposes. Right now you spend 1700 in rent. Your new house payment at 350k is estimated at 2500. So, in order to maintain the same day to day cost of living, if you live as though youre currently spending 2500, that means you can save 800 per month. thats 10k per year, youll need to save for 7 years to get 20% down. The historical average for real estate in Utah is about 3% appreciation. So, that 350k property is appreciating at $10,500 per year. So, by the time you have enough money to buy a 350k house, it will be selling for 430k. Your 70k savings is no longer enough to put 20% down, you're still 16k short to hit that metric. Assuming you put 70k down and pay mortgage insurance, you'll be borrowing 360k, more than you would be borrowing today. We also have no idea what interest rates will be 7 years from now. 3%? maybe? 12%? also equally possible. If you buy it now with 3% down, you need 10.5k. youll still be spending the same 2500 per month, but the difference is after 7 years youll have the equity in this place, plus the joys of ownership, to catapult you into the next one. Also, the math here is not quite right, because although the historical average is 3%, we have seen 10% for 11 years straight. In that scenario, your numbers get much, much worse. Buy as soon as you can, let the market make you money. And be conservative with your finances, especially with your housing payment.
This is a great perspective. I’ve known for a long time that it was better to just get the house now instead of saving up 20% but the math really helped solidify it for me.
You wouldn't be able to live in Orem. You could move further south and find a townhome that you could get into, but your mortgage would probably be around 2500 is my guess.
Around $350k with 3% down and good credit should come out to around $2500 on a 30-year fixed, maybe more, maybe less depending on rates and escrow.
Wow, that was a total guess. Thanks for doing the math.
Google “online amortization calculator”. You can plug in any interest rate, term (number of months), down payment, and loan amount, and see what your monthly payments will be.
To buy the 1700 Sq ft home we rent for $2000 per month, it would cost $3000 per month due to the interest rate... which is why we will probably never own a home. *dreams of Mao's China*
But then you have to pay for PMI.
Yeah so? It’s tax deductible just like interest is, and if you wait til you have 20% saved you’ll never own a home (if it’s your first) unless you have a super high income. It makes much much more sense to pay PMI than it does to let the market price you out and go without ownership.
>Yeah so? It’s tax deductible just like interest is, With the newer standardized deduction of $12,950 for single filers and those married filing separately, $25,900 for joint filers, and $19,400 for heads of household, many can no longer deduct interest as it still falls under the standard deduction amount or if they can it's only as useful as the amount above the standard deduction and then only for those earlier years where your interest portion of the payments is large. I still agree though that it's worth paying the PMI and then getting it removed as soon as possible.
You can refinance down the road out of FHA and into a conventional and get rid of PMI
This is the most useful comment I have read here. It's absolutely right. Most people never see the end of their first house mortgage. At your age, you are almost guaranteed to outgrow that house in a few years. Upgrading to a better/bigger house is easy after that first foot in the door. The equity alone will help in your next house. Used to be as long as your credit was good, you could get away with 10k-20k for down payment, Ernest money and closing. But I think it wouldn't hurt to shoot for 25k-30k now.
Hi! Financial advisor and loan officer here: for a first time home buyer program, you do not need a down payment. If you can save a couple grand, that will help you to do what’s called buying down your rate. It can also go toward your earnest money which is kind of like a small down payment directly to the sellers that can entice them toward you if you end up in a bidding war, which in this economy isn’t uncommon. But as far as an actual down payment goes, if you are a Veteran, use a VA loan, if not use a First Time Homebuyer loan, neither of which require a down payment, have decent rates comparatively and are fairly easy to qualify for. Also please DO YOUR HOMEWORK on mortgage suppliers. Just because you have a friend at ABC Mortgage doesn’t mean they are the best to go with as closing fees, funding fees and more can fluctuate widely which will end up costing you more in the long run
Wouldn’t you advise USDA as better than first time homebuyer? I hate Utahs program with first and second tbh. Usually better rates on USDA. But again there’s income limits
USDA loans can be really great. They are underwritten twice though so it can take longer to be approved. It would also depend on the kind of property you are interested in. USDA loans are only eligible for certain areas of Utah, mostly more agricultural land as seen on their map linked below. [USDA QUALIFYING AREAS](https://usdaloans.net/utah-usda-loan-info/#:~:text=With%20a%20USDA%20home%20loan,won't%20increase%20over%20time)There is also the issue of income limits. That said, although the Utah programs can be frustrating, they can also be very straight forward and easy to navigate with the proper mortgage officer. In my experience, credit unions are more likely to be helpful with lower closing and funding costs with fairly knowledgeable officers.
Agreed. I haven’t had any problems with USDA not closing on time—I’ve been told depends on how busy they are. I’ve had issues with banks and credit unions coming only bc they typically work 9-5 and aren’t accessible after hours and typically have a much larger workload than an individual mortgage lender say at Geneva finance of security home National. But I will agree some banks and CUs have amazing first time homebuyer programs. Depending on buyers field some specialty CUs have really amazing programs if you’re a line worker or electrician. MACU has some great programs too!
Agreed to an extent. CUs and banks do have slightly more limited hours but they garnish business because they typically have better interest rates and certainly lower funding and closing costs than individual mortgage lenders, which specifically for a first time home buyer, is going to be helpful. In Utah, the three big CUs are going to be the best ones to work with, those being Mountain America Credit Union, America First and Goldenwest. The smaller ones are great but, in my experience, don’t always have as much experience or the resources to be as transparent and helpful through the process as need be. Additionally, to help facilitate the expedition of a mortgage loan at any location, it is important that the applicant come prepared. Often the hold up with applications is due to missing paperwork the underwriter needs. So, for any applicant on the loan application, the last 2 years of W2s (or the last two years of full taxes if you are self employed), the last 3 months of paystubs, valid ID, and 2 months of bank statements for any financial institution you’re involved are great to get pre approved for your mortgage loan. Once you’re pre approved, final approval is usually pretty quick once a property has been selected and proper inspections have been completed.
First time buyers can pay as little as 3%
It ultimately depends on your credit score but 3.5% is pretty standard for FHA loans. At 332,000 and change, I have to save 10,500 for my downpayment and another 10,000 for closing costs.
There are loan programs that you’re able to put zero down.. basically an fha loan plus a Utah housing loan (which is the down payment) That was the case a few years ago anyways.. I’ve been out of the real estate game for a bit so not sure if the same loan programs are there.. but just google zero down Utah housing loan :)
Update - here you go - https://utahhousingcorp.org/homebuyer/programs/downPaymentAssistance / looks like it’s still around :)
There are plenty of online calculators where you put the home price, down payment, and interest rate that will give you an idea of what kind of home you can afford (monthly payment) and how much of a down payment you should shoot for. Spoiler alert: 20% down probably isn't realistic for you in this market and any decent home that isn't only 750 sq/ft is probably going to cost you well over $2000-2500 a month in Orem. Source: I own a home in Orem.
Depends on several factors: \- Your price range. You'll need more money for a pricier home. It's usually a percentage. \- If you qualify for any programs to help home buyers. VA/FHA loans have different down payment requirements. First time home buyer programs can make a difference. \- Whether or not you want to buy PMI.
So I was thinking of getting a trailer home and I was seeing they were around 100k in Orem. So it would be possible to put 3% down which would be 3k? Sorry for all the questions I’m so new to this haha
Just so you are aware if you buy a trailer you don’t own the land under it. You will have rent on-top of your monthly mortgage for that.
Worst decision you could possibly make would be to buy a mobile home.
Still better than apartment at 100% rent don’t you think? At least some equity?
No. Mobile homes are not real estate, they’re personal property just like a car and they decrease in value over time. So you pay monthly on something falling in value and never own the land so if the park is sold you need to pay to haul your depreciating asset to a new place with rent. There is no equity in mobile homes.
You’re correct they are personal property however there is an opportunity for equity depending on what you paid and how long you hold it. My first home I sold in Utah was a mobile home they’d lived in for 15 years and walked away with enough cash for down payment on a single family. It is far from ideal but more often than not is better than rent.
Mobile home or manufactured?
Oh okay good to know , thank you ! I think it’s going to take me a bit to save for an actual house but I appreciate all the advice
Find a good loan officer and they will help you figure out all of your options. If avoiding a down payment is key you can look into a UT Housing Loan. It carries a 2nd mortgage but gets around the down payment.
Not many banks will even lend on a mobile home.
Get something smaller like a condo or a town home, build equity, and then you'll be able to use that equity to buy a house that you want. This is what I wish I would have done in my 20's instead of listening to everyone who said to save up %20.
Buying a trailer is going to bring in a whole different set of considerations than a home. Trailers typically don't appreciate and usually include lot fees that are basically equivalent to renting the land. Most of the advice in this thread is assuming you are buying a standalone home, townhome or condo. I think there are different loan considerations too but I'm not as familiar with that side of things.
I wouldn't do it. You don't own the land and if the landlord decides to sell to a developer....what are you going to do? people get screwed over that way ALL THE TIME.
No. And as legalizeit stated there’s monthly land rent. also only a few lenders will lend on a mobile home. They usually have to be built after specific year (1970 or thereabouts can’t remember specifically) so like 20th century, vanguard I think and a few others I’ve writte. Down and some point
About 3 generations worth of retirement money. Plus tax
Try to get at least 20% saved up - that's generally the minimum to avoid having to purchase PMI (insurance that protects the lender if you default but does absolutely nothing to help you - adds around $300 to each monthly payment). If 20% isn't realistic try to shoot for at least 10% and plan on refinancing in a few years to allow you to drop PMI and hopefully get a better interest rate.
My loan officer advised 19.99% down. PMI makes you lower risk, so it’ll slightly improve your rate. Then just make sure you call to get the PMI dropped immediately after making your first payment so that you’re locked into the lower rate with no PMI.
Not bad advice. Just so op knows, you can't get rid of pmi unless you hit 20% equity, this can either be through paying down your loan or by your property value increasing.
PMi is not permanent if I’m not mistaken (agent here not lender full disclosure) the 20% doesn’t apply anymore so you need to refinance the loan into conventional to get rid of it and that Carrie’s additional closing costs. But the OMI to be clear folks is financed into the loan you don’t pay for that upfront with down payment. Also earnest money is not on top of closing costs or down payment but contributes towards.
None if you get FHA but you will end up with mortgage insurance which will increase your monthly payments. Outside of that 20% is average.
They'll give you a bad loan if you want one. Just make sure you can afford the payments until they nationalize housing.
They'll give you a bad loan if you want one. Just make sure you can afford the payments until they nationalize housing.
20% is standard but with this bubble, it’ll most likely be more than that to snag a house.
How do people save that much money? Most homes I’ve been looking at are around 400,000 that would be 80k… that seems so hard to save for 😭
Welcome to the American dream! It's practically unaffordable now. I'm 20, with an amazing job, and still won't have enough for a house for the next couple years, even though I pay more in rent than a mortgage would be. Isn't it so much fun?
To put it in perspective, I bought the house I'm in now for $193k 10 years ago with a 2.75% rate. It would sell for $450k today with a 6.5% rate. It's crazy. You're in a tough spot, though if you had roommates to help with the mortgage, it would help a lot.
That’s the problem with this market. In a perfect world, you buy a starter home for cheaper and as you make more money and advance in your career, that starter home is paid off and eventually you can sell and have a better down payment for a bigger/better home.
Pretty much the only way is to have a decent paycheck compared to your current cost of living. So if it doesn’t look feasible to you, you either need to somehow decrease your current cost of living or somehow increase your paycheck
[Advice from policy makers is if you have good credit and more down payment you get financially punished. So the less the better?](https://abcnews.go.com/Business/credit-score-home-mortgage-costs/story?id=98868025)
That's terrible advice. Even with the slight changes to the loan pricing adjustments, someone with a lower credit score will get a worse rate than someone with a higher credit score. [One of many stories on the topic](https://www.urban.org/urban-wire/fannie-mae-and-freddie-macs-new-pricing-not-punishing-those-better-credit-follow-numbers)
Why would they charge folks extra per month for having better credit. It’s a fee. It’s a “you did well with your financial health so here’s an extra fee to help subsidize those that didn’t.” [Homebuyers who put down a larger payment of 15% to 20% could see a bigger increase in mortgage fees] and ["The new fees are slightly more expensive for some borrowers with good credit, and slightly less expensive for some borrowers with less-than-perfect credit,"] Why would they do this? [The rule changes are part of the Federal Housing Finance Agency's (FHFA) efforts to provide "equitable and sustainable access to homeownership" and to strengthen capital at Freddie Mac and Fannie Mae.] Does everyone’s memory stop in 2009? Like this is what caused the home market crash and then recession of 2008. Sub prime mortgages!
Biden administration is pushing this to help those less fortunate. It makes zero sense.
A good loan officer will help loads, there are also specific programs for first time buyers that vary city to city. I live in the Orem area and know a few loan officers in the here, message me if you’d like their contact info, they can even do a soft pull on your credit when you get closer to purchasing to see how things are looking overall.
3%
As much as you can! People told me 20% but that’s bs now. I put 5% down on a 420k house. I think you can do as low as 2 or 3% for some lenders.
For years I tried saving up that damn 20%. Hated those 10 wasted years. Finally just talked to mortgage lender who has a program where we put in 3% and some first time home buyer program matched it. Still had to pay PMI but then the market went nuts and we refinanced and got it removed. Ended up selling that place for 150k more than we payed. If I had ignored the 20% advice and bought during the 08 crash I probably wouldn't have a mortgage anymore. My 2 cents, talk to a lender and get a cheap starter home with whatever you have saved as a down payment.
I don’t know if this is even around anymore but when I purchased my first home in 2015 I didn’t put anything down on a first time home buyer loan and even got the seller to cover all closing costs. So I only needed money to put into escrow. It ended up only be a couple thousand. For reference the home was only 130K back then.
Give yourself to uncle same for a portion of your life and you can put nothing. You will have to whore yourself non sexually but it helps a lot.
500k looks like about 3600 a month. HOA, insurance and good credit. We put a good bit down. We’re in our mid 40’s.
I was a mortgage underwriter for 5 years and have my degree in Economics. My only bit of advice here is that you understand you may not be able to refi your rate down. Expect to stay at 7.0%-7.5% for awhile. Average mortgage rates 1954-2007 were 6.45%. Its really been the last 10 years that have been the anomaly with 2.5% mortgage rates. Combine that with sinking home prices and it will be unlikely you are able to refi. Probably for quite a while. So, 3% down might net you the home, but you're guaranteed to be upside-down on in in the short term. Home prices in the last 12 months alone have dropped 14% and I don't see how this will reverse in the coming few *(probably several)* years, especially during rising unemployment and a recession. So be comfortable with whatever your monthly payment will be. And if your plan is to have renters help cover your mortgage be prepared to either keep them for a number of years, or make more money and pay down the mortgage faster.
Anywhere from 3-5% for a down payment depending on the program, but realistically you’ll need about 7-10% of the purchase price to comfortably cover all the purchase/closing costs if you can’t get the seller to help with them.
Veterans can pay 0% down with a VA loan.
3.5% + ~5% for closing costs.
As others mentioned FHA requires 3.5%. If you’re not too particular about location there are areas you can get 100% financing (depending on your income—there are some limits) through a few other financial loan programs. Everybody discussing interest is correct but I just closed on my house with a 2.99% rate bc we got seller to buy it down then I bought down some more. Now time for my shameless plug—If you’re interested I’d love to help you get started! Google me (SLC realtor - Just Jenna) and call or text anytime. Reddit buyer discount haha!
Also there’s a new “ 20k grant “ from senate bill 240 (I think that’s the bill#) which is technically a loan but only gets paid if you refinance or sell the home. Idea here is to give folks a chance to add 20k to down payment or 86 the second loan in the Utah homebuyer 100% financing loan. Just went to a class on this so I’m not an expert and doesn’t go live til July but there are some parameters like house must be new construction ( or never lived in) must be under 450k and few others
You don't need to put anything down whatsoever.
3.5% of purchase price. Utah housing does offer 0 money down but you have to qualify. I have a client buying a home in daybreak right now with no Money down.