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New Goal: Save for House Down Payment

December 4th, 2006 at 07:52 pm

Saving for a house down payment is something I’ve talked about, but have not made any dedicated actions toward. The soonest we’d be ready to a buy a house won’t be for ~ 2 more years, possibly 4 due to motility and relocation issues of finishing graduate school and post docs. Mr. Bean and I are both in agreement that home ownership needs to be a priority, so I hereby declare to start making some action towards this goal.

1. We need to figure out a ball park estimate of what a typical % down payment is. I know 20% used to be the standard, but I hear this is no longer the case (insert sigh of relief). I know you can get a house with 0% down, but that’s not the way we want to go either. So, research needs to be done. We’ll do better if we have a number in mind (even if it’s rough).

2. Once we have a rough idea of what we’ll need for a down payment, Mr. Bean and I need to have a frank discussion of how we can start saving for it, as well as how we best maximize our current joint savings to get up towards this goal.

Opinions & thoughts welcome. How early did you start saving for a down payment?

Posted in Saving Wisely | 7 Comments »

7 Responses to “New Goal: Save for House Down Payment”

  1. Broken Arrow Says:
    December 4th, 2006 at 07:59 pm 1165262373
    1165262373

    20% down is generally recommended because that's typically how much it would cost to avoid PMI. However, as you already realize, you can still buy a house with much less put down (or nothing in some cases). And as you have stated, that's also not recommended. The more you can put down the better.

    Personally, I'd love to have a place of my own some day. It won't happen anytime soon, but... someday. Smile

  2. threebeansalad Says:
    December 4th, 2006 at 08:04 pm 1165262675
    1165262675

    My Dad told me a story of buying their first house in the early 1970's... the asking price was 23K, he had 8K (30%) to put down and the bank said it wasn't enough and needed another 1K! Oi Vay! Maybe I shouldn't be complaining.

  3. Ima saver Says:
    December 4th, 2006 at 10:58 pm 1165273105
    1165273105

    I started saving the day I got married. Got my first home at age 21!

  4. threebeansalad Says:
    December 4th, 2006 at 11:09 pm 1165273755
    1165273755

    Ima Saver-- you amaze me!

  5. Lez Save $ Says:
    December 5th, 2006 at 12:44 am 1165279452
    1165279452

    I started saving for a 20% down payment on a house when I turned 24. Now I am almost 25, and I am slowly working towards that goal.

    There are many good resources on the web depending on where you live and where you want to buy your house. Check them out sometime. I find that goverment or state regulated websites are best since they tend to be unbiased in their advice.

    good luck!

  6. daylily Says:
    December 5th, 2006 at 02:36 am 1165286166
    1165286166

    A 20% downpayment could be pretty steep depending on where you will be living. I think we did a 5% downpayment and that was 7 years ago. Yes we paid PMI for a while. We refinanced three years into the original mortgage from a 30-year at 7% fixed to a 15-year at 5.625% fixed. Because property values had risen in those three years we ended up having enough equity in the house that after the refinance we no longer had to pay PMI. I should also note that changing from the 30-year 7% with PMI to the 15-year 5.625% with no PMI only raised our payment by about $50 !!!

  7. mbkonef Says:
    December 5th, 2006 at 01:57 pm 1165327042
    1165327042

    Even though you can get a house with less than 20% down, my advice would be to save as though you HAD to put 20% down. This way, you are in great shape and can avoid PMI if you reach your goal, but can still be fine even if you don't. I personally have never put less than 20% down on a house out of 3 houses that my DH and I have lived in. My feeling was that if we could not afford the 20%, then we could not afford the house. Plus, I never wanted to pay the extra PMI. I also never wanted to be "house poor" that is, working so hard to pay for the house and not having anything left over for anything else. Having said all this, I have never lived in an area like CA or other places that has ridiculously high real estate prices. I am not sure what I would do if I lived someplace like that.

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