HomehousingAre you down with the down payment?

Are you down with the down payment?

Are you down with the down payment? Now that I’m debt free, I have only one objective with my discretionary income. Save it. Even though I’m coming to realize renting isn’t really that bad, I imagine one day Girl Ninja and I would like to buy a house. Being that we probably wont be buying for about 3-5 years, we probably need to have some kind of “down payment” plan written out. If you didn’t already know, I love plans!

Fortunately, unlike my proposal, our wedding, or paying back my student loans, this plan is pretty darn straightforward….

Save $100,000

Yeah that’s right. One Hundred Thousand Dollars. That’s a lot of freakin money, but with a little discipline and a lot of focus we should be able to reach that goal in the next five or so years.

So why $100,000? Your guess is as good as mine. Probably because it’s a nice clean looking number and substantial enough it will hopefully afford us many options. One thing is for sure, just because we saved $100,000 doesn’t mean we have to put all $100,000 down. Our actual down payment will be based off things like the loans interest rate, price of home, and what stage of life we are in (how many kids we have,condition of our vehicles, how long we plan to stay, etc). Shoot, maybe we will decide to only put down $20K and keep the remaining $80K for important things like flat screen tvs vacations.

Unlike the majority of my other goals, this one is pretty flexible. If we find a great house, in a great spot, for a great price, I won’t have a problem contemplating buying it. Even if we only have $40,000 in the bank.

I love these types of goals because they can ebb and flow with our lifestyle. Heck, who knows? Maybe we will reach the $100,000 threshold and continue lovin’ the flexibility of the renters lifestyle. Maybe that $100K will become $150K or $200K. It’s all about fluidity baby!

How much did you have saved up when you bought your first place? If you haven’t bought a place yet, do you have a goal number? Are you determining your down payment by a fixed $$$ amount or by a percentage? Anyone have no desire to ever own a place because they’d have to give up the flexibility of renting?

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  1. we had 5% saved up.. I wanted more, but we had a good deal, and we were approved, so we went for it.. its taking longer to pay down now, but it still should be gone before I’m 30 (3 more years)

  2. Your down payment goal would buy a perfectly nice 3 bedroom, 1 bath home near the downtown in the city where I live. Straight up. And where’d you get 20,000 in pogs? My mom threw all mine away.

  3. We’re still renting an apartment, and we’re going to be happy with the flexibility it gives us for a while, since we’re both still in school and don’t know what we’ll be doing after graduation. However, we’d like to pay cash for a house, and if we stay in our area $100,000 – $150,000 would buy a very nice home! 🙂 It always makes me feel a little better to read these posts from people in high COL areas. I think, “Ok, if they can save that up for a down payment, we can save that up to buy a home!”

  4. Well, for you, I would think saving 100,000 would almost be a requirement since you live in southern California. That is, if you want to avoid paying PMI insurance on your home. (Assuming you are looking at 500,000 dollar homes.)

    Maybe the half mil is overestimating on my part? I just know when I watch those ‘house hunter’ shows on HGTV, the homes in California are expensive and don’t buy much.

    Great goal, and good luck!

  5. 20% + buy a fixer that had potential…so we could add to it as we got the cash. In hindsight, I way overspent on “fixing.” We would’ve been better off if the house didn’t need everything.

    You usually don’t get 100% back on improvements, so if you’re lucky enough to find someone who has fixed up a house to your taste, you’re better off. I probably still wouldn’t have changed things due to the cash flow at the time. If there is a next time, I’d probably not get as big a fixer (unless its a primo location).

    I don’t know if your readers are old enough to answer this question, but has anyone built a house? Most of the people I know who did it said it was full of headaches and delays. Not sure any of them would do it again. I dream of saving up for land, and building it with 100% cash as I go, but I don’t know if I want years of dealing with knucklehead contractors.

  6. We haven’t bought our first place yet – but we’re working on it. Slowly but surely. I’ve built my goals in tiers….so my first goal is 5% of $300,000 once we hit that – the goal will be 10%..and so on. Until we hit at least 20%. I figured that with incremental goals we’ll have some satisfaction along the way.

    Thus far we’re sitting at about $7,500 in the bank and putting a min. of $150/week in the bank. I’m hopeing that we’ll be able to up the contributions in the near future.

  7. We put down 20k on our first home six years ago. Unlike you, Mr Plan Ahead a Decade, we didn’t really save up or plan for buying the house. We actually bought before we got engaged just a couple months after I moved back to the PNW. The cash was what I had saved my first year teaching and living at home and the house just sort of popped up and seemed like the perfect purchase. Since we didn’t budget for a down payment (heck, we didn’t even have a budget since we were ‘just’ dating), now in our married life we have been focusing on paying down the mortgage asap which has totally worked for us. Seeing that mortgage total drop drastically every year is very motivating!
    Ironically, we are now renting and have that home rented out since we have moved for my husband’s work almost every 18 months the last 4 years…so it is our (awesome!) tenants who are paying the mortgage and a little extra each month:)

  8. We built our house from the ground up with a national home builder, and it went about as smooth as a build could go – and we’re happy with the quality. We’d do it again.

    When we bought the home we put down 20% which came out to about $60,000 because we wanted to avoid PMI. We got the money by saving up over a couple of years, and also because the townhome my wife had bought before we were married had appreciated by $40,000 since she bought it. So we rolled that money over, and then added another $20,000 or so of our saved money.

  9. Our goal was to put down at least 20%. We ended up putting down closer to 30% to make sure we could get the loan and that the payments were manageable.

    I think these days the general goal should be 20%. Any less and you risk being underwater of the economy turns downward again. With 20% you still have a nice amount of equity when you purchase.

  10. Just like your post earlier about all of the stuff you need to buy when you move in with GN into your new apt, the same applies to a new house. You will probably have more rooms which means more furniture. You may also want to graduate to some higher quality furniture to go with your new house so a chunk of your $100k may start going to some of those items. Let alone if you buy a house that needs a bit of work.

  11. I put down $177,000, i’d been saving it up from the age of 15 but didn’t want to buy until I was out of university and had a job.

    I think the school nurse should give you a chat about how you should save for a house about the same time as you get the safe sex chat. So many of my friends have no deposit and no idea how I came up with that money. It was just saving and compounding no miracles

  12. I had $75,000 in Australian dollars saved for a $300,000 house.

    It was fairly easy, just had direct debit to out high interest savings account, took us less than 2 years too…. pretty good, considering that we don’t earn much, that was basically my husband’s wage and we lived off of mine

  13. We both live in really high cost cities, so $100k would be our magic number too! As 20 per cent, that would be a down payment on a pretty nice place. 60-80k would also probably do in a pinch.

    If I managed to maintain my current salary (unlikely) I could do that in around 10 years. Haha. (Which is actually doable…I didn’t even bother to do the math on my old income). If BF was working, we could probably halve that to 5 years.

    Of course, we’d still need a hefty EF if we were to be homeowners.

  14. Once our debt is completely paid off at the end of this year we’ll start saving for a down payment. But we still don’t know where exactly we want to live, it depends on my husbands job, so we may stay in the city we are in now, but if he found a job in the Northwest we would happily go out that direction.

  15. […] Are You Down With the Down Payment? at Punch Debt in the Face […]

  16. We had $35,000 saved and used $22,800 for the 20% downpayment and about $3000 for closing costs…I just wanted to make sure to have some padding. 🙂

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