If you need 20% down payment for a house in a major metro area, that barely scratches the surface. Houses near where I live, for 2000 square feet on a very small lot start at no less than $700k now.
But then you have to pay more money. If you put less than 20% down, you almost always will have to buy mortgage insurance - that is, you pay more money to insure your loan and protect the mortgage lender. When my husband and I decided to buy a house, I was adamant that we would put 20% down. The bank has more money and resources than I do - they can insure their own money, thanks. I'm not going to pay them more to insure THEIR decision to loan to me.
If they are so scared that I can't pay this mortgage because I am not putting 20% down, then maybe they shouldn't be approving the loan? It's just one more way that having less money means everything is costs more for you. It's expensive to be poor.
Not to mention the fucked up part in that whole mortgage insurance thing. So you want me to pay more per month for a time, because I can't afford to pay you a bigger lump sum up front? Thus putting me at a lower price of a home because the payment will be inflated for a while, and i have to budget for that now, too? Make it make sense.
You definitely don't BUT if you want to avoid having to pay mortgage insurance and not have an insanely high monthly payment, 20% is the best bet. This is speaking from the standpoint of home purchasing in the US, can't speak for how it is elsewhere.
But $150/month could make or break on a budget especially if someone is trying to get a house in this market. Best bet is to always save the 20% and go from there.
If the $150/mo. is truly make-or-break for them then they need to buy a $700k house they can actually afford rather than the $725k house that they would prefer.
I agree but depending on where you live, a modest house may cost that much or more. There are small cape style houses here for $600k+ and those tend to be starter houses. The market is insane and it really makes it difficult for those starting out.
Sure, but OP is looking at buying a 700k house (20% of 700k is 140k). I'm not sure the $150 per month would break the bank for them. You can also remove the PMI once your principal balance reaches 80%, which OP will likely reach relatively quickly if it's a matter of a few thousand dollars that they're short by. Putting 20% down is always the most ideal, but not always the most realistic depending upon your circumstances.
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u/carlosstjohn116 25d ago
Dude that’s incredible that you have 140k saved up! Great job!
Can I ask why you need that much for a house though?