Home-Buying Question...

What is the typical down payment on a house? I have heard so many varying answers that it is confusing. Some have said as little as 10% others as much as 60%.

Re: Home-Buying Question...

I would say 20%, but I don't know that there's a real "typical" amount.

20% is generally the least you can put down without having points or PMI, or unless you take a 80, 10, 10 home equity loan (where you put down 10, mortgage 80 and take another loan for 10).

don't quote me, cause I'm no expert.

Message edited 2/19/2003 2:14:20 PM.

Re: Home-Buying Question...

It depends on what you are buying, the price of what you are buying and how much you can afford your monthly mortgage payments to be.

The idea is to avoid PMI - private mortgage insurance, which can add a few hundred to your monthly mortgage payments.

Most mortgage companies recommend that you put down at least 20% to avoid PMI. Other companies offer programs for first time home buyers, that allow you to put down less than 20% - that's why it's important to shop around for a mortgage, especially if you don't have a lot of cash for a sizable downpayment.

I'll give you an example for the average home price on Long Island - say $300K - the downpayment (assuming 20% down, avoiding PMI) would be about $60K.

Re: Home-Buying Question...

I just want to add that when I brought my condo (before I got married) I was paying PMI, and it was still worth it. PMI stinks to pay since it is basically just giving money away with nothing in returning but owning far outweighted paying PMI. It is very difficult to save up enough these days for a 20% downpayment. If I had not been able to sell my condo to purchase our new home, we would have had to pay PMI. You only pay it until you have 20% equity in the house. Plus the tax savings you get with owning a home also may outweigh the PMI payments.

Re: Home-Buying Question...

There are some first time home buyers programs through, FHA, VHA, and Fannie Mae that require anywhere from 3-5% down, BUT you do have to pay PMI

Re: Home-Buying Question...

We are putting VERY little down payment only about 5 %.. For us we live in an apt. and we have 2 dogs, our landlord has literaly STOPED fixing things and has told us to pay for it and he will reimburse us later, we ARE not going to do that..We wanted to move out but with the dogs, it was almost an impossibility to find another apt., and i didnt want another apt. so we decided that we would put down what we could and have no choice but to pay the PMI...

you dont pay PMI forever though, only until you reach the 20%

Re: Home-Buying Question...

Michele, that's true in your situation...but, a 1BR condo is not as expensive as a 3BR house, so PMI is not always the best solution. It really depends on what you are buying, and how much it costs. It could be worth it.

I also wanted to add that paying points on your mortgage is also sometimes a good idea, if you can get a better mortgage rate as a result. We paid one point on our mortgage b/c we could afford the initial out-of-pocket cost, and it lowered our mortgage rate for the long term. The way we have it figured, we'll make the money [that we laid out for the point] back in a matter of 2-3 months. Not a big deal.

It's all a numbers game, really. You have to do some figuring to see what works best for you, but don't let these things like PMI or points prevent you from entering the real estate market. DH and I rented in CA for 3 years and we now feel like we gave away so much money! Now, our 4 BR house will cost us only about $500 more per month than our tiny 2BR apartment! And, we get our interest back now!

Re: Home-Buying Question...

I can see how it may be worth it to pay PMI b/c paying rent feels like I am throwing my $$$ in the garbage once a month. How does the whole shopping around for a mortgage routine work? (Excuse the dumb questions, I am clueless when it comes to this stuff)

Re: Home-Buying Question...

FYI - There are ways to pay less then 20% and still avoid PMI. We paid only 15% and don't have PMI. We do have a mortgage and a home equity line of credit though.

Re: Home-Buying Question...

I am doing my mortgage through word of mouth, my cousin used this guy from a credit union, and she loved him and said that part of the reason she even was able to get the house was because of him..

On another note, the PMI that we are paying with our mortgage, is a one time fee of 5900.00 and it will make our payment about 30.00 less, and if we wind up with the 20% within ten years, we get part of it back.. thats not bad at all..

Re: Home-Buying Question...

If you have a credit union or bank account you can start there. Many have pamplets on Buying a First Home.
Both of my parents are in mortaging so I just got my mortgage thru them.
And again I think PMI stinks to pay but with the prices of homes right now, it is very hard to save over 50K, so work out all the numbers and figure out what is best in your situation.