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StringedInstruments
Auburn Fan
Member since Oct 2013
10224 posts

If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
If I’m not going to save up for 20% on a down payment and have all other prerequisites to qualify for a conventional loan, should I have a particular percentage as a goal? Say the mortgage is in budget and within our COL abilities. I know I can go as low as 3%, but I’ve been down that road before and got burned by not having the equity to sell without writing a big check.

I’m mostly trying to establish a two year savings plan for us to buy a house.


HYDRebs
Ole Miss Fan
Houston
Member since Sep 2014
1020 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
The key percentages to look at should be 3%, then 5%, 10%, then 20% if you can get to it. Those are where your LLPA's typically lie as well as each level will get you better PMI rates if you have to pay PMI.


TheWiz
LSU Fan
Third World, LA
Member since Aug 2007
9959 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
quote:

I know I can go as low as 3%


Then you are probably looking at PMI so factor that into your monthly note.


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Brian Wilson
Houston Astros Fan
Member since Mar 2012
1752 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
Certain lenders will allow you to pre-pay PMI at closing and it is usually a fraction of the total amount you would pay on your way to 78% LTV.

With that said 10%-15% is ideal. Obviously the more you put down the less you pre-pay in PMI.


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10
StringedInstruments
Auburn Fan
Member since Oct 2013
10224 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
quote:

5%, 10%,


So there are benefits to these? I know that credit score can help as well. Would an 815+ credit score by both signees help with PMI rates at all?


ItNeverRains
LSU Fan
Franklin, TN
Member since Oct 2007
14121 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
If the area is more than 50% minority there is a 100% LTV out there for primary. Just FYI


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02
HYDRebs
Ole Miss Fan
Houston
Member since Sep 2014
1020 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
Yes credit score is a factor when figuring out PMI. Everything 760+ will get the best rates from the PMI companies.


CE Tiger
Chicago Cubs Fan
Metairie
Member since Jan 2008
38140 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
If you are paying PMI regardless just put the minimum down.


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46
Ace Midnight
LSU Fan
Between sanity and madness
Member since Dec 2006
67516 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
3 to 5 percent then. I mean, there are some advantages to going 10%, but at a certain point, you're paying PMI and that's it. I would collect as much cash as you can and make the payment that gets you the lowest total cost over the term of the mortgage.


Dayman
Member since Sep 2015
564 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
I just purchased a home. Pmi was drastically reduced at 15%.


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10
notsince98
Missouri Fan
KC, MO
Member since Oct 2012
10026 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
20% really is ideal. It will save you a LOT of money in interest, PMI and monthly budgeting.

If you go below 20% do whatever you want. Just make sure you avoid the loan programs that do not allow early PMI removal.


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50
Upperdecker
LSU Fan
BR
Member since Nov 2014
17752 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
You’re gonna need current PMI quotes to get a good answer to this question. I’d be nervous if I couldn’t save at least 10% down payment over 2 years. That would mean the house is probably out of your budget

Care to tell us more about your budget and your income?


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02
randybobandy
BYU Fan
NOLA
Member since Mar 2015
1346 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
quote:

I’m not going to save up for 20% on a down payment


Then you really should not buy a house. The more you borrow, the more you will pay (with interest) for the property. It's better to save up at leasr 20-30% before you make a huge purchase. But don't listen to me, I haven't had a house note since 2006. In be fore subtle brag BS.


HYDRebs
Ole Miss Fan
Houston
Member since Sep 2014
1020 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
quote:

Then you really should not buy a house. The more you borrow, the more you will pay (with interest) for the property. It's better to save up at leasr 20-30% before you make a huge purchase. But don't listen to me, I haven't had a house note since 2006. In be fore subtle brag BS.


Wrong and Ignorant take by far too many on this board. Is it better to put 100% down and pay all cash of course? Sure, but a majority of Americans are not in a position to do so especially in high cost of living markets.

The opportunity to accrue home equity and wealth for your family is available and certainly happens by putting less than 20% down for a house.


deeprig9
Georgia Fan
Member since Sep 2012
33917 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
quote:

Wrong and Ignorant take by far too many on this board. Is it better to put 100% down and pay all cash of course? Sure, but a majority of Americans are not in a position to do so especially in high cost of living markets.

The opportunity to accrue home equity and wealth for your family is available and certainly happens by putting less than 20% down for a house.


Agree.

If you can put 3% down on a house and your mortgage (pitimi) is cheaper than what you'd pay in rent, in a nicer neighborhood, in a nicer dwelling, how on God's Green Earth is that a bad financial decision?

For the 20%'ers I say if you can't put 100% down then you aren't ready.



notsince98
Missouri Fan
KC, MO
Member since Oct 2012
10026 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
quote:

The opportunity to accrue home equity and wealth for your family is available and certainly happens by putting less than 20% down for a house.


that isn't what buying a house does unless you are talking some rare instances.


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notsince98
Missouri Fan
KC, MO
Member since Oct 2012
10026 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
quote:

If you can put 3% down on a house and your mortgage (pitimi) is cheaper than what you'd pay in rent, in a nicer neighborhood, in a nicer dwelling, how on God's Green Earth is that a bad financial decision?



Many people lose money on houses but think just because they walked away with some equity when they sold that they came out ahead. The true "cost" of owning a house is rather high and many times results in not growing any wealth by owning a house.


Tiguar
South Alabama Fan
Alabama
Member since Mar 2012
25244 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
Utter bull shite unless you sell in less than 2 years.

Buy if you're going to stay in the same location for more than 2 years.


You might get some of it back. You get absolutely nothing back if you rent.

For a 150k house,

$1100/month rent x 24 = 26400 gone.


700/month mortgage/insurance/tax with 30y, 4% interest is about 24,000 gone assuming 4000 closing costs, 5000 to realtor, tax, insurance, and 2k to general home maintenance.

Everything after 2 years puts you in the net positive vs renting, and you'd actually probably end up renting the same house for closer to 1300-1400/m.



notsince98
Missouri Fan
KC, MO
Member since Oct 2012
10026 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
$150k home with $1k/yr HOI and $2.4k/yr in property taxes with 3% down payment and 5% interest (lets be realistic here) on 30 year mortgage and $2k/yr in repairs and maintenance:

Total cost to own said house until you own it:

$150k for house
$135k in interest
$30k in HOI (this cost doesn't stop at 30 years)
$72k in property insurance assuming no increase (this cost doesn't stop at 30 years)
$60k in repairs and maintenance (this cost doesn't stop at 30 years)

$447k total cost to own that $150k house for 30 years

So in order to actually have built wealth from that house, you will have to sell it for over $475,000 (6% realtor fees).

$475k over 30 years allows you to pay $1,320/month in rent to come out the same.

In reality, rent doesn't matter in this conversation. Even if a house is a wealth loser, it can be the better choice over renting in many areas.

The point was it is a huge misconception that you easily build wealth by owning a house and that just is not true. Typically, the only people who actually build wealth from owning a house are those that buy in a hot area and are able to sell at a massive profit within 2-5 years. Those situations are rare when looking at the national level.
This post was edited on 4/12 at 9:15 am


AUCE05
Atlanta Braves Fan
Member since Dec 2009
28213 posts

re: If I’m not shooting for 20% for a down payment, what percentage should be the minimum?
Personally, I wouldn't worry about 20%. Buy in a great area, and value will outpace cost.
This post was edited on 4/12 at 9:56 am


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