How did you come up with your down payment?

wouql · #1 (**permalink**) 08-05-2006, 01:37 PM

I'm 22, and I have no plans to buy a place of my own any time soon (matter of fact, I just re-upped for another year at my apartment).

But I'm realizing how long it's going to take to get a down payment for even a small house. I'm wondering if it's something to do before I'm even aware I'm buying a house. So I wanted to ask how people got the money they used.

When did you start saving for a down payment? How long did it take you to save it all? Did you borrow any from relatives? Finally, what %age did you put down?

Thanks in advance,
wouql

Ima saver · #2 (**permalink**) 08-05-2006, 01:40 PM

I saved for my down payment, but that was a long time ago before houses cost very much. I think I only had to put down about 10% at most. Now, if you don't have 20% down, I think they make you pay PMI, private mortgage insurance in addition to your payment.
I started saving the minute i got married so I did not have to pay rent for very long.

DivaJen · #3 (**permalink**) 08-05-2006, 04:49 PM

Quote:

Originally Posted by wouql

I'm 22, and I have no plans to buy a place of my own any time soon (matter of fact, I just re-upped for another year at my apartment).

But I'm realizing how long it's going to take to get a down payment for even a small house. I'm wondering if it's something to do before I'm even aware I'm buying a house. So I wanted to ask how people got the money they used.

When did you start saving for a down payment? How long did it take you to save it all? Did you borrow any from relatives? Finally, what %age did you put down?

Thanks in advance,
wouql

My husband and I (fiancee at the time) sat down and figured out the maximum we could each save each month, and then we did it. We were both teachers at the time, and we saved a 5% down payment. I think we saved for a year and a half - hard to remember now. When we bought in 1997 we had an 80% 30-year first and a 15% 15-year second, avoiding PMI in the process. Since then we have refinanced to a 20-year fixed loan with about 17 years left to go.

jodi · #4 (**permalink**) 08-05-2006, 06:26 PM

I have to admit, we used the money we got as wedding gifts, plus a little my parents gave us for our downpayment. We were fresh out of college with jobs paying $15,500 and $19,000. We got approved for a $50k loan and found a house for $46,900. Our total payment was less than we had been paying in rent by almost $100. Anyway, we started saving after that towards our next home and had about $25k saved at one point, although we now live with relatives and never bought that next home, so the money went toward cars, braces, college tuition, and helping relatives. We have about $10k now, but I would want to be able to put at least 20% down if we do buy another house at some point.

jeffrey · #5 (**permalink**) 08-05-2006, 09:00 PM

Well, it appears that everyone has forgotten how to play nice here for a few seconds. Now I know you're all old enough that it doesn't make sense to send you to your rooms and think about what you've done

Inappropriate posts and responses to them have been removed.

Please remember that if there is an inappropriate post, the triangle at the top right can be used to contact us - no need to respond. Then there is a lot less of a mess for us to clean up and it saves everyone time and energy that could be spent more productively talking about our favorite subject, finances.

I expect from this point everyone is going to be able to play together nicely, right?

funnyvalentine · #6 (**permalink**) 08-05-2006, 11:38 PM

I just won't post anymore. problem solved

Bluezy · #7 (**permalink**) 08-06-2006, 03:28 AM

Back to the subject....

I've set up a second online savings account that is strictly for downpayment on a home. I don't mind waiting and saving. I also don't mind paying rent and not having to worry about property taxes, finding homeowner's insurnace, replacing roofs, etc.

Ima saver · #8 (**permalink**) 08-06-2006, 06:25 AM

Funny valentine, please continue posting. I enjoy your posts and thank you. I don't think you are the one that Jeffrey is referring to. Diva, that was a smart way to avoid PMI.

PrincessPerky · #9 (**permalink**) 08-06-2006, 03:16 PM

Just do it...
might be corny, and might not seem that easy, but truth is we tend to spend what we earn, so start small, make it automatic, and just do it.

even if the math says it is a waste of time...10$ a month seems like a waste, but get used to not spending it, then add on either a nice big chunk per month (cutr out a bill, like cable, or reduce a bill, like insurance) or just another 10. get used to that...then add more, you get the idea I hope.

Ima saver · #10 (**permalink**) 08-06-2006, 03:43 PM

If I were a young couple in this day and age, I would have a small wedding and request cash gifts to be used for a house down payment. Then save, save, save! Take the loan for the shortest period of time. Also, start small. Buy a little house and trade up later.

disneysteve · #11 (**permalink**) 08-06-2006, 06:44 PM

We put down 20% on a $142,000 purchase price. Part of that was a gift from family. The rest (about 2/3 of the amount) we saved between the time we got married in 7/92 and the time of purchase in 4/94. How did we do it? By living frugally and saving as much as we could.

What should you do now? The same. Live frugally and well below your means. Set aside as much of your income as you can spare after meeting your basic needs. When it is time to buy a house, you'll be all set.

cschin4 · #12 (**permalink**) 08-07-2006, 06:34 AM

We saved money. We did buy a house until age 30+. So, we had 20% to put down. Prior to that we lived in apts. until we decided it was time to buy a home. Since you are 22, the time to start saving is now. If you put some money aside, you will put yourself in a much better position in the long run.

Saving in So Cal · #13 (**permalink**) 08-07-2006, 12:48 PM

It took us about 4 years to save 20% down on a small $300,000 home (I live in California). We had a regular amount going into savings plus we added any unexpected money (bonuses, tax refunds, birthday gifts, rebates, etc.). We actually thought it would take us a lot longer, but it went fast once we got started.

DayByDay · #14 (**permalink**) 08-07-2006, 01:57 PM

We had actually given up hope of ever being able to save enough for a down payment, but then DH happened to be at the right place at the right time and landed two very large construction projects that lasted two years and which paid very well. We were then able to make a down payment that was a little over 20%.

parafly · #15 (**permalink**) 08-07-2006, 02:20 PM

My girlfriend and I are both 24 and renting together. We both graduated college last year and each make a decent entry level engineering salary. We recently decided to start saving for a home together. We get paid biweekly and are currently saving $1000 each paycheck, which would amount to $26K in savings for one year.

Our goal is to buy a home for around $300K, so a 20% down payment would amount to about $60K. Since we do not want to spend three years saving for a 20% downpayment + closing costs while wasting our hard earned money on rent, we are probably going to save for 1.5 years (due to our renting lease cycle), which should amount to about $40K in savings. We are counting $10K for closing costs, so we should have about $30K for the downpayment, which would be about 10%.

Our plan for avoiding PMI costs will be to take a piggy back loan for the other 10% on top of the 80% regular mortgage.

sakigt · #16 (**permalink**) 08-07-2006, 02:59 PM

Depends on where you live.

I got financial assistance through a state program for my down payment, the only downer is I have to pay PMI, a whopping $50 a month for me.

$50 a month X 24 months = $1200 extra cash

BUT!

$121,000 Purchase Price
$127,000 Home value @ Closing
------------
$6,000 instant equity

The condos are reselling already for $134,000!

For me, paying PMI was definitely the smart thing to do. Yes, waiting and saving the 20% can help you to avoid it, but at the expense of the type of home you are looking for appreciating!

Make some phone calls! Now, when youre young and poor! lol, is the time to buy a home.

#17 (**permalink**) 08-07-2006, 06:34 PM

pointless post but I'll make it anyway...

you folks have inspired me to increase the amount I automatically draft from my checking to my GMAC account.

thanks!

(and the above poster was correct, once you get the savings rolling, it builds quicker and is easier than you think)

tgavin71 · #18 (**permalink**) 08-08-2006, 04:20 AM

We saved for our first deposit. 10% of $114,000 in 2001. We had to pay mortgage insurance. We have just refinanced and using the equity that has built up we were able to get a new mortgage with a down payment of 20% which negated the need for mortgage insurance.

Fern · #19 (**permalink**) 08-08-2006, 09:20 AM

i put down about 45% (about $95,000) on my 1st house 10 years ago.

I was able to do that becus i had received 2 inheritances from both of my grandmothers when they passed away, plus I saved for many, many years. I bought the house when i was 37 and still a single woman.

couldn't have swung it otherwise becus my income is more modest.

Snoopy2645 · #20 (**permalink**) 08-08-2006, 11:59 AM

Well my first place was a trailer I saved for a downpayment for that for years I wanted out of my parents house ASAP!!! I think I was around 13 when Is started saving for a trailer by the time I bought it at 18 I had 6k to put down & I already had a baby so it can be done. I wanted out because of problems at home my parents had from way back I couldnt take it much longer!!! Then with my house I bought it at 22 I had 1/3 of the house price for a down payment I used an inhertence from my dad & some of my savings for it the down payment. I would save as much as possible if you want to save for a house because like others stated you should have at least 20% down