Purchasing a House

[nyy214]

My fiance and I plan to get married in July. We currently have $55k in cash and she is debt free. I have a car loan with $9k left and student loans of about $35k (I am still in grad school so they will continue to accumulate). Combined we make $105k. We are renting an apartment for $1200/month and are looking at condos for $300k. What is the most we should be looking to put for a down payment/monthly payment for the condo given our situation?

She will also need a new car soon. Is it a bad idea to take a loan out on it so we have money in the bank considering we will need money for a down payment on the condo? Thanks for your help!

[Blessed]

I personally would keep 3-6 month of expenses in cash, clean up the debt, pay off the car, buy another car with cash, cash flow the rest of school and then save up your down payment and buy a house. You two make a good income so you could clean it up easily. I know this is not what you asked exactly and it is a longer road. However in the long haul I think it is an easier road.

I believe some lenders let you have a debt to income ratio as high as 36% ( including house payment). I believe traditionally it is 28%. Figuring that out should give you a ball park figure. Lender will let you get away with less than a 20% down payment but you will pay PMI.

[HappySaver]

Good advice from Blessed.

Bad idea to buy a house without having 20% down, plus something extra for closing/moving/emergency costs. PMI sucks and it's just good household management to put down 20%. Our neighbors bought with PMI and 4 years later the bank keeps low balling their appraisal so they won't be able to re-finance out of PMI. We've put at least 20% down on our houses and it's a great feeling of security to know your equity isn't razor-thin if anything happens and you need to move.

[Folio Explorer]

To clarify, if you put down less than 20%, your lender will require that you obtain Private Mortgage Insurance. You can drop PMI when your principle reaches 20%, but you'll pay fees for the appraisal. Also, I suggest going with a 15 year conventional mortgage to drastically reduce interest over the lifetime of the loan.