Almost everyone I know who bought a house prior to age 35 got the downpayment from their parents. Even the ones with really good jobs. Try asking your older relatives who like you and have money to burn. Some might give you the money rather than waiting to pass it on after death. Begging is embarrassing, but sometimes it doesn’t pay to have any pride.
We bought our current home ($250,000) with an 80/10/10 loan arrangement, with closing costs included in the price (at the moment of sale there was a cash flow crisis). An 80/10/10 loan means 80 percent primary 30-year mortgage, 10 percent secondary 10-year mortgage and 10 percent cash. The purpose of an 80/10/10 mortgage meant I didn’t have to pay mortgage insurance, which only benefits the bank.
Within 18 months I had entirely paid off the secondary mortgage and converted the primary to biweekly auto-payments. That means an extra monthly payment a year and thus reduces the 30 year payoff to 25 years. At the same time I began monthly principal payments. I will pay off the 30 year primary in less than 15 years total. I will save more than half the interest had I not planned to pay off both mortgages at an accelerated rate.
The down payment comes from an attitude to always, always, always consider savings as an expense taken out of every paycheck since I started earning money delivering newspapers as a kid. Without fail. No exception. It also comes from discipline to not waste money on crap. Don’t get me wrong. I made plenty of lousy buying decisions on life’s toys and things I thought necessary at the time. I buy quality and things that will last a lifetime. Initial cost might be more but over the life of the item it’s dirt cheap. I also only buy things (other than a house or vehicle) only when I have cash in hand or will have cash in hand within 30 days. That way if I buy a new computer or two, I must save up the cash and have it in hand before I make that credit card purchase. The cash pays the billing during the next credit card billing cycle. Without fail. (Yeah, I upgraded to two new laptops in May. With cash. Top of the line and I did not pay full price. Lenovo has an outlet site when you can buy new – never left the factory – for as much as 60 percent off. Yes, I always shop for bargains.)
We don’t have a meager lifestyle. It just takes discipline and if you didn’t learn it or develop it as a kid you won’t have it as an adult. It also pays not to be a drug or ego addict (alcohol, tobacco, coffee, restaurants, etc.).
:dubious:
We have $5,500 towards a house that we have been saving for about 7 months since we got engaged and decided we want to purchase a home. We have $8,000 in emergency savings and another $5,000 in a wedding fund. We also have retirement Roth IRA accounts in addition to our 401k’s through the offices. So we don’t just have $5,500 in the kitty, we have almost $20,000 but it is spread out for different purposes.
We don’t have a problem saving money but the amount we would need for a down payment is a little overwhelming so I thought I would see how other people did it and so far the most common answer seems to be that they didn’t, quite frankly. Most of the people here have said they got a mortgage with a 5% down payment or a relative kicked off and left the money to them. This makes me feel a lot better to know that most people can’t afford to come up with that kind of money either and it isn’t just us.
And I didn’t say no remodeling or redecorating, I said habitable, by which I mean working plumbing and electricity, no black mold, etc. We know we need to plan to have extra for the minor things that need to be done when you buy a place. The places we’ve found for $140,000 are huge but literally falling apart and not worth it when we would have to take out a $60,000 loan to repair the damage on a 110 year old building.
Yes, people generally live beyond their means. Just look at how the credit card industry is thriving.
We were really lucky. We married at 31 and bought a house six months later. My wife had worked in the midwest for about 10 years out of college, always had a roommate and isn’t much of a spender. She was promoted a number of times but never really changed her lifestyle, so by the time she moved to the East coast and we got married, she had about $75k earning a paltry 2% in a savings account. (I had been in grad school most of that time, so had only been receiving an income for about a year by that point) We bought our first house for $190k in 1999 in northern New Jersey and just took the down payment from her savings.
Also, like Snickers, we didn’t put down 20%. We put down 10% and took a home equity loan for the other 10% at a slightly higher interest rate, but paid extra to that every month then refinanced two years later and rolled the payoff into the re-fi.
So while we were fortunate that my wife had amassed a substantial savings account, she wasn’t necessarily doing it for the purpose of a down payment. And yes, it took about ten years.
My husband saved for 10 years, and I saved for 5. We were married for 4 of those years, during which we socked away pretty much my entire paycheck and some of my husband’s too. Before we were married my husband lived even more frugally and managed to save most of his paycheck during that time.
We bought last fall, after prices had gone down about 30% in our area from the peak, but are still pretty much outrageously high (let’s just say, our house is significantly more expensive than the ones the OP is looking at). However, saving for so long allowed us to put 30% down, so that our monthly payment is doable if only one of us is working – although we are both working right now, we both felt pretty strongly that what with the economy and such, we wanted to be able to get by on one income if necessary.
However, if it weren’t for our new kid and not wanting to move with a baby, we would’ve kept renting and kept saving. Prices are still going down, and our mortgage payment plus utilities and such is about twice what our rent was (though to be fair we have twice as much space now).
This is an important point that bears repeating. Saving for a large-percentage down-payment means you are less likely to be in a two-income trap. We wanted our monthly payment to be low enough that if one of us became unemployed, we would still be able to make the mortgage payments.
I bought my house in 04 when they were selling houses to anybody with a pulse and sometimes without one. 
I was able to qualify for 100% financing only because of my high credit score and my profit sharing fund. I even had to borrow the cash for closing cost!
It sounds like you have good credit but make sure. Clear up anything that is outdated that could be bringing down your score even a little.
They will also take into account any 401k’s, IRA’s and other retirement funds.
Again, the credit score means everything to them!
I just reached 20% equity in my house so I finally got out from under the PMI after refinancing. Mortgage insurance sucks for sure but renting sucks more IMHO.
You probably won’t have to come up with 20% down, if you have great credit the banks will work with you, especially with the excess number of homes for sale right now.
I bought my first home in 1997 with 5% down. I bought a townhouse that cost $104,000, so I put down just over $5,000. I’ve moved twice since then, first to another townhouse and then into a single family home. I had enough equity in my home due to the rising real estate market and paying down the mortgage to significantly bump the down payments on the subsequent homes.
I guess I’m a bit curious about your financial situation - if you’re in New York, I’m guessing your rent is pretty expensive. By my calculations, a 6% mortgage for $250,000 would result in a payment of approximately $1600.00 per month, while a 6% mortgage on $180,000 would result in a payment of $1,150.00. Unless I’m missing something, I can’t see how it would make more sense for you to try to save $1000.00 per month for the next six years rather than paying an extra $350.00 per month on your mortgage to buy a home now. Is there any reason you’re convinced that it wouldn’t be wise for you to make a down payment smaller than 20%?
I decided I’d get a condo before the market got any higher, and thankfully at the time I almost had 20% in the bank. Had to dip into my IRA a bit, but it was worth it since it is still cheaper than rent. Now, getting rid of it will be a pain, but hey :mad:
Took me about three years. My initial downpayment savings fund came from claiming zero on my taxes and socking the refund straight into an untouchable savings account. (Being a single parent meant I had at least one good deduction.) As I got raises, I kept my expenses as low as possible and put the extra in savings, too. By twenty-seven, I had twenty percent and found my place.
Granted, I bought what I could afford, then saved up and added onto it a few years later. Mortgages at the level you’re talking about blow my mind, there’s no way I could have saved up that much and paid rent and childcare.
Anecdotally, no one in my circle got inheritances or trust funds or anything like that. Most of us just scrimped and saved or bought tiny starter homes in questionable neighborhoods and worked on improving the properties to trade up into something better as the market allowed. It’s not that you’ve been misled, per se, but that you live in an outrageous market.
I bought my first house 2 years out of college, saving 20% down. I worked in the high tech world and had no trouble saving the money quickly for the Nashua NH market back in the 80s.
We rented for a full decade before buying - but that was because we had such a sweet rental deal. By the time we bought, we had 50% down.
To give non NYCers an idea – there are subsidized rental programs in NYC for which household incomes over $100,000 qualify.
pbbth you might qualify for affordable home programs for middle-income residents available through City programs. Listing change often - check back if you don’t see anything.
Visit here to see properties currently available by lottery:
http://www.nyc.gov/html/hpd/html/buyers/lotteries.shtml
Example: new construction in Bed-Stuy:
http://www.nyc.gov/html/hpd/downloads/pdf/Gates-Ave-coop-units.pdf
Look at the sidebar menu options for additional info on the Downpayment Assistance program (for households making under $61, 000/yr) and Mitchell-Lama co-op program.
The reason we can’t buy a $180,000 home and just trade up later is because in this area $180,000 homes are not livable. I contacted 3 real estate agents today to ask about homes in that price range and they advised that they wouldn’t even show me homes in that range if I did not understand up front that most of them require at least $50,000 or more in necessary repairs. Not like needs a new paint job and replacement windows kind of repairs but no plumbing and 80 year old electric wiring repairs. That means that our cheap starter house will end up costing $250,000 anyway because of the money we have to put into it to be able to live there every day. Beyond that we really don’t want to be in a situation where we can’t afford our mortgage. It only takes one job loss or surprise baby to take us from, “Well, this is tough but we can manage it” to “Jesus I hope our insurance company can’t tell we burned it down for the money” and we would rather rent for a while longer and come up with at least 15% down on a place than be in a position where we are flirting with disaster. 20% would be better so we can avoid having 2 or 3 mortgages or PMI.
Hello Again I will be sure check out the lottery!
I think you misunderstood my question (or maybe I didn’t express it clearly).
If you put 20% down on a $250,000 house ($50,000), you’ll have a mortgage of $200,000.00. That’s a payment of about $1,300.00 per month. If you put 5% down ($12,500), you’ll have a mortgage of $$237,500 for a payment of just over $1,500 per month. It seems like paying an additional $200.00 per month on your mortgage would be a lot easier than saving up an additional $40,000.00 for your down payment.
Ah, I see. The thing is after all the payments, taxes, PMI and everything those numbers are much higher than they first appear. According to a couple of mortgage calculations I’ve made we would be looking at a $2200 monthly payment with 5% down and $1800 with 20% down, both of which are significantly more than we pay in rent. $2200 would be doable, just barely, if we were really focused. Then we would constantly be a job loss, medical bill, or surprise kid away from drowning in our bills without any principle to borrow against if we needed it.
I had the tail end of a trust fund that matured when I hit 21 that I hadn’t touched, and mrAru and I had been saving $250 a month for 3 years, and he had a re-enlistment bonus that we bundled up and used as the down payment. We were preauthorized for a $150 000 loan and the property we decided upon cost us $91 000. I vaguely remember that because the guy that owned the property was desperate to sell it, we got a serious break on points and whatever other crap was associated with it - since mrAru handled everything while I was in Virginia [a goddaughter was about to pop out of the mother and I was helping with the rest of the kids] I really don’t know much of the details otehr than we actually didn’t end up paying out the whole thing on the house, we had a bit left over to get some new furniture for the place.
My first down payment was a while ago - back in the early 1980s. I had a scholarship while I was at uni, and I managed to save the down payment over the three years of my degree.
It took me either 1 year, 2 years or 5 years depending on how you look at it.
It took me 1 year to pay off all my debt, and another year to save up $5k.
Then I borrowed $10k from my grandpa, and paid him off in 3 years. So if you count the time it took me to pay off all my debt from credit cards to paying off my grandpa, it was 5 years. Of course, I was living in my house 3 years by then 
Of course, my house was only $150k and I only had to put 10% down (super awesome credit, and just before the bust). Looking for a house in 2010 in the NYC area is a whole different ball of wax.
For my first house, I got a 0% down loan with no PMI. Go go go housing bubble!