Purchasing a high value house with no money down in VA.

I’ve got a couple of questions for the experienced home buyers here at the SDMB.

I’m in the military and will be PCSing to the DC area, specifically Chantilly. We will be there for 4+ years and would like to buy a home so we are not throwing money away on rent. My wife and I make very good money, about $130K/yr right now, closer to $140 by then. The problem that I am anticipating is that there is no way that we can save up/put down a significant down payment on a $400K+ house in that area and from the looks of it, unless we want to live in the ghetto that is what we are looking at paying for a decent place. For the record we have only known we will be moving there for about 8 months, so it’s not something we could have long term planned for. Neither of us ever expected to be living in such a high cost area so we haven’t saved enough to make a difference on a loan. We have lived in base housing for the last 6 years or so we don’t have a house to sell to make money on or anything like that.

So my question are:

  1. Even though I am certain that we can afford a mortage on a $400K house will we even be able to get financed for one in the current market with no down payment? Our savings MAY cover closing costs on a house that pricey.

  2. The VA will only guarantee about $417 according to the website, but I’ve heard alot of horror stories dealing with the VA and I don’t know anyone that’s actually used them for large loans like this.

  3. We have a big lab that we are not willing to part with. How hard would it be to find a decent place to rent out there with a big dog? I’m guessing hard.

  4. I’m looking for tips/advice from anyone with the following in mind: The downpayment situation will not change between now and March; we won’t live in the ghetto to save some bucks; Chantilly VA is the location.

Any tips? Thoughts?

In this area, with the meltdown in “nontraditional” mortgages (read: creative accounting), good luck getting a zero-down mortgage. I expect it’s possible, but you’ll pay out the wazoo and several other parts for it. Do a lot of very good research for a top-notch buyer’s agent with experience with your financial and military situations.

And when you arrive in the area, please let us Mid-Atlantic Dopers know.

Where are you going to be located? Reason I ask is that if you are working at Fort Belvoir, living in Chantilly is going to give you a hellish commute.

There really aren’t any ghettoes as such in Northern VA. Something you may want to consider is that the market is shaking out and prices may be dropping especially in the outer suburbs. In any case, I don’t think that prices will be going up for a while.

I would talk to a few banks and lender. If you can get a VA loan, then go for it. Many sellers are trying to get a sale. A few years ago, they might not have gone for your offer but in this market, they may be happy to be able to sell the house.

You probably won’t be able to buy a single family house for $400k but you may be able to afford a townhome.

In terms of renting a pet friendly place, that will be difficult if you are looking at apartment complexes. If you are renting from an owner, that may be another story as well.

ETA- Scuba_Ben if he can get a VA loan then it is possible to get a zero down loan. He may also be able to get a regular loan and pay PMI.


You’re not “throwing your money away”.

4 years? You’re going to pay more in interest on a house in NOVA over 4 years than you would to rent. The small amount of equity you will build probably won’t even cover your closing costs.

And that’s if you even build equity. Personally, I think it’s about 50-50 whether a house in NOVA is worth more in 4 years than it is right now.

Here’s a mortgage calculator


Put in your numbers and click on the “View Report” tab.

For a 400K mortgage, fixed 30 year at 6.250%, your interest payments your first 5 years will be


You’ll build up roughly $20,000 in equity not figuring in appreciation/depreciation.

That’s not figuring in your tax savings (make those interest payments more like $16,000 each), but also not your upkeep, or mortgage insurance (which you will be paying).

As people in the area get more desperate to sell, you’ll find a way to rent a house and you can probably bring your dog.

If the OP is looking at Chantilly, there is a military organization in town that he could be working for, and getting assigned there may very well have come as a surprise. I’d say we should just trust him that Chantilly is the spot.

As for how to go about getting the loan, try USAA. They cater to military families and were willing to give me and my wife an 80/20 loan on a ~$350k house while I was making approximately what a mid-level captain or junior major makes; furthermore I managed to get a great rate. Don’t forget that your BAH will go way up when you move: between $2000 and $2800 per month, tax free, depending on whether you claim your wife as a dependent and what rank you are (I assumed you’re either over E-6 or over O-3, based on your salary).

As far as finding a place, call up your gaining organization and ask if there are any officers (given your price range) who are trying to sell, especially doing a for-sale-by-owner. See if you can sit down with them and work out a rent-to-own agreement given that you’re both military and need to avoid troublesome debts in order to retain your clearances. Northern Virginia is extremely pricey because lobbyist/lawyer/colonel salaries are pretty high, and the average D.C. office is very top-heavy. One other thing you could do is rent in the area for a year and keep your eyes open for foreclosure properties. NoVa is egregiously overbuilt, especially at the mid-to-high end, and with the recent BRAC decisions lots of organizations are moving out of the local area. That means that in the next year or two there will be lots of sellers and (presumably) not as many buyers, and prudent renting could allow you to save up $30k-$40k in down payments pretty quickly.

One last thing to reassure you: you’re making a significantly higher combined salary than my wife and I make. We just had a baby and bought a house in the price range you’re looking at, and we’re still clearing a comfortable “profit” at the end of each month. Our parents helped us out with a significant down payment, but only after we had proven that on paper we could afford to take the whole load ourselves. Given your higher salaries (and assuming that your lab costs as much as our baby) I think you’ll be fine.

Edit: I assumed you had done the math on rent-vs.-own; I strongly urge you to look at Trunk’s numbers! I think he’s right that NoVa housing will decrease in value and may just barely be back up to today’s prices in 4 years.

I think this deserves to be repeated. What with all these stories of housing prices in this area declining by 5% or so over the last year, you may want to consider the financial consequences if the market here doesn’t match growth trends, especially since you’re considering a rather short-term ownership.

Why do you say that he will need PMI? When I purchased my house we put 5% down and got an 80% first mortgage 15% second mortgage and paid no PMI.

When did you buy? Those loans have pretty much gone away.

It was about eight years ago.

I take it you’d prefer to “Throw money away” on mortgage interest? The fact is that unless you’re quite wealthy, you can either rent a building to live in or rent the money to buy a building to live in. Phrases like “throwing money away” are emotionally charged, but don’t offer any serious consideration of the different options.

I advise you to do some research on house prices, comparable rents, and alternate investments over a 4-whatever year stretch and see what kind of annual house appreciation you’d need to see to make buying a good idea. Make a spreadsheet. If you want, try this one, which I made recently to compare buying and renting in Santa Barbara (conclusion: rent). I bet you’d need 10%+ appreciation a year. Houses won’t be going up that much over the next few years. They’ll probably be going down. The reason that banks won’t give 0 down loans anymore is that houses could easily decline in the near future, and they don’t want to be stuck holding the bag. If they get 20% down, then they’re covered for a 20% decline.

ETA: blog post where I explain the assumptions I made for the spreadsheet.

Things have changed drastically in the last six months. The loan I got in January is no longer available. Heck, people who were preapproved a month ago are getting to closings and finding out that their funding’s been pulled or that their lender has folded. It’s very difficult to get a loan without putting down at least 5% and getting PMI.

Which I gotta tell you makes total sense to me. PMI was intended to protect the lender form borrowers who didn’t have enough of a “stake” (or downpayment) in the purchase and therefore, might be more likely to flake on the payments. I could never understand how a second loan would magically make that risk go away. And, now it’s obvious that the risk didn’t go away, thousands of home owners are walking away from mortgages, generally the sub-prime (poor credit score), 100% ones.

I will be working in Chantilly. I’ll just leave it at that.

Anyway, I want to stay within a 40 minute commute if possible. My lab is not my main expense, my two kids are.

The consensus here seems to be that I would be making a grave mistake buying a house next year, because the values are expected to continue declining and I would be up shit creek when it becomes time to sell.

The only thing that REALLY turns us off to renting out there is that we’ve heard many stories of people who are renting and at the end of their lease get booted because the owner wants to try to sell the house again. We have two kids and can’t be moving from school district to school district.

It appears, at least on the surface, that there are a fair number of full fledged houses with yards and everything for around $400K out there, but I’ve never owned a home before so I’m sure there are tons of additional costs that come with it that bring it up considerably.

There is (fair) potential that I could end up staying there longer than the initial 4 years as the unit I will be working for is not of the revolving door, standard military move cycle type. But there is ALSO a fair chance I will not want to stay because the ops tempo will be very high and my family may not like it.

The only thing that might help you is with the bad housing market right now, you might get a good price and get the sellers to put money towards your closing costs. I sold my house by pledging $3,000 towards closing costs.

However, the PMI (mortgage insurance) will be the worst part of the deal, it added another ~$130 a month on a $280,000 house, so for a $400,000 house it might add $150 or so.

As long as you’re sure you can afford it, just get a fixed rate 30 year mortgage and you should be ok if all else remains equal. No adjustable rate or balloon payments. People think tomorrow never comes, well it does and very quickly.

Are you familiar with the property tax and insurance costs for the area in question?

I’m not sure what branch you are in, but the Navy Federal Credit Union offers Veterans Choice loans that match the terms of VA loans, without having to actually deal with the VA. We bought our first house 5 years ago with 0% down and even rolled the closing costs into the loan.

(They also have 100% financing Active Duty Choice mortgages for active duty personnel.)

You may have a credit union available to you that offers similar terms. Check out the loans available at USAA as well.

I can’t tell you what house prices will do, but the mortgage interest deduction is a big deal on your income taxes.

Except for the no down, I think your in pretty good shape to buy. You BAH (adjusted for the D.C. area) should cover the P&I, so you’ll have to cover taxes, insurance and maint. With a 4 year tour you should come out ahead, maybe even a winner. If you can get a loan and don’t expect to live too high on the hog, I say go for it.

I can’t speak so much for prices in Chantilly - we’re at the eastern end of the county (in fact, Fort Belvoir would be a lovely commute for us). In our area, 400K would buy a townhouse at best. In fact my old townhouse, that we sold 5 years ago, 1900 square feet, sold for over 400K.

I just did a search and 400K will just barely get you a detached house in the Chantilly area; the search I ran, for detached houses, got a lot of hits in the 500K price range. HOWEVER, the market is rough right now and I’d bet some of those places would be willing to deal somewhat.

Honestly, if you’re looking at staying only 4 years, I’d seriously reconsider renting vs. buying. In normal times, you’d just barely be breaking even; these days price drops are still a very real risk and you face a fair chance of actively losing money on the place (and not just comparing direct purchase price minus commisions, I mean getting considerably less on sale than you initially spent on purchase). A detached house will hold its value better than a townhouse of course. We bought 5 years ago, in the middle of the price-runup madness, and though I think we’d make a profit, people who bought a year later would not.

The DC area probably has a lot of detached houses for rent - there are a lot of military folks around here who bought, intending to rent them out when they themselves get transferred. We’ve got a house on our street that’s been rented out for the entire 5 years we’ve lived here. I don’t know what their rent is, but I know the current occupants are another military family; they heard of the place through word-of-mouth. If you do get booted out of one place - as much of a PITA as that would be, chances are just fine that there’ll be another one in the same school zone.

On the plus side - dunno how old your kids are but Fairfax County schools are generally considered decent. We have 2 in special ed so our experiences haven’t been usual, but in general we’ve had very good luck.

I guess we are looking to be somewhere between Chantilly and Alexandria because my wifes office will be in Alexandria and she needs to be closer to the kids than me because I will be traveling alot.

One or the other of you will be looking at an icky commute, then. If you live nearer to Alexandria, then you’re probably going to have to go on the Beltway at least part of the way and that’s hideous that time of day; it can take me an hour to go from just east of Springfield, to the I-66 interchange, during morning rush. I don’t know for sure what I-66 is like westbound. If you live a little further south, say Springfield or Lorton, that’s not an ideal commute to Alexandria (though people do manage it) and then you could take less-main roads to Chantilly - for example the Fairfax County Parkway (I use that daily) is busy but tolerable. Moving closer to Chantilly would give your wife a dreadful commute though once she’s on the Beltway, it’s not too bad in the mornings going toward Alexandria.

If you do wind up living closer to Alexandria, 400K will buy at best a townhouse. You can perhaps find something cheaper in one of the more, er, “transitional” neighborhoods a bit south on US One but there’s a reason for that; that’s what passes for a bad neighborhood in the county.

Don’t even think of crossing the river and living in Maryland. If you go north/west into Montgomery county, housing is just as bad as Fairfax. If you go east, to Prince George’s County, housing is affordable but the schools are not good and there are some fairly high crime areas. Not to mention, the Beltway to get to PG county in the evenings is really, really bad. Worse than that stretch from Alex to I-66 I mentioned above. A lot of people seem to live in PG county and come to VA for the jobs.

Where in Alexandria might your wife’s job be? Metro might be a good option for her commute, which opens up some possibilities for where to live.

This changes things to me - Chantilly to Alexandria and back - at rush hour - when the wife got a call because Junior had strep or school let out because of snow - is something you may want to experience for yourself. People actually making that commute can tell you but as a rule of thumb in the DC area you want the primary caregiver and kids as close as possible in these set-ups.

If you can, come out yourself if you can and see what you can afford and what the traffic is like.

Another comment on the schools: Fairfax County is all one big school district. So if you stayed in the county, you’d be in the same “school district”. Obviously if you move more than a mile or so, you’d stand a fair chance of transitioning from one elementary school to another.

This has the interesting side effect of causing the entire county to shut down because a small portion has a chance of snow. Our household joke is that if Great Falls (highest-priced area, on average) gets snow, they have to close because that area is mostly populated with lawyers and senators and you don’t want THEM po’d at you, so all us peons in the rest of the county lose a school day. Also, they have to second-guess what the weather is doing because the high school start so early in the morning and sometimes that bad weather doesn’t materialize at all. My kids were home from school once for an honest-to-god drizzle.