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So I know ideally you want to put at least 20% down to avoid PMI, but sometimes that becomes very difficult to come up with even with a good salary and no debt. Here's how my family's numbers shake up:
I feel $1800 is the most we can realistically save per month based on our income. While we don't have debt, we do have other significant expenses like child care and transportation but for simplicity I won't get into that.
Problem is, a modest home where I live will cost about $400,000.
400,000 x 20% = $80,000 down payment
Closing Costs ~ $15,000
Moving Expenses/Minor Repairs ~ $25,000
Total= $120,000 I would realistically need to move into a new home.
That would take me 66 months at my current savings rate, if all goes according to plan. Seems like an awfully long time. Only thing is, who knows how much home prices will be 5 and a half years from now. My time frame may be even longer than what I'm calculating.
So how long did you take to save for your first home??
I bought my first home with a VA home loan, so I didn't put anything down. Without the VA loan process, though, I would've been waiting at least a few years to save. I'm single earning a salary in the low six figures.
So I know ideally you want to put at least 20% down to avoid PMI, but sometimes that becomes very difficult to come up with even with a good salary and no debt. Here's how my family's numbers shake up:
I feel $1800 is the most we can realistically save per month based on our income. While we don't have debt, we do have other significant expenses like child care and transportation but for simplicity I won't get into that.
Problem is, a modest home where I live will cost about $400,000.
400,000 x 20% = $80,000 down payment
Closing Costs ~ $15,000
Moving Expenses/Minor Repairs ~ $25,000
Total= $120,000 I would realistically need to move into a new home.
That would take me 66 months at my current savings rate, if all goes according to plan. Seems like an awfully long time. Only thing is, who knows how much home prices will be 5 and a half years from now. My time frame may be even longer than what I'm calculating.
So how long did you take to save for your first home??
I plan to start when I finish grad school and expect it to take about 5 years (I want to buy in cash and not have a mortgage, so if I only wanted 20% down, say 1 year).
My plan is to move to a cheaper area to make it happen. I should be able to put away about $2500/month if I continue living with roommates, which I absolutely am willing to do because I do not want debt!
Bought my first home 2 years out of school, income rich and cash poor. Fortunately I was able to borrow the down payment from my parents (which was paid back with interest) or I would have been stuck with PMI.
I had been toying around with numbers and my plan had been to go a year putting the difference between my ideal mortgage payment and current rent into a savings account to get a level of comfort and also have funds available for a down payment. Well before I could execute that plan, my landlord decided they needed us out of the house so that they could rent it to their own kids. So I proceeded to purchase my home with nothing down PMI and all.
One of the things that worked out great in my personal situation is I got a payment within my budget and after a couple of years with raises and a refi, I am so glad I jumped when I did as I would not have been able to save up the recommended 20%. I fully understand it could've all gone wrong with a job loss.
I bought my first home with only 6% down of my own money. I got a credit from the state for first time home buyers and after 3 years of living in this house I am up to around 16% in equity after making some extra payments to my mortgage. Those extra payments and the usual payments I make never added up to anything over what I would have paid to rent this same place I own. It is totally do-able to buy your own house if A) You're willing to stay there long enough and B) Looking at a place equivalent to the current place you rent for $2,100 a month. I was 24 when I closed on it.
You should not compare buying a 4 bedroom house with renting a 2 bedroom condo if that's what you're doing. If you really feel you must save 20% then yes it will take you a while to save for it but I recommend that anybody try and buy a place if they plan on staying there 5 years or more. Even if you're only putting 10% down.
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