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Maybe it's just from my personal interactions with people, but it seems like the vast majority of young professionals who are somehow able to afford to purchase expensive real state in DC are getting a nice "help" from a mom/dad or whoever with the massive downpayment that's required. Otherwise how can a couple in DC, who most likely work for the Feds or are contractors, but are only in their late 20s be able to plunk down 100-150K downpayment on a home?
I'm in my late 20s and have been quite smart with my money I'd like to think (as has my wife), but we are not trust fund babies and everything will be purchased with our own money, and it seems like anyone we've talked to in our age group that has bought a 700k rowhouse or whatever is getting helped out substantially by a parent or someone else. If we were to buy a home at that price, our savings would be almost non-existent afterwards.
I just don't see how govt employees/contractor types can afford downpayments on these homes at a young age. I'd like to think the young ones purchasing these rehabbed rowhomes in gentrifying, trendy hoods are not all trust baby types?
if you're parents were loaded and offered to give you money for a downpayment, would you take it??
they could also have inherited money from their grandparents. or just be living way beyond their means. but really it shouldn't matter how they can afford it. it's no one's business but their own
Last edited by r_u_a_wizard; 05-27-2013 at 11:41 AM..
A lot of homebuyers in their 20s get help from their parents, especially for something like putting down cash for a downpayment. There's certainly nothing wrong with it, per se. That being said, there are properties in this area that are selling for substantially less than $700k, and perhaps your sights are just set a bit too high.
If you are willing to put in a bit of sweat equity, there are some interesting options (e.g. HomePath) that could be a better fit for you and your wife. No, it isn't going to be a rowhouse in Dupont Circle, but it might be something you'll be proud to say you did in 5-10 years time.
We must run in different circles. Most of my friends (late 20s/early 30s) are renters and are not 6-figure earners. A few with more established jobs (and higher paychecks) own, but generally they own one-bedroom apartments.
Me, I bought my first place in DC in my early twenties. I did so with no financial help from anyone, and after three years of working full time at a good job and living below my means (possible even in DC), I amassed enough savings for a healthy 20% down payment that still didn't wipe me out. No, I wasn't able to afford an established NW neighborhood, but I bought in SW which I really have grown to love.
DC is a place where people in certain professions can earn a high salary even in their 20s and 30s. I could easily imagine a 30 year old couple buying an expensive rowhome if they a) both earn 6 figures (very possible if both are lawyers, consultants, lobbyists etc), b) put less than 20% down (they probably could muster up at least 10% down after 5 years of savings), and c) are comfortable with a big mortgage that leaves them a bit stretched each month.
I'm sure a good number of buyers get parental financial assistance, but I don't think it's uniquely a DC thing. I think you see that happening in pretty much every expensive property market.
Best advice I can give you is to own a condo first, since it only requires 3.5% down. Key is the neighborhood, if you see it booming within the next 5-10 years, you'll get a ROI. Between the 5K first time home buyer's check (not sure if DC still does this) and the no property tax payments for the first 5 years (again, not sure if DC still does it), you'll get the money back. There's programs out there that help working young professionals. I got no help from my folks, saved for 3-4 years and made the jump.
But if possible:
1) Get an condo in an up and coming neighborhood
2) Live in it for 5-7 years if you can
3) Flip it and use the profits for a down payment on a house
Or you could always rent it out. That's the thing with DC, you can price it absurdly high and you're still gonna get someone to bite because it's DC.
Best advice I can give you is to own a condo first, since it only requires 3.5% down. Key is the neighborhood, if you see it booming within the next 5-10 years, you'll get a ROI. Between the 5K first time home buyer's check (not sure if DC still does this) and the no property tax payments for the first 5 years (again, not sure if DC still does it), you'll get the money back. There's programs out there that help working young professionals. I got no help from my folks, saved for 3-4 years and made the jump.
But if possible:
1) Get an condo in an up and coming neighborhood
2) Live in it for 5-7 years if you can
3) Flip it and use the profits for a down payment on a house
Or you could always rent it out. That's the thing with DC, you can price it absurdly high and you're still gonna get someone to bite because it's DC.
Not to turn this into a financing thread, but just to clarify, you can buy a home with 3.5% down if you obtain FHA financing. For a condo, that first means that the building has to be FHA qualified; one FHA requirement is that the building be owner-occupied beyond a certain percentage. Not every condo building in DC is FHA qualified. FHA financing also has higher fees and closing costs than conventional financing.
Not to turn this into a financing thread, but just to clarify, you can buy a home with 3.5% down if you obtain FHA financing. For a condo, that first means that the building has to be FHA qualified; one FHA requirement is that the building be owner-occupied beyond a certain percentage. Not every condo building in DC is FHA qualified. FHA financing also has higher fees and closing costs than conventional financing.
My mistake, forgot to mention that as well. I lucked out b/c the seller covered the closing costs and the building was FHA qualified, so all I had to put was the down payment.
But agree or disagree on the general idea tho? Unless you luck into $, I think buying something small first at least puts your foot in the door for something bigger in the future.
There are many downpayment assistance programs such as HPAP that give you up to 40K towards a downpayment on a home. many people take advantage of that.
It's not always true but way more true than not. I'm in my 30s and all my friends but one got their house with help from parents. Big money people like young lawyers, lobbyists and politicos don't need to do that but even people in the upper middle class generally need to beg for $ to afford a decent house in this area.
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