FHA loans need 3.5% last I checked. So her $12k wasn’t far off for a $500k dollar place. Yes they also require PMI for a bit, but better putting money into something that causes gains for yourself than for a landlord. As this article so clearly proves.
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EnglishMobster@kbin.social 9 months agoMight've been financed on credit - but even still, it takes a lot more than $12k for a down payment.
Assuming the median price for a home is $500k, you'd need $100k for a traditional 20% down payment. Sure, $12k is 12% of the way there... but it's nowhere near what is needed for an actual down payment.
Savaran@lemmy.world 9 months ago
CryptoRoberto@sh.itjust.works 9 months ago
People will often ignore FHA offers or take lesser conventional offers. FHA loans fall through more often and have additional requirements on the property. I’ve worked in mortgage for years. Took an offer for 5k less when I sold my first home to take a conventional loan offer…
Anyone who’s dealt with real estate knows how much more likely the conventional offer is to close. In a seller sided market no one wants to take government loans.
CryptoRoberto@sh.itjust.works 9 months ago
You also need 2-6% for closing costs. People always ignore that…
TowardsTheFuture@lemmy.zip 9 months ago
Nah you can put lower you just need mortgage insurance so you’re paying a bit extra on mortgage due to not having to save up for 5 years to afford it (which would mean the price probably rising by enough in those 5 years that you’ll need to save up for another year and now you’re 6 years behind on a payment lol.) if you’re saving up while renting you’re probably paying close to mortgage for rent (or more if you’re in certain areas) plus putting more aside to save for that down payment so you should be able to afford the slightly higher mortgage until you get to that 20%.
Alexstarfire@lemmy.world 9 months ago
I doubt your pulled out of ass price for a house. And you don’t need a 20% down payment. The highest down payment minimum is like 10% and most people don’t need that much. All depends on the type of loan though.
Bizarroland@kbin.social 9 months ago
The reason why people go for the 20% Mark is because once you clear 20% then you don't have PMI, or private mortgage insurance. That typically runs a quarter of a percent of the purchase price of the house until you have 22% of the house paid off, and you have to pay that on top of your mortgage, the interest, and the taxes and insurance.
For every $100,000 you finance that means that if you pay less than 20% down you will have to pay an extra $750 a year just as a "couldn't afford 20% down" fee.
And typically to get the first quarter of your mortgage paid off takes 10 years, so for many people that will be $7,500 per $100,000 they borrow to buy a house as the poverty cherry fee on top of everything else.
Alexstarfire@lemmy.world 9 months ago
I’m aware, having bought my house about 2 years ago. It doesn’t change any of what I said. 20% is nice for that reason but it is not a requirement and most people don’t put 20% down because they don’t have the money to do so.
Hell, I intentionally didn’t put 20% down because my interest rate was under 3%. Was better off taking the extra money and sticking it in investments.
Trainguyrom@reddthat.com 9 months ago
And typically to get the first quarter of your mortgage paid off takes 10 years, so for many people that will be $7,500 per $100,000 they borrow to buy a house as the poverty cherry fee on top of everything else.
You can also work with the lender to perform an appraisal once you have 22% equity due to the property value increasing which may only take a couple of years depending on the market.
CanadaPlus@lemmy.sdf.org 9 months ago
Assuming the median price for a home is $500k
Depending on where you live that’s way too high. That’s like an NYC price or something.
CmdrShepard@lemmy.one 9 months ago
Some people don’t want to be tied down with a mortgage and find renting to be better. It’s similar to leasing a car.
wintermute_oregon@lemm.ee 9 months ago
You only need 1-5% down as a first time home buyer.
LordOfTheChia@lemmy.world 9 months ago
Also shop around for mortgage lenders (hint: credit unions) that will give you a break on the mortgage insurance if you put down at least 5% down.
Bizarroland@kbin.social 9 months ago
There are also closing costs and other fees. I bought a house in 2020 using the native American home loan program.
I had to put down two and a quarter percent as a minimum and on a $500,000 house that should have been $11,250, but the total to close was actually a touch over 20 grand.
It took me several years to save up that money and it disappeared in a flash.