Post # 1
Hi Bees, So FI and I recently learned that should we renew our lease, our rent will jump up to $1800/month, not including utilities, etc. Since we got engaged, we have been trying very hard to save up money toward a downpayment on our first home. With our lease being up at the end of May, we are beginning to wonder if we would be better off just moving into a house and not putting the full 20% down on it. In our area, you can get a pretty decent starter house for around 160k (three bedrooms, 2.5 baths, kinda older homes but usually well-maintained). We are not averse to putting less down and having more expensive monthly payments because we will collectively be bringing in a bit more than $6000 each month before taxes (I recently got a new job with incredible benefits and a good base salary). We are fortunate in that my parents, as a gift, are covering our wedding and neither of us have school debt. Still, it always feels like you hear about the standard 20% down and if you don’t have it, you’re screwed. I’d just hate for us to lose a few thousand dollars to get back into a different apartment- we’d have pet fees, safety deposits, movers, etc. and then we’d probably only be there for a year while we got the rest of our downpayment together. What do you all think? Should we just eat the cost of moving into a different apartment or should we get serious about moving into our first home?
Post # 2
We bought last year and did not have 20% to put down. We put down 10%, and our interest rate is amazing, so I’m sure we pay less overall than others who did put the full 20% down. We went with a conventional loan because it worked out best.
It’s not ideal to have to pay PMI for a bit but I think it worked out for us. Our mortgage is not much more than we were paying in rent every month.
Post # 3
DuckEBee: I didn’t put 20% down when I purchased my home. If you guys can afford it, I’d say go get approved for a mortgage! Most of the time, a mortgage payment is much less than rent. Not to mention, this way you’re “investing” your money instead of throwing it away just for a place to live.
Post # 4
- Wedding: August 2013 - Rocky Mountains USA
You definitely don’t need 20% down, especially because PMI (you get charged ~0.5% interest for private mortgage insurance on a conventional load if you don’t have 20% down) on a relatively inexpensive house isn’t much at all. Our house was $130,000, we put down 10%, and our PMI is only like $25-40/month. I’m really glad we didn’t wait until we had 20%.
House hunting and the whole buying process is a major pain in the ass though!! There’s some great advice for first-time buyers in previous threads on here… I’d search through the boards when it’s time to start looking.
Post # 5
I’m buying a house with only 3% down, yes our monthly payment is higher but we plan to pay extra to principal each month. There are a bunch of great first time buyer programs out there. I definitely recommend doing your homework and finding out what your options are. We could’ve waited another year and saved up more for a down payment, but the market is starting to shift and prices and interest rates are going to increase so we wanted to get into a house sooner rather than later. Good luck!
Post # 6
I don’t think it’s a good idea to deplete your savings just so you can put 20% down. However, if you’re able to comfortably, it does save you a bit of money in the long run.
Post # 8
housebee: I definitely agree. I want to make sure that we have a good cushion in the event of an emergency. We have two dogs and a bird. While they’re a healthy bunch, we’d hate for something to happen and for us not to be able to handle it.
Post # 7
It all depends on what you are comfortable with. The benefit of having 20 down as you know is not paying PMI. PMI on your house shouldn’t be much. PMI on our house is 299 a month but our house was 325k and we only put like 3% down. Even with PMI our mortgage is within a comfortable range for us and so far we’ve been able to write it off on our taxes which I am sure will end this year. Having 20% down though is not a requirement, and I’d say probably most people do not have that.
Post # 9
I don’t know where you are to give advice. If you can make use of the HBP and take out money from RRSPs to get to the 20%, I would recommend that to avoid CMHC fees.
What is your downpayment % approx without touching registered accounts?
Post # 10
DuckEBee: I realize this is a few months old, but what we did was 10% down and pay extra every month (about our payment plus half). Good luck!!