Post # 1
Hi I’m wondering if anyone has recently bought a home with no down payment? Our landlord is selling the duplex we live in and nearly everyone I know who owns a house pays a lower mortgage than our current rent.
although I don’t know much about the program yet I’ve heard that an area 15-20 minutes from where I would ideally live is considered a rural area and so you can get a mortgage with no money down if you buy there. I’ll have to look in to this.
Tonight I took the first step in the process of getting prequalified through a state program that helps first time and low income home buyers so hopefully once they contact me I’ll have some good news.
Post # 3
I don’t know how I feel about that idea. Where I live now and the town I went to college it was cheaper to own then rent but from what I learned that it safer to have some type of down payment. I hope by next year that we could afford to buy but I will only go for it if we have enough for 20% down payment which could happen once I find work and I just hand over most of my paycheck to my SO.
Post # 4
We’re planning on buying a house with a down payment of less than 20%… unfortunately we “make too much” (UGH!) for any assistance programs in our area and don’t have anything like what you’ve stated. If you can get a house with no DP and no PMI — that would be awesome.
Unfortunately, we will probably have to pay PMI (not sure how we’re supposed to get $50k to pay for DP and closing costs… almost no sellers here are willing to give sellers assistance) and it SUCKS. It is such a waste of money and sometimes is ridiculously high. FI has an outstanding credit score, so it makes me angry that because we don’t have a rich relative that died that we are “risky” even though the credit report would prove otherwise…. but that’s a rant for another day.
I just really would avoid paying PMI if at all possible. Not sure if you can do this. If you have to, you have to… unfortunately that is how the way the world is now. But some kind of DP is great.
Post # 5
ugh If we had to put down 20% it will probably take us 8-10 years to save and that is for a low priced home in our area. That is super depressing. There have got to be people out there that don’t have $30-50k saved and still manage to buy a house…
Post # 6
- Wedding: June 2012 - Chapel of Flowers
Commenting to follow. DH and I are hoping to buy a house next year and probably will not have 20% to put down. (Unless we both work 80 hour weeks for a year straight- No thank you!)
Post # 7
I bought the house I currently live in a little over 5 years ago with no down payment. I do pay PMI on that mortgage.
We are moving, and just closed on our new house on Friday. We had planned on putting 5% down in order to decrease our interest rate slightly, but when we added up our remaining wedding bills, and found out my sign-on bonus for my new job won’t come until after the wedding, we converted the mortgage to 0% down. Through a program for physicians, I don’t pay PMI on my new mortgage.
Next time my FI and I buy a house, we are hoping to have a substantial down payment. It’s just nice to have equity in a home. With my current home, we have put over $20k into it over the years in improvements (not even to mention mortgage payments…), and will walk away with just over 2k at closing. The reason being a combination of the down-shift in the market, and the fact that I put nothing down initially…
With our new house, it appraised 25k higher than what we paid for it, so I guess we sort of have instant equity. Even so, next time we’d like to put down 20%+
Post # 8
@ferdie224: what exactly is PMI and does it last for the life of the mortgage?
Post # 9
PMI is private mortgage insurance. It is required for many/most loans if you owe more than 80% of the amount of the loan. For my new home, it would’ve been about $280/mo, and would be money thrown away (does not pay down your pricipal). Essentially (the way I understand it), a loan with less money down is a riskier proposition to a lender, and charging this extra fee allows them to get more money from you, so if you are unable to keep up with your mortgage they haven’t lost as much (that’s how I think about it in my head, I am sure there’s a better, more precise explantation).
As for whether it lasts the duration of the loan, my understanding is that currently if you drop below 78% owed then PMI goes away. However, someone told me that this is changing soon and PMI will be permanent. I don’t know which is right, or even if the 78% (vs 80%) is correct, but it would be something to ask your lender when you’re shopping for a mortgage.
Post # 10
@ferdie224: thanks for the info!
Post # 11
It sounds like you are talking about a USDA loan which is a government program. I know that it does provide 100% financing and I don’t think you have to pay PMI on a USDA loan but I do know the rules changed last year so you would have to look into it. We were planning on using it last year to purchase a house but we ended up using a VA loan. You can go online to research USDA loans and I believe you can even search the zip code to determine if the area you want to buy in qualifies. Just do a preliminary google search and if it seems like you guys qualify up front then go ahead and contact a bank for more information. Yes it is safer to have a down payment, you’ll be much less likely to end up upside down but with interest rates where they are now it’s hard not to take advantage. Just be smart about where/what you buy. We just bought last year and paid $20K less than the appraised value and its already gone up $5K since we have lived there so we already have collateral without taking into account any of the payments we have made.
Post # 12
We did not qualify for any government programs when buying a house, and did not have 20% DP. We gave a smaller DP and prepaid the PMI. Meaning we made one time payment that satisfied our PMI requirements, and we never have to pay PMI again. And my understanding is that PMI, just like interest, is a tax write off, so we will be getting some of it back during tax season. Good luck!
Post # 13
@MaVer610: Is PMI not a government program? CMHC here is comparable to PMI and it’s a government program.
Post # 14
Keep in mind that your friends may pay a lower mortage payment than you pay in rent, but they also paid closing costs, realtor fees, inspection fees, and they’re currently paying for property taxes and homeowners insurance. Any maintenance that needs to be done is payable by them. Their toilet breaks? Water heater goes down? House needs a new roof? All of that is coming out of their pockets. Being a homeowner has a lot of hidden costs.
Post # 15
I have put at least the required 20% down on all of my properties. I refuse to pay additional fees and be considered a high risk mortgage. No, sir. I wouldn’t qualify for any kind of government assistance either.
Post # 16
A co-worker just bought a brand new home (had it built) with a USDA loan, so no down payment necessary. He was required to pay $1,000 to start the build but that was it, homebuilding company took care of all remaining fees. So it is possible and I don’t think irresponsible if your mortgage is going to leave you coming out ahead.
We have been working toward owning a home but I have very specific requirements, we will put down at least 20% and have an equal amount in our savings, but that is a personal goal and one I’ve questioned. There have been many times where I just want to throw in the towel and be done with renting and if we were looking at cheaper homes it probably WOULD have been smarter to buy with less than 20% down based on interest rates.