Post # 1
I want my own home. A house. A geodesic dome home on 2+ acres of land with 1 dog, 1 barn and 3 gardens…to be exact. I am ready to tend my own land, have large gardens, and live off my own resources. We want to “homestead” and be happy, crunchy, hippy folks.
But how much money do we need to get there? I am currently focusing on trying to save $50k over the next 4-5 years. I make a smallish salary and have student loan debt, but we live frugaly. Since Fiance is still a Pd.D student, he is not really able to contribute much to savings right now. It is my thought that $50k would be enough to take out a morgage ($200k) for land and the supplies and labor to build our house with $5,000-$10,000 left over for extra stuff.
Is this reasonable? How much should we plan to save before taking on this type of investment? Have any of you built homes? What should we expect? Any advice would be appreciated 🙂
Post # 3
I think normally about 20% down is what is expected plus closing costs (which you can sometimes ask the seller to pay). I built a home with my ex, but it was in a development so completely different than what you’re doing (which I think is sooo cool!!)
Post # 4
You need :
– 8 months cash in emergency fund
– minimum 3.5% down if you go FHA (although I would suggest sticking with the 20 down rule, as you can tell this has gotten a lot of people in hot water by not following) I believe you could go with 0% down if it’s rural or a 203k loan (house rehab). I get that you want to build, but in the case you find the perfect setup and can build to change it into what you want, this might be an option.
– Closing costs (depends on price of house) My guess for 200k would be 7-9k, but I don’t know how rural works.
– Cost to move – for us it was about $500 in cleaning supplies, boxes, and moving truck rental.
Edit: I reread your post, and changed mine.
Post # 5
I think you should talk to a realtor near you & get an idea of what kind of $$ you’re looking at. If you’re in Mass – try William Ravies, I used them when I was thinking of moving to Boston & I really liked working with them.
Post # 6
All of that in Massachusettes? You are going to need more than $250,000 total. You could probably pull it off in rural Ohio or Indiana, but not in MA, or New Hampshire, or soutehrn Vermont.
But Sarah is right. How much you need to save is in relationship to how much you spend. I would look into the cost of land, permitting, materials, contractors, inspections, well-drilling, getting electricity out to you, etc.
Post # 7
@Sarah71710, whoah. Thank you SO much for the details! I will certainly look into rural/agricultural loans/grants/programs. It is also good to think about the extras of closing costs, and EMERGENCY cash!
@Dancy905- I will look into William Ravis! We are acctually looking more towards relocating to Western MA or Vermont when we build, but the job market is better in Eastern MA and it is good to know of a realitor we could go to around here if we stay!
@cebre80- thanks! I think our idea is pretty cool too and I appreciate the support 🙂
Post # 8
I’d go talk to a realtor. As it is, I think you need more cash. Not to mention, things break around the house. There are extra expenses throughout the year that you don’t even think about! Like property taxes and stuff that are in the thousands.
Is a 200K mortgage normal for your area? does that include the interest? I would sit down with some contractors and get some cold hard numbers. Then, I’d add 20% more to it. Because there’ll be things you want to upgrade to, things that aren’t feasible that require more supplies, and all that stuff.
Err on the side of having MORE money on your side than less. Especially since you do have debt, you don’t have a large salary, and your husband isn’t bringing in any income. I’d stay where you are for as long as possible. You’d be banking on the fact that you’d be able to actually pay off that mortgage…counting the chickens before they’re hatched so to speak.
My parents built their own home. It’s glorious. But it definitely went over budget. Things just pop up like better light fixtures, better wood to build with, all kinds of stuff. There are a lot of other, smaller costs you have to eat, too, like for my dad he had these engineres he had to pay to survey the land and the army corps of engineer to ok a bunch of stuff (he lives on the lake). you have blueprint drawings you have to get signed off by a PE, all kinds of stuff.
I think if you’re going to build your own home…200K isn’t much money. That’s less than what MY house costs. I’d rather save up towards 500K and build a really glorious home. I just don’t think 200K is worth building your own home for b/c you’ll be forced to go smaller than you’d probably like. And you’ll probably want to go bigger in a few years anyways or even in 10. You don’t want to outgrow the home you actually built.
But i don’t know how land costs work where you are. It took my parnest YEARS to get plans going to build their home. They’d draw up what they want, it’d go through changes like 20 times. It took a long time to get it JUST right. Now they love it. There is a lot of satisfaction in building your own home.
Post # 9
Boyfriend or Best Friend and I had around 25k for our house.
Most places want 20% down to get around PMI (an extra monthly addition until you are up to 20% principal, iirc). We got a USDA loan (no PMI, just house + some other odd fees). Our broker was trying to tell us to save the 25k, just get the full cost + closing in a loan, but we didn’t want to do that.
It worked out that a shady loan officer at a bank I went to snootily told me that they’d upped the USDA income limit, so now Boyfriend or Best Friend was well under it instead of just over it… I think the limit for one person was 75k or something like that.
Post # 10
I didnt answer the poll bc i think the answer is: it depends. First you need to figure out how much what you want will actually cost you. 200K sounds low to me but if that is the number, that is great.
Then you need to figure out how much you can pay per month, and work that backwards to figure out how big a mortgage you can handle. I’ll use myself as an example. My Fiance and I make great salaries and are both in industries where we can expect our wages to increase exponentially in the future. But– we have only been out in the working world a short time so we didn’t have big stockpiles of cash. Paying a high monthly mortgage is not a problem for us at all, but the down payment was our sticking point. So, we went the FHA route because we could put minimal amount down and still comfortably make our mortgage.
For us, our house was just about 200K, and we put about 16K total into it. That was 8K towards our down payment (4% down), 1K towards prepaids, and 7K towards moving expenses, new furniture, getting set up, etc. Closing costs were paid by the builder.
This makes total sense for us because now we are building equity and we’re very comfortable with our monthly payments. But, if you have a lower salary and can’t afford a 190K mortgage, then you’re going to need to put more down to compensate for that.
Also keep in mind that if you put less than 20% down you will have to pay PMI. That is about 80/mo on 200K house. We’re going to have to pay that for 5 years which again, is fine with us, but it might not be fine with you.
Post # 11
Oh and I forgot to add that we still have 10K in savings as an emergency fund. You really really don’t want to sink every penny you have into a house bc once you’re a homeowner you’re responsible to make sure that things are taken care of and you don’t want to get into trouble and have your home foreclosed on!
Post # 13
Wow, this information is awesome. Thank you all for commenting! Obviously, I have no idea what I’m doing with home ownership and I am VERY thankful for the advice!
We are looking to spend no more then $50k on land, which is do-able based on the areas we are looking at. We would idealy like to live within biking distence of Northampton, MA and have found some affordable properties within 10-15 miles of the city. Geodesic dome homes are pre-fabricated structures that can be put together without large machinery (they also happen to be hurricane and earthquake proof, which I think ROCKS). We would most likely use a design from the company we buy from or work with them to design our own. My parents built their own home and we have electritians and contractors in our circle of family/friends who may be able to help in the construction.
We are somewhat fortunate in that Fiance will be making a much larger salary after finishing grad school, so we know that we will be much more financially stable then we are now in the next 2-3 years.
HOWEVER, I want to err on the side of caution before going into this type of investment, as I do not want to end up in a bad financial situation. Thank you all for your words of wisdom, it is so helpful!
Post # 14
50K for land is crazy awesome. You can’t buy a shanty for that price here in St. Louis =].Or, sometimes, a nice car!
I have to look up these geodesic homes. I don’t think I’ve seen any…at least not here
I’ve just seen a lot of friends “buy big” assuming they’ll make more money in a few years, their husband will, or vice versa. It just doesn’t always work out like that, so plan with a back up in mind, that’s all! I know personally we’re able to afford our mortgage/house/expenses/etc on one of our salaries and can comfortably live off a certain amount per year. It allows me the luxury to be able to take a year off to go back to school and, like your Fiance, contribute $0 to the household while my husband’s salary takes over. We try to live off one (we kinda have to) and look at extra money like “let’s put it towards our mortgage and pay it off faster” versus “we need X money per month (from both people) to pay our mortgage”. I’d just hate for one of us to be laid off and us be SOL!
Your situation definitely sounds unique. Maybe the builders of these homes or whoever sell sthem can send you towards some people who own them that may be open to discussing some financial aspects of it? Sometimes people who live a “hippy” lifestyle are a little more open to sharing the wonders of having their own gardens and making a certain lifestyle work than your average joe.
Post # 15
This is am image of a dome home and a webside with info for anyone interested. I have never been in a dome home, but I am totally in love with their shape, open interior layout and eco-friendly design 🙂 So cool!
Post # 16
@Rosie, I answered $50K, but that’s only b/c you didn’t give a higher range option. I would say you need at least $100K in cash to do what you want to do. That would include a down payment, closing costs, misc. fees and building supplies to get started. The more cash you have the better.
We are also aggressively saving so I understand it’s hard. We will try to live off of my salary once we get married and put his directly into savings. Even doing that, after taxes we will only save about $55K/year and that’s only if nothing unexpected comes up. It’s a little discouraging, but we are workign together which is always fun.