Post # 1
DH and I are looking to move, we currently rent. We have a newborn and would be fine renting, but we also have a pit bull which makes it hard to find an affordable place to live. I found a townhouse for sale for 200k, and with no money down, the mortgage will be the same as what rent goes for. we have savings but since I am on maternity leave, I really don’t want to deplete it.
Realtor bees, what would I expect to pay out of pocket when purchasing a townhouse? closing costs, etc?
Post # 2
Generally, unless you or your husband are veteran’s and qualify for a VA loan, it’s going to be basically impossible to purchase a house with 0 down payment. There are options like FHA loans that allow you to pay 3.5% down payment, if you and the house qualifies. For a $200,000 that would be about a $7000 down payment. If you feel like you need to buy ASAP, dipping into your savings is probably your only option. Otherwise, I’d start a “house fund” as soon as you go back to work from maternity leave.
My husband and I are just starting to save to buy a condo, and it’ll probably take us years to save up enough to put a down payment down (we live in a very high cost of living city). I totally get where you’re coming from in terms of the mortgage payment being the same as rent, but unfortunately, mortgage lenders don’t see things the same way.
Post # 3
Don’t forget there are other bills & maintenance included with homeownership – that are sometimes included in rent.
Post # 4
Are you factoring in closing costs (10-15k usually)? Mortgage insurance (since you aren’t putting 20% down, it is required)? HOA fees? It seems unlikely you could even get a mortgage these days without putting anything down. I would start saving for a downpayment now and keep renting.
Post # 5
In Toronto Canada, it’s almost impossible to purchase with zero down.
There used to be some B lenders that used to do it, but you’re intrest rate was 4-6% making mortgage payments insane expensive.
It’s best to try to save up at least 5% because even with that amount mortgage insurance has to be put into you’re premiums.
Post # 6
To echo PPs, can you even get approved for a mortgage at 0 down? I know there are sometimes incentives with 0 down and there’s the VA loan if you or your SO are veterans, but you still need to get approved for the mortgage with only one income. You may also have to factor in PMI into your monthly payment (as well as property taxes and insurance).
That said, we did a 0 down VA loan for $184 and our closing costs were ~$4k. But again, it was a VA loan, so closing costs would be different as the VA limits some costs.
Post # 7
These would be questions best asked to a real estate agent and mortgage broker. I’ve found any ‘calculators’ to be wildly off from reality.
Either way, it’s a really good idea to have as big of a downpayment as you can to save money in the long run. Also, be aware that homeownership isn’t just the mortgage — you’re on the hook for any costly repairs that WILL need to be done as well. So honestly I wouldn’t compare it financially to renting at all.
Set an appointment with someone in your area, and they should be able to help you with specifics and then you can decide what sort of timeline you’re looking at for savings. Good luck!
Post # 8
What state are you in? Rules will vary state to state, I am licensed in New Jersey, I have had clients put 0% down and roll closing costs into their mortgage but for VERY specific properties. With townhouses, you need to check the HOA standing, I have townhouses that you HAVE to put 20% down because the complex is no longer FHA compliant. Your best bet if you really don’t want to deplete all of your savings – find an FHA townhouse approved complex and you can ask for up to a certain percent of a sellers contribution and you can also ask your mortgage broker if they offer any programs. Sometimes they will cover a portion of closing costs.
Closing Costs & Costs of Buying Include:
Mortage (usually 1% of purchase price), Inspection, Attorney Fee, Title Fee, Apprasial, Realty Transfer, Taxes, HOA contribution fee, HOA buy in fee, etc etc
Normally you are looking at around 5k-7k
Post # 9
Thank you so much! I am in NJ also 😉 That was really helpful!
Thanks bees 🙂
Post # 10
If you are looking in monmouth/ocean county, I can send you a list of a few townhouse communities you might qualify for! Message me if you need any help 🙂
Post # 11
Also remember you have insurance and taxes rolled into a mortgage, plus you should have a healthy savings account for unexpected repairs. Also town houses usually have HOAs and you can be on the hook for large assessments on top of your HOA monthly fee.
Rent =\= mortgage payment.