How common is it to put 5% down on a house?

[Anonymous]

We want to do VA when we buy our next home. We will have some cash in the bank. Should I even both putting some down or keep it as a good start to the emergency fund for the new house?

[Anonymous]

It is incredibly stupid to only put 5 pct down on a house.

[Anonymous]

If you can't put 20 pct down on a house, you can't afford it.

[Anonymous]

How common? Pretty common among those that go bankrupt.

[Anonymous]

I live in the SF bay area, and rents are much, much higher than PITI payments for comparable housing and only rising. Housing also seems to continue rising. Thus, those who are able to buy do so by any mechanism possible, including a 3.5% downpayment.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Subject says it all.

Never heard of being able to do this without the special circumstances others have noted. In general, don't buy what you can't afford.

Ignorant and smug - what a delightful combination.

[Anonymous]

Anonymous wrote:We did but we had a high income. DH just finished his medical training. We both had tons of student loans and had very little savings. We put 5% down. We had to borrow the closing costs from MIL. 5 years later and our house is almost paid off. We knocked out our student loans first, then cars and now the house.

Damn, y'all went big. Must have had great credit!

[Anonymous]

We started our home search 6 months ago and naively thought we could put 5% down. When we began to research financing in order to obtain a pre-approval letter we learned that the higher the cost of the home, the percentage for down payment required increases. Now this may not apply for most but we were looking between 1 million and 1.25 million. Our loan officer told us any amount over 1.25 would require a 20% down payment so if we wanted to stick to 10% spend under, and 5% would have to be under 700K. We ended up purchasing for 1.4 million and put down the 20%, we had the cash but simply thought we could choose the down payment percentage amount. Our loan officer said pre housing crash that might have been the case but high home sale prices are scrutinized much more to avoid the foreclosures of the past.

[Anonymous]

Anonymous wrote:It is incredibly stupid to only put 5 pct down on a house.

My net worth is approximately $400,000 higher than it would be if I had put 20% down on my previous two residences. Using FHA loans is literally the best financial decision I have ever made.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It is incredibly stupid to only put 5 pct down on a house.

My net worth is approximately $400,000 higher than it would be if I had put 20% down on my previous two residences. Using FHA loans is literally the best financial decision I have ever made.

It is complete bullshit that the federal government subsidizes home ownership. If you can't afford to put down 20 percent (or enough to satisfy a private lender) you have absolutely no business buying a home. The government subsidizing mortgages just makes them more expensive. But you don't care about that, of course, because YOU GOT YOURS!

[Anonymous]

Our financial adviser said that if you can't put down 20%, which we couldn't, then put down the least possible because you can make more money with your money elsewhere. So, that's what we did on our second house - put down 3.5%.

[Anonymous]

Anonymous wrote:We want to do VA when we buy our next home. We will have some cash in the bank. Should I even both putting some down or keep it as a good start to the emergency fund for the new house?

Just remember that the amount of your downpayment impacts the amount of your VA funding fee.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We want to do VA when we buy our next home. We will have some cash in the bank. Should I even both putting some down or keep it as a good start to the emergency fund for the new house?

Just remember that the amount of your downpayment impacts the amount of your VA funding fee.

And the amount of your monthly payment, obviously.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We want to do VA when we buy our next home. We will have some cash in the bank. Should I even both putting some down or keep it as a good start to the emergency fund for the new house?

Just remember that the amount of your downpayment impacts the amount of your VA funding fee.

Unless you have any percent disability (thank you 10% disability!), then you don't have a funding fee.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It is incredibly stupid to only put 5 pct down on a house.

My net worth is approximately $400,000 higher than it would be if I had put 20% down on my previous two residences. Using FHA loans is literally the best financial decision I have ever made.

It is complete bullshit that the federal government subsidizes home ownership. If you can't afford to put down 20 percent (or enough to satisfy a private lender) you have absolutely no business buying a home. The government subsidizing mortgages just makes them more expensive. But you don't care about that, of course, because YOU GOT YOURS!

While I'm pretty skeptical you're actually open to understanding why you're entirely wrong, I guess I will give it one short go: The FHA loan program is actually one of the best investments the Government makes. While its literally true that it can drive up home prices (though not necessarily mortgages, since it ultimately reduces the cost of credit), it does so by providing countercyclical support during market downturns. That makes the market more stable, which is ultimately good for business. It is not an exaggeration to think it likely that the loan program played a major role in the housing crisis not becoming far worse than it was. Here is Moody Analytics' attempt to quantify the FHA's role in preventing a much deeper recession: