House downpayment: How low would you let savings go?

[Anonymous]

We've been saving like crazy for a downpayment for our next house. Our current house was bought at the peak of the market and the value hasn't recovered, but we have to make a move as our oldest child starts school in the fall. We can put down 20% on just about anything in our price range, but then we'd only be left with 25K or so in liquid emergency funds (if we bought at the top of our range). Is that too risky? HHI is $200K and we typically receive yearly bonuses that would hopefully arrive a few months after we purchased. We do have 401Ks and such in case of a true emergency. I am having a hard time thinking of our amount in savings going down by so much, but also don't want a higher mortgage payment. WDYT?

[Anonymous]

How's your job stability?

[Anonymous]

Job stability is very good.

[Anonymous]

My lender told me not to go below 10k. Your 25k is well above that and I would feel fine with having only 25k in the bank. It's enough for major repairs or to buy a car or to survive unemployment for a few months.

[Anonymous]

I also hated parting with our savings! I tried to think of it as a transfer, using it to buy equity which we could always get cash out of in a pinch.

[Anonymous]

I would do it without thinking twice. It's sensible to have an emergency fund, esp. when moving into a new house, but it's also possible to be too conservative.

[Anonymous]

25 is fine. We were 100% tapped out but both have stable jobs, so it wasn't a problem.

[Anonymous]

May not be wise, but we wiped out everything. Went down to under $100 in our bank accounts on closing day. But both my spouse and I have very stable jobs and great credit. It's worked out and we've rebuilt our savings.

[Anonymous]

We also wiped out everything. In case of a true emergency, we could always tap our retirement funds or other investments which would cause us to pay a penalty or have negative tax implications. We did it a year ago and didn't have a need to cash anything in, thank god. We would do it again.

[Anonymous]

OP we did exactly this, 25k was our minimum comfort level. Unfortunately we bought more of a fixer upper than we realized and are now down significantly below that. But we also obtained a heloc so I feel like we still have some backup. We'd be fine with the monthly payment on 25k on the heloc for 10 yrs. I hope this doesn't blow up in our faces...

[Anonymous]

First time around we wiped it down to $10k, but like you have ended up in a "house hasn't recovered value" situation.

This time we are being more conservative and leaving $30k in our liquid emergency fund and $40k in our longer term car/home repairs/etc fund.

[Anonymous]

Anonymous wrote:May not be wise, but we wiped out everything. Went down to under $100 in our bank accounts on closing day. But both my spouse and I have very stable jobs and great credit. It's worked out and we've rebuilt our savings.

Oh my gosh. I would be freaking out! I'm glad it worked out for you.

[Anonymous]

OP, since you are underwater, you are either having a renter or short selling or foreclosing your current house, right? If so, I'd be sure to have a very large amount in reserves in case of an emergency, car breaks down, house crisis, etc since you risk of crappy credit.

[Anonymous]

I was down to 5K in savings after buying house, just to hit my 4% down payment. But the house was in pristine shape. 3 years in now and not so much as a clogged drain. And we're back up to 20K savings and paying a little extra each month towards principal. Was risky but worked out great.

[Anonymous]

We went down to 10k. It bothers me (bought last year) but we have stable jobs, families we can borrow from in a pinch and retirement savings, and are in a position to save more soon.