Buying a first home - did you get the downpayment from your family?

[Anonymous]

Not a penny. My DH and I had the same experience as the OP, shock at the realization that everyone around us was getting big money from their parents for down payments. I found it strange to have one's parents so involved in one's adult life.

[Anonymous]

Anonymous wrote:Parents gave 120k with understanding that all of the inheritance will go to my siblings

My parents didn't give me anything and there is no inheritance when they die. I'll consider myself lucky if I don't have to support them when they're elderly.

Different worlds.

[Anonymous]

I remember being your age and wondering how some of my colleagues could go house hunting in neighborhoods I couldn't dream of being able to afford. I thought maybe we should just stretch our budget if everyone else is managing to afford a $800K starter home. You have to be really careful not to compare yourself to others. You have to focus on yourself and your budget. You just never know who has extra help behind the scenes. Frankly, I'm surprised your friends were honest enough to tell you they were getting help.

+1

I graduated law school and started out with a top firm - $86K base + bonus in 1998 - with nearly $100K in debt (student loans @ 8% in those days + I had about $30K in credit card debt from all the stuff that student living expense loans did not cover in college/law school). I was also living/working in NYC. No help from parents post-age 20 (so a lot of regular living expenses like food during college went on CC). I really tried hard, but it still took me 7 years to fully pay off all the debt with no help from parents or anyone else for that matter. Paid for my own wedding. Bailed out parents several times for various expensive home repairs or medical expenses. Bailed out brother a couple of times too. By 2006, debt was gone, and had saved $100K for a down payment, had a 2-yr-old and wanted to buy. And yet . . . it still was a stretch when we bought our house in a neighborhood my colleagues have been known to refer to as "ghetto". I sometimes wonder how I could have worked so hard for so long at such a high salary and have so little to show for it . . . but the truth is that a lot of people have help along the way and it makes a huge difference. Imagine if I'd started out debt-free out of college/law school? And add to that help with a downpayment? And not having expended thousands in helping out family members?

Everyone has a different starting point. Try not to compare to others and work within your own budget. This is good advice.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, you're making like $6k a month. You could spend $1,500 on rent each month and still have tons leftover. Where's all your money going?

I wish. It's $4500 take home after my taxes, thrift contribution (12% of salary + 8% match), life+health+dental+vision insurance. Also, I just hit this level of salary one month ago after a recent promotion. I'm also dumping a LOT ($700+ month) on student loans and didn't finish full-time grad school until I was 29. If it wasn't for grad school, I wouldn't have my very good job (got a 40% raise vs. my job before grad school).

I do have money saved up, but no way do I have $50K+ for the down payment (plus closing costs) for a mediocre condo.

Cry me a river. Six figures at 31, no dependents, and you can't save anything? Nothing?

Better get cracking to save up that $50K. You need to start somewhere.

OP here:

I'm not crying anything. I was just trying to see if my experience was typical for young, well educated professionals in DC. Think of my posting as more of a survey than a rant. I freely admit that saving up for a downpayment is hard work and requires sacrifice for most people.

That said, I went to a grad school populated by lots of wealthy students and they compose my main network here in DC. So it sometimes feels like its only me and a few other friends from middle class backgrounds who are struggling with this while all those who are buying are not having the same experience.

[Anonymous]

Anonymous wrote:15:36 here. My shitty cheap apt was actually in Bethesda!! How crazy is that? It was metro accessible too, but only cost me $700 a month.

To the PP who gets $28k a year, holy shit. How much freaking house are you saving for? Am jealous.

PP who first mentioned OP should live in a cheaper place. Our cheap apartment was in Courthouse. Started out at about $900/mo and when we moved out years later it was about $1100.

OP, you don't have to live far away to find a cheap place. But you will have to check Craigslist and you will NOT be in a nice, modern high-rise or anything.

[Anonymous]

$0.

[Anonymous]

Anonymous wrote:Parents gave 120k with understanding that all of the inheritance will go to my siblings

what happened w/ taxes

[Anonymous]

It used to be "Illegal" to use gift money for the down-payment. The reason was that it showed to the mortgagor that you could not afford the house on your own. So if you were using parental money for any aspect of the financing, you were required to mention that in the application. If you didn't, the mortgagor could call the loan. The rule makes sense from a mortgagor's position -- they want to ensure that you are financially stable and able to make your monthly payments. I have no idea if this is still the rule, but I would think with the mortgage crisis, the rules would have been tightened even more. When we bought our first home we had a second mortgage from my parents which was specifically NOT recorded or disclosed because the mortgagor could have refused the applicatio or called the loan if it knew about it. It was a private understanding and we paid it off ASAP. Same with the down payment - I needed to demonstrate where it had come from so the mortgagor knew I was financially solid. You should, by the way, get pre-approved or pre-qualified by a bank before you start looking. Sellers love to see that you are financially set and ready to go.

[Anonymous]

I think the % of parenting helping with the first house payment has increased as the relative wealth of the country has increased.

DH owned a house before we met. He saved for his down payment by living in a group house for several years. I was saving for a down payment when we married, so that was used later when we moved and did a renovation.

Due to a confluence of circumstances, we had bought the "new to us" house before we were able to sell the old one; at the same time my parents had sold thier house in MA and boughtone in NC and had extra cash on hand prior to investing it. They gave us a "bridge loan" until we sold the first house. We paid them back after three months with interest. It was a win win, they earned more than they would have and we paid less than we would have. If the timing had not been right, we would have either gone to the credit union for a bridge or liquidated some investments.

[Anonymous]

I am frustrated reading all of these posts. My parents came from wealthy families and are squandering what they have been given which is a ton. Never in a million years would they think about helping me. Even my own wedding they paid alcohol only 1k and paid that only because they thought a cash bar was tacky. The same year they bought 30k in toys but" it was the best they could do". They also threw thrmselves a lavish milestone birthday party. I was beyond angry when everyone complimented them on how beautiful my wedding was with the guests implicit thought that they paid. And what was I suppose to say to this don't thank my parents they are cheap, I did this myself? Whenever I start to feel sorry for myself, I think of how much worse things could have been. You went to good schools and it sounds like you have nice parents. Appreciate what you have and don't ask parents.

[Anonymous]

OP, call em crazy but I think most people in this world do not get inheritances. I think the DC area is over run with trust fund babies and upper middle class people so that may be why it feels like "everyone" gets something. (Most people who don't fall in that category find it VERY hard to live here!!)

[Anonymous]

Anonymous wrote:OP, call em crazy but I think most people in this world do not get inheritances. I think the DC area is over run with trust fund babies and upper middle class people so that may be why it feels like "everyone" gets something. (Most people who don't fall in that category find it VERY hard to live here!!)

Correction I did not mean inheritances per se, I meant money from parents, whether it is in the form of a down payment, inheritance, whatever.

[Anonymous]

Anonymous wrote:It used to be "Illegal" to use gift money for the down-payment. The reason was that it showed to the mortgagor that you could not afford the house on your own. So if you were using parental money for any aspect of the financing, you were required to mention that in the application. If you didn't, the mortgagor could call the loan. The rule makes sense from a mortgagor's position -- they want to ensure that you are financially stable and able to make your monthly payments. I have no idea if this is still the rule, but I would think with the mortgage crisis, the rules would have been tightened even more. When we bought our first home we had a second mortgage from my parents which was specifically NOT recorded or disclosed because the mortgagor could have refused the applicatio or called the loan if it knew about it. It was a private understanding and we paid it off ASAP. Same with the down payment - I needed to demonstrate where it had come from so the mortgagor knew I was financially solid. You should, by the way, get pre-approved or pre-qualified by a bank before you start looking. Sellers love to see that you are financially set and ready to go.

A gift for a down payment is not illegal as long as it is disclosed and a gift letter is signed. What you described as having done - the second mortgage from your parents not disclosed to the lender - that was and is most definitely illegal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, you're making like $6k a month. You could spend $1,500 on rent each month and still have tons leftover. Where's all your money going?

I wish. It's $4500 take home after my taxes, thrift contribution (12% of salary + 8% match), life+health+dental+vision insurance. Also, I just hit this level of salary one month ago after a recent promotion. I'm also dumping a LOT ($700+ month) on student loans and didn't finish full-time grad school until I was 29. If it wasn't for grad school, I wouldn't have my very good job (got a 40% raise vs. my job before grad school).

I do have money saved up, but no way do I have $50K+ for the down payment (plus closing costs) for a mediocre condo.

Cry me a river. Six figures at 31, no dependents, and you can't save anything? Nothing?

Better get cracking to save up that $50K. You need to start somewhere.

OP here:

I'm not crying anything. I was just trying to see if my experience was typical for young, well educated professionals in DC. Think of my posting as more of a survey than a rant. I freely admit that saving up for a downpayment is hard work and requires sacrifice for most people.

That said, I went to a grad school populated by lots of wealthy students and they compose my main network here in DC. So it sometimes feels like its only me and a few other friends from middle class backgrounds who are struggling with this while all those who are buying are not having the same experience.

Yes, OP this is DC. DH went to grad school and we paid for it. He was working full time, going to grad school and had a newborn at home. It sucked, we had no help financially or help with the baby so we had to suck it up and be adults. DH was going to school with others saying how 'hard' it was and grad school was their only job that they were not paying for. DH graduated at the top of his class and while friends were on daddy's dime, going to the bars and spending $150 without thinking about it, he was at home eating homemade meals since even take out was too expensive. When we went out to dinner to celebrate DH's graduation, his parents didn't even pick up the tab at a cheap restaurant so we had to pay for it.

If you keep trying to stay on par with your friends, you will find yourself miserable. Just wait until you have kids- then you see the real competitiveness of DC with the furniture the parents buy to the stroller, the type of fricken diaper their kid craps in. If you learn to do your own thing- get a roommate, move farther out, etc. you can start living for yourself and not others. The grass is always greener on the other side.

[Anonymous]

My husband and I didn't get any handouts. Purchased our first home in 2001 when escalation clauses were the norm I was making $50k at the time and he $80k we were good savers demolished the entire kitchen and did all the renovations oursleves. Made a nice profit and sold in 2004.