Down Payment For 600k House – Obstacle #3: Down payment – save at least $45k (for an FHA loan) or $55k 📸IG Handle: DollarSenseLA
Having enough money for a down payment is a big challenge for many millennials, especially if you’re #youngandfree because you don’t have years to save and you don’t have a partner to build more savings. If you are a couple in a #hust, you are the audience most likely to be able to pull this off.
Down Payment For 600k House
A traditional down payment is usually 20% of the home price, but don’t let tradition stop you. For example, on a historically $600k home, you will need $120k down. This number is before factoring in additional closing costs. For many, this astrological number six represents our hopes and dreams.
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5 is the new 20. Fortunately, Freddie Mac and Fannie Mae have created mortgage products that make credit more accessible. In 2017, if you choose a conventional loan, you can put down as much as 5%. On the other hand, if you choose an FHA loan, you can put down as little as 3.5%. At this point, you might think, an $800k house on the west side only needs $28,000. Suddenly, it seems to happen. Keep your thoughts!
However, you can’t buy an $800k house with 5% down because when you put a down payment, there is a limit to the amount you can borrow. The limit is called a conforming credit limit, and it was $636,150 in Los Angeles in 2017. Simply put, if you want to take advantage of the lower payment options with conventional (5% down) or FHA (3.5% down) , you can only borrow as much as $ 636k.
How much house can you afford if you choose the best combination of minimum payment (5%) and maximum loan ($636k)?
What happens if you choose to borrow more than $636,150? You’ll need at least a 15% down payment, Wooping + $105k for a $700k home, and another $21k to $35k to put in for closing costs. In total, that’s at least $120k. Some older millennials (#hustlecouple or #lonewolf) might rock it. But let’s be real, that’s still not an option for most people.
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Let’s face it, it takes years to save six figures in LA regardless of your income. Realistically, if you’re buying your first home, you’ll probably take out one of the lower down payment options: a 30-year conventional fixed loan or an FHA loan. Now let’s move on to some real life scenarios.
1) Scenario 1 – 5% down payment with a 30 year fixed rate conventional loan for a maximum loan amount of $636,150
3) Condition 3 – 15% down with a conventional west side with a purchase price of $800,000 (believe it or not, this is a rare find at this price)
*In all cases, I make low assumptions about closing prices, as they typically range from 3% to 5% of home purchase price.
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If you have very little money down (less than 5%) or you have a credit score of 720 or higher, Scenario 1 is your best option.
If you have enough cash to cover a down payment of at least 5%, Scenario 2 is the best option.
If you are the average millennial in LA, you probably have student loans and/or a car payment, which leads to the last and biggest obstacle of all, the debt-to-income ratio! Pay attention to the work published by Rocket Mortgage, a Forbes consultant and business insider. He is a poet, musician and nature lover. He lives in metro Detroit with his wife and children. Connect with Andrew Dehan on LinkedIn Linkedin Andrew Dehan
Edited by Suzanne De Vita Edited by Suzanne De VitaArrow Right Senior Editor, Home Lending Suzanne De Vita is a Senior Editor on the Home Lending team, focusing on mortgage and real estate topics for home buyers, homeowners, investors and renters. Connect with Suzanne De Vita on LinkedIn Linkedin Suzanne De Vita Connect with Suzanne De Vita via email
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Saving money for a down payment on a home can be difficult, especially if you’re a first-time home buyer. However, the minimum down payment standards for different types of mortgages may not be as high as you think. Here’s what you need to know about the average payment for a first-time buyer and what’s needed to qualify.
Many first-time homebuyers believe they need to put down 20 percent to qualify for a mortgage. Fortunately, it is not.
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According to the National Association of Realtors (NAR), the average down payment for a first home buyer was 6 percent in 2022. A 6 percent down payment on a $350,000 home is $21,000.
Compare that to repeat buyers whose average down payment in 2022 was 17 percent, or $59,500 on a $350,000 home. 26 percent of first-time buyers reported to NAR that the down payment was the most difficult part of buying a home.
The amount you should commit to a down payment depends on your financial situation, comfort level and other factors.
If you can put 20 percent down, you can avoid mortgage insurance and get a lower interest rate which can mean significant savings. However, you should not do this if it means withdrawing all your money. It is important to keep an emergency cushion. In addition, you’ll need money for closing costs – more on that – and expenses like furniture, moving, and any repairs to your home after you move.
K Debt Free House Chart Mortgage Payoff Progress Chart
On the other hand: because your savings rate will never match the growth of the house
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