{ "media_type": "text", "post_content": "How do people save for a down payment on a house? My SO and I make a combined 130k salary, currently rent a 1br apt for $2250/mo, have other debts of 600/mo and 15k in savings. Neither of us have been able to save much since we started to rent the apt (6 months ago). I want to stop \"wasting\" money on rent and build equity in a home, lay down roots, start a family, but I feel I/we will never be able to save enough for a down payment (NY prices, 400-500k). Starting to feel hopeless &stretched thin", "post_id": "5f7b9433dda4400024a3921e", "reply_count": 33, "vote_count": 5, "bowl_id": "59064a3cb12379001006592c", "bowl_name": "Personal Investment Chatter" }

How do people save for a down payment on a house? My SO and I make a combined 130k salary, currently rent a 1br apt for $2250/mo, have other debts of 600/mo and 15k in savings. Neither of us have been able to save much since we started to rent the apt (6 months ago). I want to stop "wasting" money on rent and build equity in a home, lay down roots, start a family, but I feel I/we will never be able to save enough for a down payment (NY prices, 400-500k). Starting to feel hopeless &stretched thin

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You also don’t need 20% to put down on a house... it’s such a myth! I put 3% down on a house that was $400K (in a highly competitive Boston suburb) and paid about... $90 in PMI a month for a year, until the value was reassessed. Used the money I didn’t spend on the down payment to make some improvements instead. Anyways, turned around 5 years later and sold it for a profit of $200K. Your house is your bank, and the goal is just to get in the game (with or without 20% down). PMI often equates to the cost of dining out for a single meal and isn’t some crippling charge that everyone makes it out to be.

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Thank you! That is very helpful, and confirms my assumptions as well. Basically paying around that right now in rent so I’ll definitely be able to make it work. Glad it all worked in your favor and you came out on top!

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I saved up to buy my townhouse on a $65k salary. And I had monthly payments for undergrad, grad, and car loans. You have to be very on point with your budget and decide what you want. I had roommates until 30, which helped me save. And I prioritized travel budget and deprioritized shopping. When I did travel, I stayed at budget hotels and took the cheaper and less convenient flights. Make your sacrifices early on and don't let lifestyle creep set in. Pick up a side hustle if you can or need to and put all that money towards savings. Are if it makes sense to do a low down payment with a conventional loan. You'll have PMI, but it can be dropped eventually. And with interest rates so low, might be worth it.

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Have you sat down and made a budget? Without increasing your income, it usually requires a lot of sacrifice and living frugally. I don’t know your numbers, but one thing I’d examine is if you made it your focus - how quickly could you pay off your debts?

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OP I don't think you're living as frugally as you think. $350 a month on a 5 year note is at least a $21k car! And you're in a one bedroom more than $2000!!! Unless you're in SF, you should be able to cut that budget down significantly. You can't have it all. If you really want the house, cut from other places in your budget.

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Do you have to keep the car? NYC is so bloody expensive that imo you can’t pull this off without adjusting to the reality of the city and removing something, given that budget I also agree with the other poster who mentioned prioritizing it / making it a primary goal. Auto-withdrawals on first paycheck to a joint account, making your grocery plan around it, etc. If you two are WFH are there costs you don’t have right now? Are you intentionally banking them twd more aggressive debt payoff or down payment fund?

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Is it possible to move out of New York? Others cities may be cheaper on comparable salaries.

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And even NYC has cheaper option. Can commute from JC (still expensive, but cheaper) to save on rent. I personally wouldn't be looking to buy in NYC on anything less than several years of $300k+ HHI. That's just me though.

Something doesn't add up looking at income/debt/cost of property. Seems like you 2 should be able to increase your income.

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OP maybe one of you needs to bite the bullet and get soul sucking high(er) paying job. Or move to lower COL area

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I’m in the same relative financial situation as you (similar income, similar debts, similar rent) and my SO and I manage to save $2.3k / month towards a down payment. It’s not going to be quick, but we also throw all of our bonuses / extra income which help the account grow fast. Take a hard look at your spending and see what you can cut out. $40 here and there purchases make a HUGE difference in savings over the long term!

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Well first get a clear picture of how much you need to save. 20% down actually isn’t that common so the amount to save may not be that large.

Check how much $ your lender would lend you for a primary residence. You can then get a mortgage with as low as 5% down payment. You may also take a first home buyer loan from your 401K if you have some savings there.

What is the first home buyer loan from 401k?

Your salaries will increase significantly after a few years in your careers. Stick to the plan and you will see your savings increase . Don’t get down

You’ll need to make some sacrifices to carve room out of your budget. Focus on paying off the debt before you worry about saving, and in the meantime get creative and try to find a cheaper place to live — even if you only plan to say there for a certain amt of time to allow you to save up. TBH that’s a lot of rent for 130K.

This is what’s I’m thinking, especially if op is remote working full time. Cut the lease and go live somewhere cheaper even if it’s only a year.

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If you have 401K, you can take a loan up to 50% of your 401K savings.

I bought condo in New York City with 10% down payment in 2013, and took 401K loan to cover half of my closing costs and part of the down payment:)). I think if the purchase price is below 450K-475K, you can buy some condos with 10% down payment.

Just had our lender calculate total cost of close on a $500k house = ~$20k 3% down plus closing costs etc. seems doable with $130k income

As a person that spent 2-3 years saving for a down payment here is my advice. I would look at your rental costs and compare it with the cost of owning a home. Will the monthly cost be 2x more than you renting? If so, why even buy? Use the $ you would be saving towards a down payment and instead invest it in the stock market. You also need to factor in how long you plan to stay at the place should you buy. It’s not easy to move or liquidate a home. I’ve missed the 2016 run in stocks mainly because of saving for a home. Since 2018, I started investing most of my income. Now I have way more than 20% for down payment should I ever decide to buy a home in the future. Also consider the fact that it’s a sellers market now too.

I’m currently in your situation. I am the only bread winner in the family - I make 97k. I can afford 20% but plan to put down 5%. I got a fixed 30year traditional for 2.75% with a $50 monthly PMI. Plan to take this and put my money into the stock market. Time in the market > timing the market

SE1 they can afford 20% down but put down 5%. That doesn't sound like a huge risk situation to the bank. They obviously looked at debt to income ratio and assets before approving. And tbh, putting 20% down and having a slightly lower monthly payment only gives you an extra month or so buffer of eating into emergency savings should the unfortunate happen... Furthermore, there isn't that much ROI in a primary home. Particularly when you factor in property taxes (and the deduction limit) and maintenance. You may be lucky and see huge appreciation in a short time, or you may wait 15 years and only see modest appreciation.

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