My spouse and I earn a combined $200k annually and have saved up $260k. We’re looking to purchase a home priced around $400k and are considering a 15-year mortgage. How much should we put down, and how much should we set aside for closing costs, repairs, etc.?
With your income, savings, and the home price you’re considering, have you thought about buying outright in less than two years? You could avoid closing costs and extra fees, plus there are benefits to renting in the short term, like avoiding property taxes and maintenance costs. Buying without a mortgage could be feasible in about 18 months.
@Whitney
Even with a cash purchase, you’ll face some closing costs, and it’s wise to work with a reputable Realtor. Finding a good one can make a significant difference, even though there are many unremarkable ones out there.
A good rule of thumb would be to put down 20%, so $80k. Set aside around $10k for closing costs.
Which state are you planning to buy in?
Haru said:
Which state are you planning to buy in?
Virginia
Haru said:
Which state are you planning to buy in?
Virginia
To avoid private mortgage insurance (PMI), consider a down payment of 20% or more. Closing costs can vary, but $15k is a reasonable estimate considering various fees.
Putting down $100k and saving some for closing costs is sensible. If you want to be debt-free sooner, consider putting down $200k and making additional annual payments on a 15-year mortgage.
Reese said:
Putting down $100k and saving some for closing costs is sensible. If you want to be debt-free sooner, consider putting down $200k and making additional annual payments on a 15-year mortgage.
I was considering putting down $225k to accelerate payoff, adding $1k monthly to the mortgage. But this would leave about $25k in savings after closing costs.
@Mai
How much do you usually save each year? With no other debts, replenishing your savings shouldn’t be too challenging.
@Mai
Having $25k left in savings is manageable. Avoid major renovations for a couple of years while you rebuild your savings. Putting $225k down is a smart move.
@Mai
Instead of extra monthly payments, opt for the standard 15-year loan. The lower interest rate over 15 years saves more compared to a 20-year mortgage, even with additional payments. Consider refinancing options like a cash-out refinance or a home equity line of credit (HELOC) if needed.
With current market conditions, consider putting down just 5-10% and investing the rest in assets that generate income. This strategy provides a safety net in case of job loss and makes your money work for you.
Use an online amortization calculator to explore different scenarios and decide what works best for you.
I’d recommend putting down as much as possible, maybe even $175K, to save on interest payments over time.
Given the uncertainty in high-earning but volatile industries, consider keeping a larger buffer in savings. We only needed about $30k for cosmetic repairs on our home.
Consider a 20% down payment on a 30-year fixed mortgage. You can still make additional payments that go directly to the principal. Explore financial tools like Money Market and High Yield Savings accounts, and calculate potential growth with a compound interest calculator to see the long-term benefits of different saving and investment strategies.
I was in a similar situation and chose to put down 40% on a $420k home, reducing my mortgage payments significantly. It’s comforting to have the option to pay off the home or invest in another property.
With a $200K down payment, you could potentially pay off your mortgage in less than 15 years. If the home needs significant repairs, keep $80-100K on hand, as full house rehabs can be quite costly.
A 20% down payment will help you avoid PMI and possibly escrow. The exact amount you’ll need for closing costs will depend on the house.