For first-time home buyers or those with families, how did you manage to save for a down payment in today’s market? Saving a few hundred dollars a month is challenging enough; how can we possibly save thousands?
What down payment? I’m drowning in PMI.
I borrowed against my 401k when I was in my mid-20s, thinking the trade-off was worth it to get into a home.
Presley said:
I borrowed against my 401k when I was in my mid-20s, thinking the trade-off was worth it to get into a home.
I also took out a loan against my 401k and have no regrets. Owning a home now feels worth it.
@Vega
Doesn’t repaying the loan add significantly to your monthly expenses?
Franklin said:
@Vega
Doesn’t repaying the loan add significantly to your monthly expenses?
The repayment is about $500 a month over five years, which you pay back to yourself. With an FHA loan, you only need 3.5% down, so for a $300k house, that’s around $10k down plus closing costs.
Check for down payment assistance programs in your area. Some offer grants or forgivable loans. Here’s a guide to programs by state: Down Payment Assistance Programs & Grants by State 2024
@Haru
Can I withdraw $10k from a Roth 401k without penalties since I’ve already paid taxes on it?
Hadi said:
@Haru
Can I withdraw $10k from a Roth 401k without penalties since I’ve already paid taxes on it?
With a Roth IRA, you can usually withdraw contributions tax-free. Check with your plan administrator for specific rules for a Roth 401k.
@Haru
I used a first-time homebuyer program in Massachusetts that only required a 3% down payment and covered additional costs with a special program mortgage. It required some classes but was totally worth it.
@Dustin
I also had to take a class, but it was completely online and manageable.
I lived at home until I was 27, which allowed me to save a significant amount.
Back in 2010, I was able to save by cutting costs drastically. My partner and I lived very frugally, I worked a lot of overtime, and we moved into a cheaper living situation. We managed to save $10k in one year.
I put down only 3% initially with PMI, then worked to build equity quickly and refinance to a better rate, eliminating PMI in the process.
Received a wrongful death settlement which, although tragic, helped with my home purchase.
I saved aggressively before starting a family, managing to put away $60k over two years. This helped me buy in a hot market and later sell for a significant profit.
It took me 10 years with multiple roommates to save enough for a down payment.
Thorne said:
It took me 10 years with multiple roommates to save enough for a down payment.
I also shared accommodation to cut costs. It’s a sacrifice but pays off in the long run.
I saved on student loans during the Covid pause and received a small inheritance, which together enabled us to make a 5% down payment.
My partner and I saved by living below our means, having no car payments, and not saving much for retirement for a while.