Question
Bigger down payment or smaller home?
I'm considering home ownership within the next couple of years. We have both have new credit and know we will need at least a 20% down payment. We are looking at homes around 380-420k. Our current rent payment is 1600. Saving 20% is about 60k. Would it be better to apply 60k to a smaller starter home around 200k and THEN saving even more for a down payment on a larger home. Or just getting it together and going for the gold. I know I risk fluctuations in the market. But even if I break even on the starter home. Is it worth having a larger down payment (say 100k) on a 400,000 home? Are there any holes in this plan I'm over looking?
1 month ago - 4 answers
Best Answer
Chosen by Asker
You really do not want to equate rent to mortgage payment directly. If you are paying only $1600 in rent, you will probably only be able to carry a $1000 / mo mortgage with ease. There are many costs to home ownership which are not accounted for when renting, things like maintenance, taxes if applicable water, sewer, garbage services. Usually are not integrated in rents, however will absolutely become your expense when you purchase a home. I would opt for a smaller less expensive home, one which you can carry financially with ease. It is easier to move up from a house you can afford than to get rid of a house which you cannot.
by smedrik
1 month ago
Asker's Rating: 
Other Answers
For a first home try and get a house that you can sell in the future at a profit, Look into the area it is in, are the houses around it better or worse? It is better to buy a house where the area is coveted and the neighbors and neighborhood is good. Always go back to the house you like on weekends and evenings to see what the neighborhood is like. You don't want rowdy neighbors
by Hi It's me- 1 month ago
good strategy in my opinion. Better to get a smaller home get your feet wet on home ownership. You may find later that you do not want or need a bigger house. You also may find that you do not like owning a home at all. One thing to remember, do not count on appreciation. Houses generally appreciate over time. Right now this is not really true. So if you are going to make money on a house, make it when you buy the house.
by pvscholar- 1 month ago
in order to afford a 300k mortgage, your income needs to be $100-125k a yr
by Doctor Deth- 1 month ago