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Most people need a down payment to buy a home. Most renters don't have enough to make a down payment, I imagine. edit: Wow, I'm probably pretty wrong about thi

Most people need a down payment to buy a home. Most renters don't have enough to make a down payment, I imagine. edit: Wow, I'm probably pretty wrong about this. 3% loans are really quite affordable. Why aren't more people buying homes? Being a renter is total hell

deleted 5y ago
[deleted]
chomp 5y ago
I think that's the tragedy. It's expensive to be poor.
- refurb 5y ago
  If you don’t have $50-$100k for a 20% down payment you’re poor? No.
  - JoeQuery 5y ago
    Your comment does not negate the claim that it is expensive to be poor.
    - refurb 5y ago
      That wasn’t my point.
smackeyacky 5y ago
Exactly - where is that $60k-$80k coming from other than maybe the bank of mum and dad?
- Beached 5y ago
  only need 3% down for most conventional mortgages. I might be out of the loop, but are 2mil+ houses for first time home buyers normal outside of places like Manhattan or the bay area?
- vba616 5y ago
  Everybody on HN makes $500K per year as a Senior Software Engineer with three years of experience.
- true_religion 5y ago
  People usually save for their first mortgage. I worked for 15 years before buying my first house.
polski-g 5y ago
Not really. You can get an FHA loan with only 3% down.
- locusofself 5y ago
  but your offer will never be accepted. someone will offer more down, conventional, or even multiple cash offers. especially for homes in the starter price range.
  - gizmo686 5y ago
    The seller doesn't care about how much you put down. Cash offers will beat a comparable offer with a mortgage contingency. At the margin, sellers may compare equivelent offers based on how likely they think the mortgage is to be approved; but most buyers are pre-approved regardless of down payment or mortgage type, so this wouldn't be that significant of a factor. The bigger factor sellers look at is how much money you offer them. At 20% on a conventional, you may be able to get your lender to wave the appraisal requirement, which would be a help if you try offering much over the list price (unless you also have the cash to make up the difference, which if you need the 3% down payment, you probably dont).
    - seanmcdirmid 5y ago
      Sellers care about down payments in so much as they can gauge how serious you are about closing successfully. Everything else being equal (if the bids are the same, if not it doesn’t matter).
    - locusofself 5y ago
      FHA loans are less attractive to a seller than an equal conventional loan because they have stricter inspection and appraisal requirements.
  - Beached 5y ago
    you can do conventional with only 3% too. your down payment has no affect on the offer chosen, the seller doesn't even get to know.
sologoub 5y ago
EDIT: forgot the link: https://www.hud.gov/buying/loans https://www.hud.gov/buying/loans FHA loans can be 3.5% down ($14k on a $400k loan) and closing costs can often be financed (most of them, but usually not all). There are also first-time buyer programs and other specialized lending options like VA (if you served/active), etc. It’s also not always a good idea to start with an SFD where you are responsible for everything (roof, plumbing, etc). It’s easier to do a condo first and get the hang of it/build some equity. If you can do SFD in a given area for $400k, condos are likely half that or cheaper. Beats renting unless you need the ability to move quickly as selling can take a bit of waiting (unless market turns, and then you could be waiting a few years or have to sell at a loss).
- asdff 5y ago
  In this market sellers will prefer all cash or a traditional loan over these.
  - sologoub 5y ago
    Sellers will prefer cash or a stronger borrower in all markets when given the choice - that’s very relational to seek to reduce risk. There are other ways to help craft an offer that could be stronger, including offering better other terms (usually not just the offering price).
    - asdff 5y ago
      Everyone is waiving contigencies and inspections and anything else they can offer already with their cash offer. IDK if you even have any cards left you could play in your hand with a weaker offer that won't also be played by the person with the stronger offer if they really want the house. It's almost like you have to luck out that no one is driving harder than you on the property.
seanmcdirmid 5y ago
I rented for 9 years in Beijing. An apartment that was technically worth $1 million for sale was renting for $1200/month, buying didn’t make sense at all in that market. Given the American market where rents are much closer to a mortgage payment, it makes much more sense to buy.
nkingsy 5y ago
What’s wrong with renting? Aside from having to move if the owner sells, it’s pretty nice not have to think about maintaining the house. Here in the sf bay (Marin sfh with two kids) our landlords just decided to sell. It’s been stressful, but we found a place that we like better for about the same rent. The owners offered the place to us at a reasonable price, but our monthly payments would have been about double what we pay now, and we would have had to put 20% down. Prices have gone up 40% since we last moved three years ago but rents haven’t budged.
- ipaddr 5y ago
  If you purchased 3 years ago your property would be worth 40% more. In SF you probably left a million on table.
asdff 5y ago
Because a seller is not going to take a 3% offer in this market.

deleted 5y ago

[deleted]

chomp 5y ago

I think that's the tragedy. It's expensive to be poor.

refurb 5y ago
If you don’t have $50-$100k for a 20% down payment you’re poor? No.
- JoeQuery 5y ago
  Your comment does not negate the claim that it is expensive to be poor.
  - refurb 5y ago
    That wasn’t my point.

smackeyacky 5y ago

Exactly - where is that $60k-$80k coming from other than maybe the bank of mum and dad?

Beached 5y ago
only need 3% down for most conventional mortgages. I might be out of the loop, but are 2mil+ houses for first time home buyers normal outside of places like Manhattan or the bay area?
vba616 5y ago
Everybody on HN makes $500K per year as a Senior Software Engineer with three years of experience.
true_religion 5y ago
People usually save for their first mortgage. I worked for 15 years before buying my first house.

polski-g 5y ago

Not really. You can get an FHA loan with only 3% down.

locusofself 5y ago
but your offer will never be accepted. someone will offer more down, conventional, or even multiple cash offers. especially for homes in the starter price range.
- gizmo686 5y ago
  The seller doesn't care about how much you put down. Cash offers will beat a comparable offer with a mortgage contingency. At the margin, sellers may compare equivelent offers based on how likely they think the mortgage is to be approved; but most buyers are pre-approved regardless of down payment or mortgage type, so this wouldn't be that significant of a factor. The bigger factor sellers look at is how much money you offer them. At 20% on a conventional, you may be able to get your lender to wave the appraisal requirement, which would be a help if you try offering much over the list price (unless you also have the cash to make up the difference, which if you need the 3% down payment, you probably dont).
  - seanmcdirmid 5y ago
    Sellers care about down payments in so much as they can gauge how serious you are about closing successfully. Everything else being equal (if the bids are the same, if not it doesn’t matter).
  - locusofself 5y ago
    FHA loans are less attractive to a seller than an equal conventional loan because they have stricter inspection and appraisal requirements.
- Beached 5y ago
  you can do conventional with only 3% too. your down payment has no affect on the offer chosen, the seller doesn't even get to know.

sologoub 5y ago

EDIT: forgot the link: https://www.hud.gov/buying/loans https://www.hud.gov/buying/loans FHA loans can be 3.5% down ($14k on a $400k loan) and closing costs can often be financed (most of them, but usually not all). There are also first-time buyer programs and other specialized lending options like VA (if you served/active), etc. It’s also not always a good idea to start with an SFD where you are responsible for everything (roof, plumbing, etc). It’s easier to do a condo first and get the hang of it/build some equity. If you can do SFD in a given area for $400k, condos are likely half that or cheaper. Beats renting unless you need the ability to move quickly as selling can take a bit of waiting (unless market turns, and then you could be waiting a few years or have to sell at a loss).

asdff 5y ago
In this market sellers will prefer all cash or a traditional loan over these.
- sologoub 5y ago
  Sellers will prefer cash or a stronger borrower in all markets when given the choice - that’s very relational to seek to reduce risk. There are other ways to help craft an offer that could be stronger, including offering better other terms (usually not just the offering price).
  - asdff 5y ago
    Everyone is waiving contigencies and inspections and anything else they can offer already with their cash offer. IDK if you even have any cards left you could play in your hand with a weaker offer that won't also be played by the person with the stronger offer if they really want the house. It's almost like you have to luck out that no one is driving harder than you on the property.

seanmcdirmid 5y ago

I rented for 9 years in Beijing. An apartment that was technically worth $1 million for sale was renting for $1200/month, buying didn’t make sense at all in that market. Given the American market where rents are much closer to a mortgage payment, it makes much more sense to buy.

nkingsy 5y ago

What’s wrong with renting? Aside from having to move if the owner sells, it’s pretty nice not have to think about maintaining the house. Here in the sf bay (Marin sfh with two kids) our landlords just decided to sell. It’s been stressful, but we found a place that we like better for about the same rent. The owners offered the place to us at a reasonable price, but our monthly payments would have been about double what we pay now, and we would have had to put 20% down. Prices have gone up 40% since we last moved three years ago but rents haven’t budged.

ipaddr 5y ago
If you purchased 3 years ago your property would be worth 40% more. In SF you probably left a million on table.

asdff 5y ago

Because a seller is not going to take a 3% offer in this market.