Author Topic: How Much Did You Save Before Buying a House  (Read 15925 times)

Evie

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How Much Did You Save Before Buying a House
« on: February 02, 2014, 12:55:57 PM »
Hoping for a little advice on saving to buy a house in a high cost of living area.  We are 33 and have never bought (renting same apt for six years now).   We've been watching the local market for four years, and are assuming a 300k home (tough to find, but they do occassionally present themselves).   We currently have 30K saved, with an additional 4k emergency fund.

How much do we need to save?  Right now I am playing with the following numbers: 

$30,000 (10% down)
$10,000 emergency fund
$10,000 closing costs
$5,000 appliances, moving costs, etc.

55K Total savings

I hope that having 30k for the down will get us a lower interest rate and keep us out of fhA (which now has permanant PMI).  We can get to this goal in maybe two years (possibly sooner if DH's business has a good year).

In order to do 20% down we would need 85 k, which would take us 5+ years

Given that we are 33 years old, I am not sure we want to wait until we are almost 40 to buy our first house.  I don't believe that renting is 'throwing our money away' since we don't have maintenance costs, but I'm not sure delaying for another five years really helps us if we can get into something that costs about the same as our rent (even including taxes, homeowners ins, and pmi) and we can paying down the principle. 

The other thing to consider is that since we are looking at the bottom of our local market, what value should we place on planning for maintenance?

For example there is a house for sale currently that they might take 300k on, with a new roof, newly rennovated, new siding, newer kitchen and bathroom, etc.  The house is on the small side, which is why it has been sitting.  Do we really help ourselves by passing up that opportunity to  save for two more years, and then buy something at the same cost that hasn't been rennovated and needs a new roof in five years?  (Since we are looking at the bottom even these issues wouldn't likely result in enough savings to compensate for the difference in price). 

What do you think?  How much did you have in savings when you bought?

Did you save money for closing, or assume the sellers would pay it?  It seems like so much additional money when you are dealing with 300-400k homes.
 

FastStache

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Re: How Much Did You Save Before Buying a House
« Reply #1 on: February 02, 2014, 01:08:14 PM »
You can get a conventional loan with 5% down, but would need to pay PMI until you have 20-22% equity in the house.

Depending on the situation, some of the closing costs can be negotiated between the buyer and seller.

I would increase the 10K emergency fund, and the 5K for the appliances, etc can vary a ton depending on what is currently in the house and how fancy you want to get. You might want to shop around at home depot, some scatch and dent places, etc to get a rough idea of prices for repairs, appliances etc.

I put about 200 bucks for house repair and maintenance each month in a house built in 2006. If it was an older home, I may budget more for roof repairs, etc.

I bought my first home with a FHA loan before the rules made it have permanent PMI. I refinanced to a conventional loan later on. This is still an option today, but really make sure you look at all the numbers and understand all the stipulations.

marylanddollarbydollar

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Re: How Much Did You Save Before Buying a House
« Reply #2 on: February 02, 2014, 02:29:15 PM »
Hi,

I was in the same boat as you for the past couple years, and made the leap recently (October 2013) into a home in a pricey market.  I agree that the emergency fund is important. Additionally, you can request the seller purchase a home warranty, or buy one yourself, to blunt the trauma of any repair issues that might arise.  I also tried to educate myself the best I could, and used a good home inspector to try and predict where issues would arise. 

Have you thought about a piggyback loan?  I shopped mortgages and mortgage brokers for months, and was told the piggyback/ 80-10-10 loan structure is virtually nonexistent. Turns out that's 100% untrue.  By putting 10% down, and having the bank split my mortgage into two, I avoided PMI and I was able to opt out of escrow (i.e., thank you very much Mr. Bank, but I'll pay my own bills).  The downside is that you'll have to pay a premium for the piggyback loan in the form of a higher interest rate.  But, you can negotiate a lower interest rate by opting for a loan term shorter than the normal 30 years.  I opted for a 20 year rate, then I'm paying off the second portion of my 80-10-10 loan as fast as possible.  That'll allow me to achieve 20% equity within the next few months, and avoid having to pay PMI, and the monthly bleed of escrow.  Not for everyone... but it was the best way I could personally live with a loan structure without getting 20% down.  I would've preferred to put 20% down, but, que sera, sera.   

As for closing costs, I found three reactions by sellers: (1) "heck no, you're not getting closing costs"; (2) "ok, sure, but we're countering with a higher sales price to split the difference"; or, my favorite, (3) "ugh, you win... we'll give you the highest percentage allowed." 

Have you considered using Redfin as your buyer's agent?  I have VERY mixed feelings about them, but, they did give me a percentage of the commission back in the form of a tax-free rebate.  (I'd check your local tax laws just to make sure, but Redfin doesn't report the rebate check, so, I'll let you take that information and run with it.)

Some other issues: Make sure you're clear on whether there's a utility easement (aka "front foot fee), or any other "hidden" annual fees related to the property ("ground rent" anyone?).  Your standard real estate sales contract is designed to protect you by asking the seller whether such fees exist, so make sure the contract has those clauses.   Also, the "piggyback" portion of a piggyback/ 80-10-10 mortgage most likely will take the form of a home equity line of credit (HELOC).  This loan form is even scammier than your underlying mortgage, but, I was able to lock in a rate, and I'm waging war against it. 

Sorry if that was too wordy, but I've spent months pondering the same questions you asked.  And, it made sense for me to make the best out of not having 20% down. 
 

Weedy Acres

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Re: How Much Did You Save Before Buying a House
« Reply #3 on: February 02, 2014, 04:05:22 PM »
My first house, I did an FHA loan and got into $120K of debt with about $6K cash.  I would never do that again or recommend it to anyone. 

I wouldn't buy with less than 20% down. 

I've never had more than about $4K in closing costs, including the prepaids, etc. and while it's possible your taxes are much higher than mine, 10K seems huge.  Make sure your loan costs aren't more than $2K or so, or you're overpaying. 

Appliances:  we recently got a kitchen full of used (white) appliances off CL for $300.  Go cheap until you've got more cash saved to get something nicer (if you really want it then). 

Moving:  DIY and Uhaul shouldn't run you too much for an in-town move.  Add in pizza and drinks for friends you bribe to help you load/unload, and you're still way under budget.

The last thing I'd question is your savings rate.  Doing the math, if it'll take you 5 years to save from 30 to 85K, you're only saving about $1000 a month.  Try posting your budget here and see what tips you can get to slash that and radically up your savings rate. 

catccc

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Re: How Much Did You Save Before Buying a House
« Reply #4 on: February 02, 2014, 04:24:04 PM »
We still haven't bought (not sure what we want/can't find what we think we want).  But we have been saving for a long time, and intend on putting down a lot or possibly paying cash if we are way below budget.  Ideally we want a home under $300K, but we've considered houses as low as $100K.  We have around $120K earmarked for a house.  Or maybe $150K.  This is all just non-retirement funds, could be house funds, emergency funds, whatever.

HappierAtHome

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Re: How Much Did You Save Before Buying a House
« Reply #5 on: February 02, 2014, 05:28:14 PM »
The median house price in my city is now $575k. And we wouldn't buy with anything less than a 20% deposit. A 50% deposit is even better.

Can you cut down your expenses to save faster?

And does it even make sense to buy in your city? If paying a mortgage will be significantly more expensive than renting, maybe it's time to consider renting long term instead?

Evie

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Re: How Much Did You Save Before Buying a House
« Reply #6 on: February 02, 2014, 05:37:13 PM »
Thanks everyone--great feedback! 

Not sure I would be comfortable with a piggy back loan--would probably try to borrow money from our parents first. 

Our savings rate is about 1k a month and that is with us being pretty careful, but I will post a budget at some point. 

There are no 100k or 200 k homes in our area of the country. They don't exist unless it is a mobile home age restricted to below 55 years old.  Hunting for something under 300k will take a long time of monitoring the market since our median home price in this area is 500k.

Our rent and a 300 k home would cost about the same including taxes, insurance and even pmi (though we would have to pay water and trash which would add approx 200).





Cheddar Stacker

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Re: How Much Did You Save Before Buying a House
« Reply #7 on: February 03, 2014, 09:33:17 PM »
We saved a very un-mustachian $0. Scratch that, we actually saved $-2,500 as we financed the closing costs for our first home. This was in 2002 so regulations were a bit loose (good times), and obviously this wouldn't work anymore. We did have some savings but it wasn't necessary to use for a down payment.

If I were in your position, I would save as much as possible first and put off all urges to buy until you know you're financially ready. Don't become tied to one particular house. Re-read the MMM blog post on how to buy a house http://www.mrmoneymustache.com/2013/09/04/how-and-how-not-to-buy-a-house/.

Good luck!

gooki

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Re: How Much Did You Save Before Buying a House
« Reply #8 on: February 04, 2014, 12:50:47 AM »
In 2005 we had saved 45k on our 270k house. Borrowed what was necessary from our parents to get over the 20% deposit mark which probably saved us a few thousand dollars in additional fees.

We had about 2k left in savings/emergency fund after said purchase.

Jappe

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Re: How Much Did You Save Before Buying a House
« Reply #9 on: February 04, 2014, 03:16:44 AM »
Saved up +- 85k in 4 years (lived at "hotel mom" and only paid 200/month to my parents. I also cooked once a week, did the dishes, etc...)
Bought my house for 219k . I took a 170k loan and used 70k of my savings (49k difference, 11k registration fees, 5k notary and bank costs and 5k for furniture / house items since I had nothing). Kept the 15k for emergency, the purchase of a car (didn't get one until 8 months later for 600), ... and just to be sure to have everything covered that I might had overlooked.

SwordGuy

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Re: How Much Did You Save Before Buying a House
« Reply #10 on: February 04, 2014, 06:53:27 AM »
There are no 100k or 200 k homes in our area of the country.

I really found that surprising.   Just for grins I checked the SFO bay area and the NYC area on Zillow and found a homes under $300k.

What part of the world do you live in?


dragoncar

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Re: How Much Did You Save Before Buying a House
« Reply #11 on: February 04, 2014, 06:58:43 AM »
There are no 100k or 200 k homes in our area of the country.

I really found that surprising.   Just for grins I checked the SFO bay area and the NYC area on Zillow and found a homes under $300k.

What part of the world do you live in?

Malibu?

horsepoor

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Re: How Much Did You Save Before Buying a House
« Reply #12 on: February 04, 2014, 08:23:36 AM »
The timing of purchase has had so much more to do with how our home purchases have ended up than has our down payment.

I bought my first house as a single 26 year old when prices were rapidly rising.  Paid $90K with 5% down, put in some sweat equity, refied in a year to get out of PMI, then sold the next year for $176.  NOT typical results, but there you go.  Saving more towards a down would have been to my detriment in that case.

Then I got married and we responsibly put down 20% on a house I wish, in retrospect, we had never bought.  It seemed cheap at $150K, for a 3br/2ba moving from California to Idaho.  That house is now worth right around the $105K we owe on it, and we lose a little money renting it out; this could be corrected if we had enough equity to refinance it.  The current value is an improvement over the $80K it was worth a couple years ago, so we hope to get out from under it in the near future.

In 2010, with the market tanking, we took the leap to buying a house in a MUCH nicer neighborhood much closer to where DH and I now work (we were commuting opposite directions when we bought the 20% down house) as a bank foreclosure for $179K with 5% down.  We were able to refinance to 3.5% fixed and get out of PMI after about 2.5 years, and the house is now worth almost $300K according to Zillow (my guess would be more like $250, but still some major appreciation).

Anyway, my point is that market conditions and interest rates play a huge role in when the time is right to buy. Of course you never know for sure what the market is going to do, but it does seem possible to have a pretty good idea of the trends.  Real estate can also be a big anchor if your mortgage and other expenses don't leave much at the end of the day.  Consider what might happen if the bottom falls out of the market, and you need to move for work, or if what you can afford now might not be enough house later (if kids are added to the picture or whatever). 

Numbers Man

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Re: How Much Did You Save Before Buying a House
« Reply #13 on: February 04, 2014, 09:00:27 AM »
Your closing costs of $10,000 and appliance/moving expenses for $5,000 is insane.

I can't see your closing costs being more than 1% of the loan. You will get a credit for taxes during your closing which will buffer any points and other junk fee closing costs. You can also seek out the no cost, no points closing cost option where you usually only pay an appraisal fee and a minimal fee to the mortgage banker. Although these no cost plans are at a slightly higher interest rate (maybe 1/4 point higher).

Moving expenses the last time I moved within a 20 mile distance was about $500 from a house. And appliances are usually included in the sale of the home so you really don't need new appliances.


Spork

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Re: How Much Did You Save Before Buying a House
« Reply #14 on: February 04, 2014, 09:26:52 AM »

* My first house: I saved 20% for down payment. That might have been a little bit of an under estimate... We had to then buy furniture, window coverings, appliances, etc.  And those went on credit.  (We're talking 30 years ago.  It killed me at the time, but I gritted my teeth and did it.)  It was a very low cost house: in the upper $70k I think.

...but my philosophy was always to work toward the house I wanted and have it paid (for E/R).  My last house I saved 100%.  But some of that "savings" was just paying off the house before and selling it, then saving some more.

Cromacster

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Re: How Much Did You Save Before Buying a House
« Reply #15 on: February 04, 2014, 09:46:25 AM »
5,000 for appliances and moving?

Move yourself: Truck rental...maybe 100 per day if its a really really big truck

Appliances:  for 300,000 if better already have appliances.....

There, just saved you $4,900.

PMI, if you really don't want to be paying PMI and can't come up with 20%.  You can always ask your loan officer if you can pay the PMI upfront.  Depending on your credit its around 1% of the home value.  You will usually come out ahead with this route.

If its your first house and you are still relatively young, you can't expect it to be the glitz and glam that the HGTV wants you to think you need.  Hell, being mustachian you should never buy an HGTV esque house....Unless you buy all the appliances on craigslist for 70% of their true value and do all of the renovation yourself..

Update to Answer original question:  Wife and I bought a house, put 20% down (40k) and still had around 50K left over.  So I guess we saved 90k before purchasing a fixer upper....and it has appliances.
« Last Edit: February 04, 2014, 09:49:31 AM by Cromacster »

soccerluvof4

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Re: How Much Did You Save Before Buying a House
« Reply #16 on: February 04, 2014, 11:49:27 AM »
20% MINIMUM. Do what you gotta do to get to that point.

Thegoblinchief

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Re: How Much Did You Save Before Buying a House
« Reply #17 on: February 04, 2014, 12:52:16 PM »
Avoid PMI, especially any loan with permanent PMI. At the very least, do the math on how much that extra $50-$100 a month translates into effect APY interest rate. You'd be surprised. A 5% loan suddenly becomes closer to 6-7% effective, depending on your loan amount.

Having bought with 5% down right before the crash, I really wish we'd saved for the traditional 20%. We're currently $30K+ underwater, and not in a fancy McMansion neighborhood either (average home value is around $100K).

TLV

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Re: How Much Did You Save Before Buying a House
« Reply #18 on: February 04, 2014, 02:04:00 PM »
Given that we are 33 years old, I am not sure we want to wait until we are almost 40 to buy our first house.  I don't believe that renting is 'throwing our money away' since we don't have maintenance costs, but I'm not sure delaying for another five years really helps us if we can get into something that costs about the same as our rent (even including taxes, homeowners ins, and pmi) and we can paying down the principle. 

...

Our rent and a 300 k home would cost about the same including taxes, insurance and even pmi (though we would have to pay water and trash which would add approx 200).

Based on this I'm not sure why you're in such a hurry to buy if the costs are so close. Do you actually mean that the monthly payment would be about the same for buying vs. renting, so that the total cost would be lower as some is going to principal? Have you checked this with a buy vs. rent calculator?

We're in a location with similar housing prices - if we want under ~$350k we'd have to pay cash and fix it (houses in that range are generally not in good enough condition to get a mortgage) or go with a condo instead of a SFH, which we're not willing to do. The buy vs. rent #s are fairly close - the break-even point goes from about 5 years to never with minor tweaks to the variables. Since we intend to move away to an area with less expensive housing eventually (probably 3-7 years), we've decided to continue renting until then as it appears to be far less risk.

Evie

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Re: How Much Did You Save Before Buying a House
« Reply #19 on: February 05, 2014, 11:36:08 PM »
$10,000 for closing costs came from several online calculators (I think most use 3-4% loan value). 

Hah, most of the homes in the 300k range in this area have no stove, no fridge, no washer, no dryer, no dishwasher, nada.  I would be willing to buy used, but I figured setting 5 k would give us a bit of a buffer in case there were other things.   

I am looking in Santa Barbara/Ventura.  As a previous poster pointed out anything under 300k either 1) goes cash and can't be mortgaged; 2) is 1 bed 1 bath under 700 square feet 70+ years old no insulatation needing at least 10k in basic work far from a bus stop or any job.

We mainly want to buy because we want to stay here long term.  But we are willing to wait. 

lordrtype1

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Re: How Much Did You Save Before Buying a House
« Reply #20 on: February 06, 2014, 03:11:04 AM »
These are the two houses I've bought, but mind you, every market is different, and here, median house price is about 99k-118k. Anything over 250k is probably in a gated community, and well over 3000sq ft.

My 1st:

Cost: 50k
Appraisal: 50k
Condition: Move in ready (new roof, 3b/2b/2car+ on corner lot, full appliances, decor dated but great condition, 1700sq ft)
Down: 5% (bond and 1% of my own money)

-it was bought 15+ years ago, so int rates are irrelevant, because they're at least 6 points lower now with lousy credit, but my payment, with escrow was 390/mo on a 30 year.  this is pre mustache, so forgive me.

Number 2:

Cost: 40k
Appraisal: 67k
Condition: Rough, but very livable (needed roof just to get 2 layers off, but that good otherwise, 3b/2b/1car, 5000sq ft lot, 1700sq ft house, privacy fenced, paved driveway to garage in back, almost no yard work)
Down: 3% (all me)
Payment: 430/mo with escrow

-fixer upper, and since the loan was only for about 70% of value, no PMI, even when I refi'd for money to finish the fixing up (also pre mustache)


The first house I actually paid it ahead for the year I had it, but 9/11 happened, and working in a city driven by building airplanes exclusively, everybody was affected badly.  I lived there about 2 years.  Hard to afford a house with no income.

Same thing happened to number two: paid double payments while I was working, but I only worked about 2 years before the economy crashed, and while my costs were low enough that I stayed there for two years trying to find some other work, it never panned out, and I only paid so far ahead.

I didn't need to spend as much to find a great house, and I could afford 125-150k house (built the way I wanted, for that matter), but the idea of paying more to own a house than renting seemed as silly to me as renting.  Around here, 1bed studios can rent for 400/mo, but I I'd just stay home, since my bedroom is about same size as most.  2bed start around 500, but you gotta look hard for one that you want to feel safe in at that price.  most are 600+.  My mortgages were never higher than 500/mo.

I'm a noob, so I don't know everything about this, but I know saving more up front, keeping the term short and sweet, and paying everything you can to be done in a few years is always better than borrowing at your limit.  You pay one off, you can use it as a down on the next.  If I paid off a 70k house, I could sell it and buy a 140k house with 50% down and my payments wouldn't change.  So I'd have more house, and I could STILL pay it off quick!  Learn from my mistakes!

-FYI all I saved was the down. Don't do that!  Not a good idea, in my opinion, but others might say different.

dude

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Re: How Much Did You Save Before Buying a House
« Reply #21 on: February 06, 2014, 07:56:13 AM »
Only put down 5%.  Home prices in our area are very high, so saving 20% would have taken a LONG time.  Pulled the trigger when we did because I had one year from the time I moved here to have my employer cover all closing costs (which were @ $7,000), and because we found a GREAT place which the seller was willing to sell to us directly, i.e., no brokers (this shaved a good $15,000 or more off the prevailing market price at the time and in essence gave us built-in equity).  Got a first and second mortgage, so no PMI.  The second was a high interest rate, but was only 10% of the loan.  Have since consolidated and re-financed to a VA loan at 4.2% (no PMI with VA loans either).  Could easily rent out place out right now for about $600 more/month than we are paying for mortgage/taxes/condo fee.

Mustachian?  Probably not, but I don't have any regrets and our FIRE plans have not been affected or de-railed by the purchase.

MissPeach

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Re: How Much Did You Save Before Buying a House
« Reply #22 on: February 06, 2014, 02:33:39 PM »
I wasn't quite sure if you were really looking or just checking local prices online. I would also find out if $300K is the real price. Where I live a 2 bedroom condo sells for $500-600 but many realtors put up listings for $300 to generate offers because they know it will sell for $500K+ anyway.

Are either of you two military or related to military people? Navy Federal sometimes has $0 down loans and with loans under 20% they usually don't charge PMI.


Dicey

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Re: How Much Did You Save Before Buying a House
« Reply #23 on: February 06, 2014, 09:53:33 PM »
There are no 100k or 200 k homes in our area of the country.

I really found that surprising.   Just for grins I checked the SFO bay area and the NYC area on Zillow and found a homes under $300k.

What part of the world do you live in?

If I lived in Fayetteville, NC, I'd think Bay Area prices were pretty outrageous too. But I am a homeowner in the Bay Area and Evie's 100% right. There are no single family homes in reasonable commuting distance, to SF under 300k. Shitty areas with high crime rates included. Unless of course, you're talking about a tiny condo with huge association fees in a shitty area with high crime rates. Your comment came off as mighty glib to me, swordguy, and not particularly helpful to Evie either.

And I love ya, dragoncar. Your Malibu quip was absolutely hilarious! Obviously you haven't shopped for real estate there. ROFL! Hardeeharharhar.

pdxvandal

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Re: How Much Did You Save Before Buying a House
« Reply #24 on: February 06, 2014, 11:05:56 PM »
Put 3-5% down on my last two primary residences in Western Oregon (2001 and 2005). It's worked out fine albeit with several refinances. Although I plan to put down 20% on my next primary residence purchase, if and when that happens.

I simply didn't have the dough in my 20s/early 30s to put down 15-20%. I have no regrets.

Dicey

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Re: How Much Did You Save Before Buying a House
« Reply #25 on: February 06, 2014, 11:13:33 PM »
Hoping for a little advice on saving to buy a house in a high cost of living area.  We are 33 and have never bought (renting same apt for six years now).   We've been watching the local market for four years, and are assuming a 300k home (tough to find, but they do occassionally present themselves).   We currently have 30K saved, with an additional 4k emergency fund.

How much do we need to save?  Right now I am playing with the following numbers: 

$30,000 (10% down)
$10,000 emergency fund
$10,000 closing costs
$5,000 appliances, moving costs, etc.

55K Total savings

I hope that having 30k for the down will get us a lower interest rate and keep us out of fhA (which now has permanant PMI).  We can get to this goal in maybe two years (possibly sooner if DH's business has a good year).

In order to do 20% down we would need 85 k, which would take us 5+ years

Given that we are 33 years old, I am not sure we want to wait until we are almost 40 to buy our first house.  I don't believe that renting is 'throwing our money away' since we don't have maintenance costs, but I'm not sure delaying for another five years really helps us if we can get into something that costs about the same as our rent (even including taxes, homeowners ins, and pmi) and we can paying down the principle. 

The other thing to consider is that since we are looking at the bottom of our local market, what value should we place on planning for maintenance?

For example there is a house for sale currently that they might take 300k on, with a new roof, newly rennovated, new siding, newer kitchen and bathroom, etc.  The house is on the small side, which is why it has been sitting.  Do we really help ourselves by passing up that opportunity to  save for two more years, and then buy something at the same cost that hasn't been rennovated and needs a new roof in five years?  (Since we are looking at the bottom even these issues wouldn't likely result in enough savings to compensate for the difference in price). 

What do you think?  How much did you have in savings when you bought?

Did you save money for closing, or assume the sellers would pay it?  It seems like so much additional money when you are dealing with 300-400k homes.
 

Okay, Evie, I'm in the Bay Area and I'll take a swing at your question(s) in hopes that it helps. I'll start at the end and then jump to the beginning.

For reference, DH and I just paid cash for a 2600 sf house about 20 miles east of SF (DH walks to work and I am RE). It was a short sale and we had to outbid 14 other people for the privilege of paying almost a million bucks for it. (Please don't tell me it's too big. We have a college kid at home and my MIL, plus her friend Al Z. Heimer.) While our new house was in escrow for eight grueling months, we continued to house shop. We also have another house that we are getting ready to sell, so we are more than a little familiar with the current market. More on that later.

We would not have been able purchase our new home if I had not bought my first house with only 10% down way back in 1988, when I was thirty and single. I had a year's salary in the bank at the time, but I only put 10% down because the house needed some work and I needed to have an emergency fund to sleep at night. Yes, I paid the dreaded PMI for eight years and it was worth it. PMI is a tool that lets you leverage the cash you have now. If you put 10% down on a $100K house and later sell it for $120K, you haven't just made 10%, you've doubled your money. (Simplified for example's sake people, I know there are other costs and considerations. Lots of them.)

So, based on my personal experience, I'm generally in favor of buying vs. renting, even if you put down less than 20%, to get into your first house. I think that an 80/10/10 as mentioned previously is absolutely worth considering. Start looking for a local credit union that buys and holds RE loans and build a relationship with them now. Patelco is the first one that comes to mind. Also Fremont Bank is local and RE friendly.

Other thoughts: buying a house can feel like a huge ball and chain and it's not easy to get rid of if you decide you don't like what you've bought. Spend a lot of time figuring out what you want and where it should be. Practice making the anticipated mortgage payments until they feel comfortable. Go to as many Open Houses as you can. Surf the listings as close to daily as you can manage. Study, study, study the market. Ask every recent-ish home buyer you know how they feel about their purchase, especially among your peer group. It can be frustrating to talk to your parents, because they often just freak out at current prices 'cause they bought their home thirty years ago.

Now, here's the "more on that later" part. It is possible that the Bay Area market is inflated at the moment. The current supply of available housing is well below average, driving up prices for the few that are on the market, sparking bidding wars. Mortgage rates are still at historical lows. While it is guaranteed that they will rise, it is not known how quickly that will happen. So you're looking for that sweet spot between reasonable mortgage rates and a house that is priced right that suits most of your needs and at least some of your wants. (Stainless Steel appliances are a bitch to keep clean. Highly over-rated, IMHO.).

If I were in your shoes, with my experience, I think I'd start saving like it was an emergency right now and watch from the sidelines for a little longer. I'd wait until the supply of houses increases, which might ease demand a bit. OTOH, in the Bay Area, we are all feeling the inflationary effects of a booming tech industry. It could be years before we see any easing in the market if Apple, Google, et al keep up the current torrid pace. You can't really know. You have to learn all you can, save as hard as you can and then trust your gut.

Finally, I have purchased six houses to date. Each time, I knew in my gut which was the right house the moment I entered it. Four times, the house I bought was the only house I looked at before making a successful offer. I attribute this remarkable string of "luck" to preparation. I knew it when I saw it and I had my ducks in a row so I could pull the trigger. Haven't regretted a single one of them.

Hope this helps, Evie. Good luck to you!