Author Topic: How quickly did you get your first home deposit? (Read 2132 times)

MrThatsDifferent · « **on:** August 22, 2020, 12:52:13 PM »

I’m curious, as I try to navigate this new line of thinking about home ownership:
1. How much deposit did you have for your first home?
2. Did you take advantage of any first home buyer’s schemes?
3. How long did that take you to accumulate?
4. Did you put your investments on hold or firehosed your money for the deposit?
5. What, if anything, would you do differently or better now?

Thanks any and all that share any insights.

haflander · « **Reply #1 on:** August 22, 2020, 01:07:11 PM »

Great questions, and ones I have been wondering about lately myself. Sorry, but just PTF.

We may be looking to buy a home a year from now, and I'm contemplating pausing 401k contributions (other than getting the company match, of course) to build the highest down payment amount possible.

Metalcat · « **Reply #2 on:** August 22, 2020, 01:13:16 PM »

Quote from: MrThatsDifferent on August 22, 2020, 12:52:13 PM

Just curious, what do you mean by new line of thinking?

SimpleCycle · « **Reply #3 on:** August 22, 2020, 01:25:44 PM »

My first house we put down $52k. It was not DW's first house, so no first time homebuyers benefits. We had the downpayment in investments from the sale of DW's house two years prior. We moved from investments to cash when we started looking for a home. The only thing I would do differently is move the money sooner - in retrospect we took a risk having our downpayment invested when our time horizon was short.

MrThatsDifferent · « **Reply #4 on:** August 22, 2020, 01:33:29 PM »

Quote from: Malcat on August 22, 2020, 01:13:16 PM

I was planning on being an “always renter” but economics and COVID are moving me to think about a safe space of my own where I may need to nest longer than planned.

GuitarStv · « **Reply #5 on:** August 22, 2020, 01:52:39 PM »

Quote from: MrThatsDifferent on August 22, 2020, 12:52:13 PM

1. 60,000$
2. Yes, we used Canada's first time home buyer plan to add another 40,000$ to the amount we had saved, so 100k total.
3. Two years
4. We continued to invest, but at lower amounts than usual
5. We would have made more money if we had invested the downpayment rather than used it towards paying off the house. Our home has appreciated at a rate faster than our investments, but it would have done do even if we put a smaller downpayment in. I didn't expect the historically low interest rates to continue forever. Given that foreknowledge I would have done things differently. But put in the same situation with the same information, I still think I'd do the same today. :P

sparkytheop · « **Reply #6 on:** August 22, 2020, 01:54:59 PM »

Quote from: MrThatsDifferent on August 22, 2020, 12:52:13 PM

MaybeBabyMustache · « **Reply #7 on:** August 22, 2020, 01:56:25 PM »

I’m curious, as I try to navigate this new line of thinking about home ownership:
1. How much deposit did you have for your first home? - $200k
2. Did you take advantage of any first home buyer’s schemes? - none really available
3. How long did that take you to accumulate? - we sold company stock we'd been holding. ~4 years or so to accumulate?
4. Did you put your investments on hold or firehosed your money for the deposit? - We continued to invest the max in our 401K, but that was our only savings/investment we made during that period of time.
5. What, if anything, would you do differently or better now? - Can't think of anything specific

Much Fishing to Do · « **Reply #8 on:** August 22, 2020, 02:14:35 PM »

I think I put down somewhere in the 20% range (~30k on a 150k home) about twenty years ago. We were making as a couple maybe 90k combined and were good savers so that wasn't hard to come up with during the short stint we lived in a big city where we would not have bought anyway. I've pretty much always been self-employed and got a much better deal by my parents cosigning if I'm remembering correctly, which they did, though I'm sure whatever the interest rate was would sound ridiculously high today. I remortgaged them off of it a couple years later as rates were falling and I then had a good long self-employ history and more down payment to add to it.

I don't think the down payment is really all that big a deal as long as you don't get killed on interest rate/fees/PMI. I do think its important to have a house payment you can very easily afford and a mortgage you CAN pay off completely within a decade as I did (whether you do or not....I don't think its that important to pay off a mortgage quickly and find the payoff or dont pay off arguments kinda insignificant in difference in the big picture, I just think its important to be able to, i.e. that the house is not some huge nut big picture...). Over the last 20 years we've put another 100k into it with cash making it our forever home (tons of outdoor living space, finishing the large basement for the teenagers, etc). Today maybe its worth $350k, no idea really, and that's less than 10% of my TNW. I realize if I lived in a HCOL area that wouldn't have been possible, but then again I could never live in most places that are HCOL.

I wouldn't bother buying a house that you don't plan to stay in for quite a while. Owning a house is a pain in many ways and the only really great reason to own it I know of is so nobody can make you move.

NotJen · « **Reply #9 on:** August 22, 2020, 02:17:07 PM »

Quote from: MrThatsDifferent on August 22, 2020, 12:52:13 PM

1. $32k (20% down)

2. None were available when I purchased.

3. 2 years (I was 3 years out of college - first year "extra" went into paying off student loans and a car, next two years were for home purchase, XH dropped down to part time to finish his degree, and we still made our savings goal and purchased the house earlier than planned!)

4. It was pretty early in our careers, and our employers both had generous profit sharing programs - I got 10+% a year and XH got 25% a year directly to our retirement accounts. I didn't have access to a 401k then, but put some extra into a Roth each year - on the normal retirement path, we didn't need to save much extra then, so there was nothing to put on hold. So, firehose into the savings account (which - omg - creeped up to 5% interest as we were saving!).

5. Nothing, really. We bought a home I still like 14 years later, at a price we could easily afford on one salary. Worked perfectly when we ended up divorced.

secondcor521 · « **Reply #10 on:** August 22, 2020, 04:14:56 PM »

Quote from: MrThatsDifferent on August 22, 2020, 12:52:13 PM

I'll answer twice, first for myself and second for my DS25 who is finishing college now and will probably buy in a year or two.

1. 20% down back in 1993. I think the purchase price was $63K.
2. Nope, conventional 80% mortgage. I think it was at 7.5% which was the going rate at the time. I also kind of think that there weren't many first time buyer programs back then, other than maybe the first time homebuyer IRA withdrawal exception (which we didn't use).
3. Not sure how to answer this. We bought shortly after I graduated from college, and we used some of my leftover college funds (which my Dad had saved up and then handed over control to me in my junior year) as well as a gift from my Dad. We didn't have to wait and save up.
4. N/A, see answer to #3. I don't think we were investing at that point since I was working at a fairly low paying job, we were relative newlyweds still setting up our household, and my then-wife was somewhat of a spender.
5. See answers for my son below.

My son's (likely) answers:

1. I'm going to recommend he do 10% and then either pay PMI or do 80/10/10 financing.
2. I don't know of any, but if there's some that make sense, maybe. I am disinclined to encourage him to participate in any low-downpayment loans, since (a) my understanding is they come with fees, higher rates, and restrictions, and (b) one can get trapped in a house if values drop after purchase with a low down.
3. He'll have some leftover college funds as well, plus savings in a taxable account, plus hopefully savings from his first job. If he does 10% down and buys an average to below-average priced home, he'll have his down payment saved up in about a year, which should work pretty well since I've suggested to him that he live in an apartment for a while first.
4. I'm not sure what he'll do here, except that he will try to analyze and figure out what the most efficient path is to his end goals. I think I'm going to recommend that he at least do 401(k) to the match even while saving toward the down payment.
5. He's currently got his savings in the stock market. If the market drops next year right before he wants to buy, he might regret that, but I sorta doubt it as he takes a Vulcan-ish approach to it. At most I would recommend that he save in the market until he decides he is ready to start looking, then shift those investments to savings so he can go ahead and buy without having a market drop set him back.

Cranky · « **Reply #11 on:** August 22, 2020, 05:01:41 PM »

We weren’t ready to buy a house until we were 40 and dh got a tenure track job.

We put down 20%, some of which family provided.

I don’t think there were any first time buyer deals to be had. It was the 90s and interest rates were high.

What I would do differently would be to move to this area and rent for a year, or possibly refuse to move at all...

Morning Glory · « **Reply #12 on:** August 22, 2020, 05:43:58 PM »

1. How much deposit did you have for your first home?

I think around 8k but I don't remember exactly. I do remember the house cost $44,750, and we haggled down to the last 50 bucks

2. Did you take advantage of any first home buyer’s schemes?

No, I wasn't aware of any at the time. We went to a very small town bank and got what is now known as a 5/1 arm , that we later refinanced to a 15 year fixed. This was in 2002, I don't remember the interest rate. There was a coupon book to mail in the payments.

3. How long did that take you to accumulate?

A couple years. I saved waitressing tips in a coffee can while attending community college and living with parents.

4. Did you put your investments on hold or firehosed your money for the deposit?

What investments? when my coffee can got full I would drive to the bank and add it to my cd, which I later cashed out for the down payment.

5. What, if anything, would you do differently or better now?

Hard to say as there is a lot more technology now. Also CDs don't return as much as they used to. Maybe not spend so much at restaurants?

BECABECA · « **Reply #13 on:** August 22, 2020, 05:53:04 PM »

1. How much deposit did you have for your first home?
20% down, about $105,000 (SF Bay Area right before the housing market crash)

2. Did you take advantage of any first home buyer’s schemes?
Tried to use a Cal FHA loan but at the last minute the rates were worse than a traditional loan so we just went with that and got a better rate without any first time homebuyer program restrictions.

3. How long did that take you to accumulate?
Approximately 4 years. It felt like a really long time as all my friends who didn’t live in the Bay Area got their first houses way sooner.

4. Did you put your investments on hold or firehosed your money for the deposit?
I continued to contribute the max to my 401k but all after tax savings went to saving for this deposit.

5. What, if anything, would you do differently or better now?
I’d have put the money in an index fund while I was saving up instead of a savings account. 4 years could have been reduced to 3 years that way.

BTDretire · « **Reply #14 on:** August 23, 2020, 06:28:36 AM »

My situation is so old it is almost irrelevant, I'm telling it anyway!
My first home was $30k with a $3k down payment and PMI.
Interest rates were running 16-3/4% for a 30 year fixed.
I got a 3 year balloon mortgage for 13-3/4%. I got laid off
one month after moving in, ~~luckily~~ because of frugality
and good planning, we had enough to weather the time off.
We did refinance at a lower rate 3 years later.

Quote

I tried, The state had a subsidized mortgage program at 9%, the maximum income limitation was $20,000, our income qualified, however because we were frugal, didn't buy alcohol, snowmobiles, new cars, eat out, buy name brand clothes and fancy shoes, have an expensive apartment, etc, in other words, tried to help ourselves, we had saved about $20,000, the interest on that money put us over the limitation, and we didn't qualify.
Moral of the story: if you want a government subsidy, buy alcohol, snowmobiles, new cars, eat out, buy name brand clothes and fancy shoes, have an expensive apartment, etc, and spend all you have. Do not try to help yourself!

kanga1622 · « **Reply #15 on:** August 23, 2020, 08:11:23 AM »

Quote from: MrThatsDifferent on August 22, 2020, 12:52:13 PM

We bought our first and only home when I was 27 and DH was 29. We used a rural mortgage program for first time buyers so we only put down like 3% but had no PMI or 80/17 loans. The program let us finance 97% of the purchase price without all the extra strings.

Honestly, can’t tell you how long it took us to build up our down payment and closing costs. We’d been saving every month while renting. Had already paid off student loans and had no car payment. So even with our low income, it wasn’t that big a deal to bring a check for $6000ish to closing.

We were pretty lucky that I have a saver mindset so we’ve always had cash to get us through in an emergency. And we have 800+ credit score so getting a loan was a cakewalk. We made sure to replace the roof as part of escrow and split the cost with the sellers so we didn’t have that big expense in the first 1-2 years of ownership. Water heater and HVAC were both 2ish years old so those big expenses were not on the horizon either.

We weren’t saving for retirement (other than the mandatory 6% at work) back then so we’ve ramped up a lot of savings and investments since purchasing our home.

ETA: We bought in 2007.

SuperNintendo Chalmers · « **Reply #16 on:** August 23, 2020, 08:46:48 AM »

Quote from: MrThatsDifferent on August 22, 2020, 12:52:13 PM

1. $78K (25%)
2. Not sure if this counts, but I did pull $10K from my IRA, which was tax-free since it was a first home purchase.
3. 7 years.
4. I didn't earmark anything for the down payment. When the time came, I just sold funds from my stash in a way that made sense at the time considering gains/losses and taxes.
5. Don't think I would do anything differently, other than if I buy again in the future it will be a smaller home. We don't have a big house, but turns out we don't even need all the space we have.

HenryDavid · « **Reply #17 on:** August 23, 2020, 09:25:20 AM »

Gonna answer in a slightly different way.

Deposit/down payment for us was 1/3 the house price. We intentionally bought a house that cost 3 years gross income (for one of us), so we basically put one year's income down.

Didn't put savings or travel on hold at first--made minimum payments and used cash for travel--but then decided low interest rates might not last forever (oops), so semi-firehosed for a few years until paid off. (While still travelling and saving because income had gone up.) Here in Canada mortgage interest is NOT tax deductible so that changes things a bit. Anyway glad to get rid of the mortgage, simplifies life.
Would either do it the same now, OR just consider renting and saving the difference in costs.

The KEY for us was laughing our asses off at the huge amount lenders wanted to lend us, and just keeping the cost to 3 years income. (Is that possible for younger people now?) That, and choosing a bike to work/walk to groceries location. That cut years off our working-for-money lives. Even though we are in a moderately HCOL area.

achvfi · « **Reply #18 on:** August 25, 2020, 11:42:14 AM »

I’m curious, as I try to navigate this new line of thinking about home ownership:
1. How much deposit did you have for your first home?
I think about $24K, including closing costs and 10% down payment.

2. Did you take advantage of any first home buyer’s schemes?
No, they did not have favorable terms.

3. How long did that take you to accumulate?
Hard to say, I scraped together everything I had. I almost had no money left in bank after the payment, with expectation that I would be alright after next paycheck.

4. Did you put your investments on hold or firehosed your money for the deposit?
Not investments but I was focused on paying off my other loans, probably had just little bit left. Probably had zero investments.

5. What, if anything, would you do differently or better now?
We are a family with two kids now, I would have chosen slightly larger home about 500 sq ft more to make this our forever home. We have lot of space, so we can expand with an addition in future to make it a dream home.

It was a no brainier if we planned to stay in this place long term. Over the years mortgage payments began to shrink relative to rent. Currently our monthly mortgage payment is less than 40% of the comparable place for rent. We have about 65% in home equity.

It ended up a great decision.

I'm a red panda · « **Reply #19 on:** August 25, 2020, 11:56:34 AM »

My first home I put down $32k. I guess it took me 24 years to save it, as that was money I had saving since birth; gifts from family, babysitting, working at a church daycare in high school, college jobs, and then saving my entire income for the 2 years I was married (we lived off my husband's income, in mid 2000s we both made about $30k). It was about 80% of my cash savings at that age.

It was supposed to be my college fund, but I got scholarships.

mm1970 · « **Reply #20 on:** August 25, 2020, 12:08:41 PM »

I’m curious, as I try to navigate this new line of thinking about home ownership:
1. How much deposit did you have for your first home?
- $165,000 (CA, 20%)

2. Did you take advantage of any first home buyer’s schemes?
- Not at that time, but we did eventually refi using our VA loan. Well, my husband's VA loan. I guess I've never used mine...

3. How long did that take you to accumulate?
- We were 34 and 36 at the time, so I guess 12 and 14 years? We are savers. About 1/2 of the down payment was from stock. My startup company got bought out.

4. Did you put your investments on hold or firehosed your money for the deposit?
No

5. What, if anything, would you do differently or better now?
Not buy so close to the 2006 peak? We bought during a hot market and literally put an offer on a house on day 6 of looking. Despite that, we are pretty happy with our house. It's small, and old. Only 2BR and 1BA and no garage, which was fine when we bought it, but it is hard now with 2 boys and distance learning/ WFH. But it's a perfect retirement home, so we stay. If we'd wanted to make money, we should have bought at a different time, chosen a better school district, etc. This is a small starter home and will never be anything else.

simonsez · « **Reply #21 on:** August 25, 2020, 01:06:01 PM »

1. How much deposit did you have for your first home?
5% of 163k plus a little for closing costs that we didn't wrap into mortgage = ~11k

2. Did you take advantage of any first home buyer’s schemes?
No, nothing really favorable.

3. How long did that take you to accumulate?
4-5 months

4. Did you put your investments on hold or firehosed your money for the deposit?
No, kept investments the same but didn't do an international trip that year.

5. What, if anything, would you do differently or better now?
Unsure but maybe not. The mortgage interest rate was whatever the going rate was at the time (4.625), I enjoyed the people that made it happen (thanks to recommendations of friend who is in real estate), I was satisfied with the final price and the bit of haggling that went into it, and the amount of time it took to close. We did pay PMI until refinance (combo of higher appraisal and principal paid) but it was pretty low effort financial-wise to save that initial 5% and various closing costs. Saving at least 20% would've been doable (in the Midwest that is, definitely not in DC area but Navy Federal did have 0% down w/o PMI 30 yr fixed loans at the time) but more disruptive to leisure and other plans so I'm torn. We are from Midwest and moved back there after 6+ years in DC area. At the end of our DC tenure, we traveled all over the East Coast since it was so accessible and knew it would not be once we moved back. It was an amazing time, not sure I'd trade all that or totally torpedo my student loan repayment schedule just to have the satisfaction of a larger down payment to avoid PMI. Granted, our PMI was not substantial (~$40/mo which prior to the recent refinance, amounted to about $700 in total for essentially the privilege of not having to have 20% down) and we are not the most aggressive people when it comes to the RE side of FIRE. YMMV.

If the house you're looking at has a basement, try and schedule a viewing on a rainy day so you know what you're dealing with. If you like the house and the basement is dry, it's one less thing to worry about.

Radagast · « **Reply #22 on:** August 25, 2020, 01:20:13 PM »

1. 20% / ~42,000 (2013)
2. No
3. 2011-2013 (2.5 years).
4. Pre-mustachian purchase. I had made minimal 401k contributions and nothing else because I didn't understand.
5. Save for the house AND max out retirement accounts. Cut out the other stupid spending. I was living at my parent's house, what did I need to spend money on anyhow? Bargain the price down a little more. Back then I didn't understand how to price real estate, but I now realize I overpaid by 10% (it was a cashflowing duplex). Obviously my friendly realtor was not inclined to clue me in.

clarkfan1979 · « **Reply #23 on:** August 25, 2020, 03:22:41 PM »

This probably isn't super helpful, but it's true.

15 years.

I started buying stock at age 12 and I sold some of that stock to buy my first home at age 27, along with some other savings.

As an adult, I would limit myself to 24 months of savings. Whatever I can afford at 24 months of saving, I pull the trigger.

rocketpj · « **Reply #24 on:** August 25, 2020, 06:01:46 PM »

Quote from: MrThatsDifferent on August 22, 2020, 12:52:13 PM

1. $14000 on a $129000 home
2. Absolutely. Here in Canada you can convert RRSPs (tax sheltered investments) to a downpayment on a home, with 18 yrs to replace it. We did that.
3. It took about 2 years to accumulate consciously, though a small part of it ($5k) was an inheritance my wife received.
4. Cashed in investments as above.
5. With hindsight I would have refinanced on the wave of booming house prices and bought 2 or 3 more properties. Of course, at the time I thought we were already buying at a peak, so lacked the nerve.

Arbitrage · « **Reply #25 on:** August 25, 2020, 10:40:02 PM »

Quote from: MrThatsDifferent on August 22, 2020, 12:52:13 PM

1. $127000 (+ closing costs). HCOLA.
2. No
3. 8 years
4. No. Built up savings while also investing for retirement and (in the last couple of years) saving for college as well. Prices were out of whack with rents (great recession housing bubble) and we just figured if prices never became sane, we just wouldn't ever buy.
5. Would've done a better job of contributing to my 403(b) early. As far as the house savings, I don't think we'd change our approach. Technically we could've bought earlier when house prices were lower, as we bought when prices were on the rebound post-crash, but my company was in the midst of a big layoff and it wasn't the right time.

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Author Topic: How quickly did you get your first home deposit? (Read 2132 times)