Ask HN: What % of your net wealth did you put into your downpayment? | Hacker News Reader

Ask HN: What % of your net wealth did you put into your downpayment?

7 pointsckamin512 comments

I've heard different things from different sources, but I'm curious to hear from the HN crowd what percentage of your net worth did you put into purchasing your primary residence? For example, assume you're purchasing a place for $1,000,000 and financing 80% of that. What percentage of your total net worth should the $200,000 downpayment be?

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Given todays low interest rates, assuming you can afford the payments. I would put in as much as it would take to not have mortgage insurance. Even if I had to borrow from a 401K.

Having said that, you MUST make sure you are not house poor. All your money goes into your house.

Whatever the real estate person says you can afford, take off atleast 20%. Back in 2004 they kept pushing me to spend more and more. And in the end I spent more than I wanted, but still 20% less than what they said I could. Interest rates were like 6.5%, which at the time seemed REAL cheap. I knew many people who struggled with their payments. I did to, but it was more of a struggle against spending. I was not house poor.

I agree with this, interest rates are low. Also keep in mind even if companies have $10 billion in cash, they still take out loans just because they can get them, and then save the cash for a time when the economy is horrible and no one is giving out any loans. Also if this were the 1980’s and home loans were like 12%, then obviously maximum down payment.

Like others, it was just about 100% (I earned more in a year than I had) and that was only about 10% down, subjecting me to several years of PMI.

The ideal percentage of your total net worth sunk into a down payment should be zero, because ideally, you should have ∞ money. For the rest of us, 100% isn't insane if you're throwing thousands at rent every month (and you've already established that you're buying a house regardless).

I have done both - minimum and more than 20%. Since mortgage rates are so low, it may be better to put your money is something profitable or save it for a rainy day. However, if you do not put down at least 20%, then you will pay an extra fee to private mortgage insurance.

I'm not talking about the percentage to put down (assume that's fixed at 20%). I mean what % of your net wealth did that 20% downpayment represent? In the example above, if your net worth is $400,000 and you put a downpayment down of $200,000, the downpayment is 50% of your total net worth.

Personally, as little as possible. Rates are low, and the political/economic situation is volatile. Let the bank hold the risk.

You’re better off with a shorter term... use small chunks of your savings to cover 2-3 payments over a period of years. That is my one regret —- my brother scrimped to afford a 15 year loan and will own his house in two years. (He’ll be 41) Run a few scenarios, changes to the deduction structure for property taxes impact the net in high tax states.

Dangerous anecdote: I put down 35% on my house, which at the time was about 20% of my net worth.

2 years later, and the stock I sold to get that 40% downpayment is now worth 8x as much – just under 3x the total value of the house.

I'd do it again because diversification is good, but hurts with 20/20 hindsight.

In regular circumstances, and if I were doing it all again, I wouldn't worry about what % of my net worth it was and put a minimum of 20% down + enough to bring the payments down to 33% of my salary.

I think you need one more piece of information which is your monthly income/debt ration. Putting all your savings into a downpayment could be "ok" as long as you have something to back it up. Enough extra money you can save every month to feed your savings account + retirement, etc. If your down payment was 20% of your wealth but you end up with 50% debts per month then it's obviously not a smart setup.

Try to combine both in making a smart decision.

For me, I put my entire net worth into the 20%. But that was a small percent of my yearly income (I only recently started making really good money).

I put pretty much all of my money into the deposit. I also borrowed as much as I could be lent, which was 5x my salary. The goal was to get a family home in a good location.

Should someone else do the same? It depends on your goals really. I don't even think everyone should buy a house, again that depends on your goals and your situation.

I would recommend that you have enough liquidity left over that, in case of employment loss, that you are able to float for the time required to secure further employment. Add a gracious buffer.

I put in about 20% of net worth in my last down payment (which was 20% of housing cost)

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