How Much Should You Put Down on a Home? (And What Not To Do!)
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- Опубликовано: 8 авг 2024
- Learn how much you should put down on a home! And why people who put 20% or more down for a home are losing big time! Chandler has heard it a thousand times before, from the likes of Dave Ramsay who tout how putting at least 20% is the smart move. chandler breaks down why that is NOT the case.
#realestate101 #homebuying
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As much as I like his videos; this only holds true in today's hot market. Real estate does not always move up by 20% per year. We can just as safely assume that next year it'll dive 20% (or more) and then everyone who took this advice is belly up on their mortgage. I also find it interesting that there was no mention of PMI, but that's just me.
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Theyre only belly up if they had to sell it that next year and the market collapsed...if they didnt then they hold and will appreciate down the road
@@keithg1955 lol, you're right man.
Yeah because they're buying hastily due to FOMO...in a sellers market
Agreed, a lot of information was left out on this post that should’ve been addressed. People need to learn about numbers involved more than someone’s advice
That only makes sense if you plan on selling the house. If you plan on retiring in that house it's best to pay it off faster so you can retire 15 years younger.
I would recommend only paying PMI on income-producing properties...which is not always easy to do. My personal advice is to treat your personal home differently than investment properties. Be safe with it, pay it down. Thats your true nest egg. Another tip: if you do get into a loan with PMI, and values go up, have the bank reappraise your LTV as soon as you think its below 80% and get that PMI taken off. Don't just pay it forever.
Sorry, have to put the breaks on the whole premise of someone making 55k and affording this 400k property to begin with. 1,700 dollar payment? It actually more like 2,000 with pmi, house insurance and taxes. That is 43% of your gross pay!? After saving for retirement, health insurance, food, car, etc you are going to have nothing left and will be house rich and cash poor. Remember you can't eat a house, or afford this payment if your spouse stays home with your kid or pay for day care. This is a recipe for disaster and loosing your house and your sanity. As to the 5 vs 20 percent down and 30 years there is only a 30k dollar difference in the interest paid between the two down payments and that isn't a lot. Comparing a 30 to a 15 year, it only makes sense to go with the 30 year if you have enough left over to invest the difference. You will not have anything left over, or the ability to save anything after buying this house because you will not be able to cash flow well with this property and income level. This last year's 20% appreciation is not going to be sustainable and will likely go back down in the next year or so. Save and invest, buy a house when you can afford and live cheaply and within your means. That is the only way I have seen it done well on 55k a year.
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Josh you got it down my man.
@@InvestAndGrow2020 really?
new fan. The info is so fluff-free...love it, man. question! just watched an older vid of your "How To Find The Perfect Home Loan"...what is your opinion on using life insurance for a loan?
Love the vids keep it up!
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Very well made video! Keep out up chandler and Chandlers team 😄
DAYUM this was life changing subbing damn bravo
Nice work 🎆
Great video and damn that’s a nice lawn at the start
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Im looking to purchase a 3 or 4 family owner occupied. The lenders I've talked to say anything above a duplex needs 20% minimum according to Fannie/Freddie. Anyone know if this is true?
What about 1% down payment $1300 I want to wait a few weeks to get it can they wait that long can i get payday to help me
So when you put 5% down does it have to be your primary residence?
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Are u in utah? Can u give advice if i should buy home now !
You don't have to put down any. If you buy a home in PA, you can have the state pick up the tab on your down payment up to 5% with a 10-year forgiveable loan. The only caveat is that if you want to rent it out before the 10-years are up, you need to re-fi.
Rent was gonna go up $150 last May, I said screw that and bought our house in Ammon. Put 0.5% with conventional loan with 3% down federal grant(won’t have to pay back) so 3.5% down. Literally only had to put 1,000 down and we are at 125k equity in one year! 💸💸💸
Just like you said in the video get into the property and the rest will take care of itself instead of sitting and waiting for life to be perfect to get into real estate.
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Did you say you only had to put down $1000? What are the requirements to qualify for the grant?
@@SugarGotAlongway2catchme it’s a first time home buyer federal grant. It is income based for the grant (where you don’t have to pay it back) or if you are above the threshold you are able to get a second loan for the 3%. I would just ask a lender about first time homebuyer grants that you could qualify for
@@TheDJW21 thank you!!
You never will know if you never really try the time is now
Next time you compare the down payments can you compare apples to apples so: 20% down for a 30 year vs 5% down for a 30yr?
I understand you were taking Dave Ramsey advice but I think it makes more since to put the same terms.
What if you already own a house and it's on a VA loan? You can't get s rental with just 5% down.
Like button smashed!
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There are pros and cons to bigger or lower down payments but try to put the lowest you can so you can use the money for other things.
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What if you can’t qualify for a loan due to lack of paper income
Great video. I'm buying an out of state property as an investment as the median home prices where I live are close to $800,000 and way out of my family's budget. Unfortunately since I don't live in that state, I'm required to put at least 15% down 😕thankfully even after the appreciation going on the houses are still within my budget and I can pay 15% down but it sure hurts to say bye to so much money at once. It's going to work out in the end so I'm excited to be a home owner.
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What state is allowing you to out 15% down?
@@hghm1 Texas
$50K not much for a down today on home - If I'm not mistaken ? Any advice for 1st time buyers =)
What state is this?? Are u at!!!!
Nice vid Chandler. How I understand it, paying down 5% is good especially if you want to safe more to invest in other areas. If your house is your livelihood and you don't do much investing, go ahead and put more down. Don't think either is stupid, depends on your situation. As for my situation, I'm glad I found your vid Chandler
I heard there is a huge difference from putting a 3.5% down payment from putting a 5% down payment. Can you elaborate on that?
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FHA loan let's you put 3.5% down and comes with PMI that lasts through the life of a loan, where as a conventional loan at 5% to 20% will have a PMI which drops once your mortgage balance is equal to 80% of your home's value at the time of purchase.
@@artemrevelsky yeah
Chandler I’m looking to buy my neighbors house but I don’t know where to start. He doesn’t want to put it on the market because I want to buy it off of him. What kind of company do I need to look for?
The bank
I like Ramsey. He is smart and practical. You should never diss people. I’m guessing you probably cut your viewership in half.
I see a bug climbing on your wall at 1:53...kinda ironic for a pest salesmen if you ask me lol
i don’t know if I missed it but did you mention how to put 5% down (besides FHA loan) instead of 20% would appreciate if you can answer this comment if you didn’t mention how.
P.S I love your content
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Go find a good mortgage broker and talk to them. Conventional mortgage is usually as los as 5% down
@@mph5896 yes he should or do you mind if I get you one?
Single family home only
Perfect examples!
Thanks for the comment don't forget to hit the subscription button
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I am a soon to be dad and i need advice not to make life harder than it is, so i have 2-3 friends who do real estate, and also my moms cousin, and all say i can put as low as 5% down, so im assuming that is a good bet? because my plan is to get my own semi truck, get my business started, stay where im at for about 1-2 years max 3 years then move out to get property, I am thinking business wise to also have investment also and able to get my property and save up that way while i build equity.
Respect!
I love Dave but his advice is not for everyone. Yet he acts like it is AND he didn't have millions form a book to put him on the map.
I subbed!
i wonder if you bought the house below the median or above 400k is a lot of money. If you bought the house above the median 1. less renters 2. less cash flow as you approach 300k-330k you end up approaching the break even on cash flow what that means is what people are willing to pay and rent for a property compared to if you buy the house with 20% down payment is 1600 a month you may not be able to collect 1600 dollars a month.
FACTS! I wish more people would understand this. Thanks Chandler for breaking this down!
Actually garbage advice. Have fun paying PMI and wasting your money.
Good advice for real estate investors assuming real easte will continue to boom and not plateau. For the "average " home buyer not good wise advice.
Why not? Even if it plateaus or loses value your payment will be less and you can keep more money in the bank. The market to tank and you’re still in a better place than if you were renting just throwing money away in the market will come back
@@ChandlerDavidSmith Yes I definitely agree on not renting but also if someone is only making 50k they shouldn't be worried about buying a 400k home and having low payments they need to make more money and then 20% down would be reasonable and could get rid of PMI so wouldn't be wasting money.
what does 20% down on a 30 yr mortgage looks like in comparison?
I think if you can put down 20,30,40% down you should. Once you close you can open a HELOC to pull funds back out but then you have a lower mortgage payment, lower interest rate, and no MI.
Pls tell me where I can get a heloc on multifamily property
@@twincherry4958 not easy but local credit unions can. Once you start to build a real estate portfolio you can ask for favors at private banks.
@@abrahamflores2566 Huh, not in MD
have to put 20% minimum in canada for non-primary properties.
no one cares about canada
So they say
Great advice thanks Chandler, however, I must point out the DR's advice is not inherently bad, it is simply for another market and/or circumstance. Consider how bad of an investment this house would be if the market corrects like it did in 2008. Your 400k---i mean now 480k (lmao) valuation would become 200k or less. I suppose the argument is still there for the lower down payment and longer term but in a correction like that your under water any way.
You only lose when you sell. Just hold it.
@@danightryder Thats not always possible. You could be sitting on that house for 15 years trying to break even. If you can comfortably afford a house and plan on staying long term, go for it.
What about PMI?
@Cole. Once you reach 80 loan to value it can go away. This means with your new equity, once it equates to 20% of what your original loan is, whic in this case it would be since it is 80k of equity on a 400,000 loan, you can refinance into a conventional mortgage and get rid of PMI.
FHA requires you to have psi for the entire loan. Conventional, once you get above 20% you can ask for an appraisal to drop pmi.
Good video. I have 4,000 extra a month to start investing. Meaning I will have 48,000 at the year end of saving. How would you invest if you had 4000 monthly income that Is just extra money
Facts! 🚀
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If you have the resources to pay that 400k in cash, would you still recommend financing a portion of the total amount?
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Absolutely. Why not buy more houses with 20% down instead of just one house paying 400k at once. Your ROI will be better with financing than paying all cash.
As long as you aren't an idiot, debt in real estate is good. Start slow and learn, but more homes is better than less. Paying cash is only smart if you're too lazy to deal with rentals (which isn't necessarily bad)
Cool
Makes no sense for me at 5 percent rather then 20 im paying an extra 528 a month in pmi and interest over the lifetime of a 30 year loan thats an extra 190k thats wasted on interest and pmi. When its your personal residence its smarter to put 20 percent if you can afford it and an investments as little as possible.
H,
Thank you it was amazing video, I have few questions:
1. 5% down to buy under personal name or LLC?
2. How soon after registering LLC we can buy home under LLC?
3. If we put 5% down mortgage will be higher than rent what about that?
4. Any video rental under personal name vs LLC?
Checking in on this video is so depressing in 2023 with interest rates so high
I always try to put down the lowest down payment possible. I factor in the PMI into all calculations.
Yeah but how do i get a loan with 5% down without actually living in the residence.
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Do u have $300Million or more in net worth
Nope
Ha, roasted!
I saw a bug on the wall, looks like you need some pest control😜
He’s a slumlord what do you expect
I listen to Dave Ramsey but the 15 year fixed iudacris to me.
Great video. Two clarifications I'll add:
1. 20% annual appreciation is definitely the exception and not the norm.
2. If you put below 20% down, you are usually paying over a $100+/month in mortgage insurance
Thanks for putting out real estate content still, David!.
Great points
You do you know that regardless of gaining 80k over that period you are also paying higher emi per month on the house not even close to paying it off.
That's not even including the higher interest rates and PMI that you will be paying.
This assume that housing prices will always go up 20% year over year. That's likely not going to happen forever.
Avg is 3 to 5% when the government isn’t printing money like crazy. The avg is going to go up.
30 year mortgage, if you are not paying extra principal you are basically renting the home. We are living in a crazy time with crazy inflation. It may eventually slow, and home prices may be stagnant.I would consider getting a 30 year, and paying it like a 15 year. That gives you a little flexibility for things like job loss. Slightly higher interest rate though.
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dave ramsey is scared of debt like i’m scared of snakes 🐍
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Houses don't always go up. Government stimulus and quantative easing is propping up the economy. Covid 19 exposed the weak economy for what it actually is. From 1900 to 1980 home prices stayed stagnant adjusted for inflation. Eventually prices will have to come down to it's historically trend line like back in 2012.
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Thank you! Simply wanting to purchase my first home. So much appreciation for your knowledge on this. It is a bit intimidating. Again, thank you!
Dave Ramey does give pretty bad advice on the buying a primary residence. I don’t know why he’s so popular. Most of Dave audiences are mostly in debt while audience in this channel are looking to build generational wealth. Dave gave really bad advice about debt. Debt is amazing if you are generating greater return than the cost of finance. I personally have $2mm in debt on cash flowing property. It’s amazing way to increase ones networth.
So we did 20% instead of 5%. How much is the PMI going to be on that 5% down?
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Yeah funny how he didn’t mention that. It will be at a minimum $150 per month and can be as high as $300 per month in this example. The lower the down payment likely will result in a higher interest rate. If your credit score is not good the interest rate will be even higher. Do an amortization schedule on a $400K loan online and you will see the thousands you are wasting by taking this dudes advise. He doesn’t believe this stuff it’s all click bate. If he does he’s a moron.
@@JoeL-mk5ty really!
I’ll be paying 105 for pmi on 425k home and 5 % down. I do have 800 plus credit. I also thought what you guys thought would be way more
It's hard for me to get a mortgage the down payment is easy😔
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Why do these guys not explain how to get the 5 percent homes...instead of just saying you can.....thats what make Ramsey have more substance
What is there to explain? You tell you are a loan officer do you want to put 5% down when you buy it. If you don’t understand the different kind of loans I did a video just on this
Daves advice is smart. However, it is absolutely NOT realistic for the average person. I wouldnt ever be able to own as a single father if I followed his advice. it's too conservative. I like the advice here. thanks for the reassurance lol
I love Dave, he has good intentions, but his advice is outdated. I do, however, agree that many many people can benefit from his advice (assuming they are very bad at managing finances and misuse debt like a large percentage of the population). If you can manage debt PROPERLY, it becomes an amazing tool for building wealth.
Agreed
Angry Chandler!
“One year ago this house was worth $400k”
lmao
What's funny?
I appreciate this advice, but it doesn’t hold true in every market. People can go underwater very quick doing this. To call another persons advice idiotic because they are choosing a more reserved strategy is pretty ironic :) that $80k they made goes bye bye with interest on the much larger loan they took out by only putting 5% down. Please include that next time…
I feel really bad for the poor suckered who actually follows this guy's advice...
xeplq
#vur.fyi
This makes no sense at all. The quicker you pay off your house the quicker you can invest that house payment. Don’t buy a home that you can’t put 20% down on. Most people shouldn’t be buying a 400K home so this example is trash. That extra $1,700 monthly payment invested in mutual funds over 15 years would bring you $781K. So throw your 80K equity example out the window. No home will go up in equity as much as you would gain investing. You also failed to mention that the lower the down payment will result in a higher interest rate. This advice is so terrible it’s disgusting. People please don’t listen to guys like this and listen to the experts like Dave Ramsey who have a track record of making people millionaires. This guy is all about more spews for more views. Telling people what they want to hear not what they need to hear.
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Dave ramsey played out
Dave Ramsey doesn’t teach to buy a $400k house with a $55k income, he’d say to stay in the $150k-$200k range.
Also a $1700 payment on a $55k gross pay would not be the wisest choice..
Horrible advice.