S/O of the how to save for a home thread: Where did you get your down payment?

[Chamomile Girl]

I live in California where buying a house seems impossible. However my husband's employer offers assistance in coming up with the down payment...they will put 5% down for you. The catch is you have to come up with the other 5% yourself. Where we live (Silicon Valley) a cheapie 2bdroom house goes for around $500K, so I would have to come up with about 25K.

How do most people really do this?

Of all the folks I know IRL only one couple did not get their down payment money from family, and in the case of that couple what allowed them to save for their dp was living in family-owned rent-free housing for five years. I do not have any family who can give me money so that is out. DH and I are scraping by right now otherwise so saving the money seems pretty much out too.

I guess I am feeling kind of bitter because I really, really, don't want to rent for the rest of my life. We are currently living in housing that is subsidized by DH's employer, and so is really cheap for the area. But because I am unemployed we are financially screwed nonetheless. Plus we can only live in this house for five years and then we have to pay market rates. I just feel like if we were to ever get out of the hole we are in it should be now, but its just not happening!

[zoebird]

uhm, hard to say how you can save up for it. in our case, DH and i happened to have a savings of $7k, and we needed 10K so family loaned us the rest that we then paid back over several months.

we sold that house (moved to NZ) and now rent (don't know where we want to live yet, etc). here in NZ, mortgages are different (variable rates, usually mortgages only last 5-10 years then you have to renegotiate them) so we don't know how to get our heads around it. And, you need at least 20% down on a house. Wellington (where we live) is similarly priced to your area.

we own our own business, and are growing it, and that is our primary income that supports us day to day, and we also have a savings from it that we divide between retirement and regular savings.

our secondary income is an extension of the business--my yoga teaching. over the next 2-3 years, all of that income will pay off my school debt.

our third income comes from DH's writing (it's a very small income). that goes into savings, but it typically used to facilitate his writing business (going to conferences, meetings, etc that might involve travel expenses, etc).

for us, once the school debt is paid off, all of my income will go toward savings for a house, more retirement, or whatever we want. in about 5 years of saving in this way, we would likely have about 50% down saved up.

[Sharlla]

dh's dad gave us 13k. we had the dp for 52 k loan but because dh cosigned for a student loan they changed the amount they would lend us from 65k to 39 k, so we needed to come up with the difference. the dp was only going to be $1800 which we did have.
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[Ornery]

My mother gave us a chunk of money for a down payment about three years ago because she gave my sister a large chunk of money for her divorce. We haven't used it yet due to all sorts of issues but have also saved quite a bit of money on our own.

[AllyRae]

For our first house, DH had saved the money for a 20% down payment.

For our 2nd house, we put 20% down from the proceeds of selling house #1.

For our current house, we put 40% down from the proceeds of a lawsuit.

[jammomma]

We saved it. We were able to get an FHA loan which only required 5% down and we obtained a fixed 30 year mortgage with a rate of 5%. They key is that we live in an affordable area and we bought a nice enough 3 bed 3 bath newer home on nearly an acre that has a monthly payment less than what the house would rent for. We would never be able to afford a 500k home much less a down payment for it.

[lookatreestar]

aww try not to feel too down. we don't have family that will loan us anything but that is probably for the better in the long run. we are slowly saving for a dp

[annettemarie]

Because this is a financial question, I am moving it to Finances, as per the TAO Guidelines.

[Poddi]

We were just married then, used all the wedding gift money for half the down payment(about 5k), the other half were our savings. I remember mom was very pleased to learn how we spent the wedding cash.

[em123]

Savings from my husband's freelance work mostly. Wish I had family that had that kind of dough!

[crunchy_mommy]

We qualified for a first-time homebuyer program in our state. I think we ended up putting nothing down. We also asked the seller to cover closing costs as part of our bid, so we didn't pay anything for the house until our first monthly payment. We had great credit & the homebuyer program has very low interest rates, otherwise I'd be reluctant to buy a house with nothing down. But anyway, check into various programs, grants, etc.!

[Ola_]

We saved pretty aggressively while renting and put down 20% when we bought. Houses in our area (outside of Toronto) are a bit cheaper than what you are describing, but not much. The home prices are one of the reasons we decided to move just outside the city.

[philomom]

My dh and I are bad savers. The down payment was a combination of wedding monies and tax returns.

[LaLaLaLa]

Our first owned home, a small condo, we saved up the down payment ourselves. We didn't have kids and both of us were working and it didn't seem all that hard. I don't think we fully appreciated our financial security at the time; looking back, we were pretty lavish.

Our current home was bought with the money from my mother-in-law's life insurance policy. It's a pretty crappy way to come into that money, but she talked a great deal about her grandkids being able to have a nice house with a yard to play in. She would have been delighted to see where we are now. It would have taken us a lot longer to get into a house if we'd had to save up for this down payment.

[goldingoddess]

Hi Chamomile Girl I just bought a house in the Bay Area so I feel your pain. We were renting in San Mateo, hubby works in Foster City. We looked at a few places on hte penninsula, East Menlo and Redwood City mostly, but would have had to spend at least 300k on a 800square foot house in a horrible neighborhood with terrible schools, so we decided to move to Hayward in the East Bay. The houses here were about half the cost for more space and a larger backyard. Hayward gets a bad rap which is why it is affordable here, but we are up in the hills and it is so quiet and wonderful here, and all the neighbors are wonderful!

Anyways we did a FHA loan so only put down 3.5%, the 3.5% was our own money, about $10,000. We are aggresive savers and saved this in about 10 months. Then my mom loaned us the $8,000 tax credit money which we will be repaying her as soon as it goes through we've used about 5k of this for moving expences, new appliances, new fence and other miscellaneous. Plus my dad gave us $5,000 which went almost completely toward closing costs even though we had a $3000 credit.

Anyways I feel you pain with living in Silicon Valley and encourage you to consider the 'not so desirable' but within commuting distance places in the bay

[odenata]

For our first house, my husband's company got bought and they bought out his stock options.

Then we sold that house, moved across country, rented and spent way too much money on stupid things, husband got laid off, moved back across the country with the severance money.

DH got laid off again a few months later, again got a generous severance package, then also got a great signing bonus on a new job, and that, combined with a loan from my parents, got us the mortgage on our second house.

So a combination of work, family, and good fortune.

Hang in there. I felt like you did, and then disaster hit (a second lay off) and then it turned out to be the best thing that could have happened for us.

[sunnysandiegan]

Our credit union offers no PMI on loans with 3% down (or higher). We went for 3% down and a townhome/condo. We live in a high COL, though a tad lower than your area. (Salaries are significantly lower, however, so many say the net effect is higher COL here, but that is a different discussion. ) The credit union approved us for more house than we felt comfortable buying and we thankfully followed our instincts and advice given to us by more experienced folks we knew.

We both had college degrees and careers when we met at age 30. He has a business degree and is a computer programmer. I have a degree in finance (and marketing and non-profit leadership) and a background in banking & securities. My lifestyle was already in good shape financially and I heavily influenced DH to follow suit. We received excellent financial advice from those in my work environment (free of charge and personally tailored to us by those emotionally invested in our success). We managed to get DH out of debt AND save for our down payment in less than 18 months (5 of which I was unemployed and 2 of which I was employed part-time making only $10/hr). I had only been working full-time with a decent salary for a few weeks (plus the PT job) when we found the home we wanted. We had just paid off the last of DH's debt a few weeks prior. We had only lived in the apt together for 1.5 years (barely knew each other two years!). And, DH also had a brand new job. Oh, the letters we had to get written on our behalf!!!

We cut costs and increased income.

[eirual]

We bought fresh out of school with no downpayment and a 40yr mortgage.

....my dad co-signed, and the intention is to lessen the years when it's up for renewal in 2012. When we bought the house I was working at a daycare making pretty much minimum wage and DH was working at a shop. Now I'm teaching and DH is heading to university in hopes of getting a better paying job. We knew we'd be moving up in the world and felt it was a reasonable risk.

Probably not our smartest financial decision, but it got us in and has turned out okay (as long as we follow through with plan to make it not so rediculously long).

[velochic]

I was a single, childless professional with a good job and just saved up the money. Probably easier to do when you don't have a family to support, but more difficult than others because my family didn't have anything to loan me even if I needed them to. It took me about 3 years to save the down payment.

[kate42]

Originally Posted by velochic

I was a single, childless professional with a good job and just saved up the money. Probably easier to do when you don't have a family to support, but more difficult than others because my family didn't have anything to loan me even if I needed them to. It took me about 3 years to save the down payment.

That's what DH and I did when we bought our first home. We were both working full-time with good paying jobs and didn't have a child yet. Now, we're using the proceeds of the sale of that house to put down on another. I can see how it would be much harder with a family to support.