I went with a 5% down payment instead of saving for 20% and it was the right call

My partner and I were saving in Austin for a 20% down payment, which would have taken us another 3 years. We looked at a 5% down FHA loan and bought a $325,000 condo last fall. The PMI is $120 a month, but our home value has already gone up more than we would have saved. For people in a hot market, has waiting for the big down payment ever backfired on you?

3 comments

3 Comments

caleb_stone11d ago

Remember when @sean_miller88 said waiting for perfect costs you? My cousin did that and now rents from the guy who bought the place he wanted.

the_nina19d ago

Yeah, I read a story about a couple in Phoenix who kept saving for 20% while prices jumped over 15% a year. By the time they had the down payment, the house they wanted cost $100k more. Their bigger down payment didn't even cover that price jump, so they got priced out.

sean_miller8819d ago

That part about the bigger down payment not even covering the price jump is the real killer. It shows how the old rule of saving 20% can actually work against you in a hot market. People get so focused on avoiding PMI that they miss the bigger picture of just getting in the door. Waiting for perfect can cost you the chance to buy anything at all.