I doubt your pulled out of ass price for a house. And you don’t need a 20% down payment. The highest down payment minimum is like 10% and most people don’t need that much. All depends on the type of loan though.
The reason why people go for the 20% Mark is because once you clear 20% then you don’t have PMI, or private mortgage insurance. That typically runs three quarters of a percent of the purchase price of the house until you have 22% of the house paid off, and you have to pay that on top of your mortgage, the interest, and the taxes and insurance.
For every $100,000 you finance that means that if you pay less than 20% down you will have to pay an extra $750 a year just as a “couldn’t afford 20% down” fee.
And typically to get the first quarter of your mortgage paid off takes 10 years, so for many people that will be $7,500 per $100,000 they borrow to buy a house as the poverty cherry fee on top of everything else.
I’m aware, having bought my house about 2 years ago. It doesn’t change any of what I said. 20% is nice for that reason but it is not a requirement and most people don’t put 20% down because they don’t have the money to do so.
Hell, I intentionally didn’t put 20% down because my interest rate was under 3%. Was better off taking the extra money and sticking it in investments.
And typically to get the first quarter of your mortgage paid off takes 10 years, so for many people that will be $7,500 per $100,000 they borrow to buy a house as the poverty cherry fee on top of everything else.
You can also work with the lender to perform an appraisal once you have 22% equity due to the property value increasing which may only take a couple of years depending on the market.
