A Smaller Down Payment

Tony is a little off in what he wants to put down as a house down payment. Is he too off for Dave?

QUESTION: Tony is 24 and just got married a month and a half ago. They make $80,000 a year and have a 15% down payment for a house, along with no debt and an emergency fund. He knows that Dave likes the 20% down payment plan, but is 15% all right? Dave thinks he should wait on buying, but for a different reason than you might think.

ANSWER: I don’t have any issue with that at all, but I usually tell people to wait a year after marriage before buying a house. Wait until fall to buy a house, because it takes a year to find how close to your mother-in-law to buy a house. You need to get to know each other pretty well. I think you guys will make a wiser decision on house buying, and I still think you’ll be able to get some great buys in the market by then.

When you buy, make sure your house payment is no more than a fourth of your take-home pay on a 15-year fixed rate mortgage.