Sorry this is a 2 part question lol. My husband and I currently have $25,000 between HYSA and checking, plus his 401k and our Roth IRAs. We are wanting to buy a house either this fall or mid-2027. We are both 23.
Our current rent is $1700 but we live in a LCOL state. We chose to live in a more expensive part of town while we are young and want to have fun, plus we can afford it. His current income is $120k and I am in graduate school; when I start working next year, combined income will be minimum 180k.
I just don’t know if we should take the risk and buy in the fall, or give ourselves another year to save up for a bigger down payment + emergency fund. If our mortgage is between $1900-2200, what’s a realistic emergency fund to have left? Looking for houses between 250-300k.
Only debt we have is 8,000 left on a car, $5,000 student loan (3.1% interest, currently in forbearance).
And is it worth it to put down a larger down payment, or is it more worth it to have a fatter emergency fund and slightly more expensive mortgage?
So many questions, but what would you do if you were us? What’s a realistic amount we need before buying if we want to put 20k down (FHA)?
What is actually enough for an “emergency fund”? When to buy a house?
byu/Abject_Culture442 inpersonalfinance
Posted by Abject_Culture442
4 Comments
> what’s a realistic emergency fund to have left?
3-6 months of expenses
> And is it worth it to put down a larger down payment, or is it more worth it to have a fatter emergency fund and slightly more expensive mortgage?
Ideally you want 20% down and 6 months of expenses
Depends on how much you have in your Roth and 401k, how safe/steady your employment is, and your own risk tolerance. Personally I’ve never felt the need to have more than $5-10k liquid in cash sitting in a savings account. I’d rather max the money I’m putting into tax advantaged vehicles and the market so I can capture the advantages of compounding. But I’ve always had very steady employment. My take is in the minority here but it’s worked very well for me. Most on here will tell you to have 3-6 mos living expenses in a fairly liquid account but I think that’s way too conservative.
You don’t need to have 20% down. This is about how much money I had when I bought my house. $8k down payment was 3% down on a $285k house, got the seller to cover a lot of the closing fees, ended up needing another $7k in closing costs, left me with about $10k left after buying the house. Honestly spent that pretty quickly on new house things and improvements, then rebuilt the emergency fund over the next few years.
It was tight, and idk if I’d recommend it necessarily, but it worked out for us. We wanted a house and didn’t want to keep waiting.
20% down for the house, 15k or so initial move-in cushion, 6-12 months expenses as emergency fund