Tuesday, March 31, 2015

Is less than a 20 percent down payment OK?

Author and radio talk show host Dave Ramsey.
Author and radio talk show host Dave Ramsey.

Dear Dave,

I'm 24-years old, and just got married two months ago. We make $80,000 a year, and have our emergency fund in place with no debt. Plus, we've saved up for a 15 percent down payment on a house. I know you suggest 20 percent, but is 15 percent okay?

-Tony

Dear Tony,

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  • I don't have a big problem with 15 percent instead of 20 percent. Chances are you'll end up having to pay private mortgage insurance, but it sounds like you guys are in good enough shape financially to handle things.

    I generally recommend, however, that couples wait until they've been married at least a year before buying a home. Buying a house is huge decision. That's why I think it's smart to wait and get to know each other even better, and on a day-to-day basis, before moving in this direction.

    Take your time and don't rush things, Tony. There will still be good deals on the market in a year or so. Plus, you'll be able to save more money!

    -Dave

    Dave Ramsey is America's trusted voice on money and business. He's authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. His newest book, written with his daughter Rachel Cruze, is titled Smart Money Smart Kids and is out now. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

    Dave Ramsey Syndicated Columnist
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