As the Money After Graduation community starts to number in the thousands, I feel so privileged to be able to hear your stories and share them with others.
The past 5 years of my own financial journey is documented in the archives of this blog, but that is only one perspective and doesn’t speak to the diversity of experiences each of you have when it comes to income, debt, and financial goals. It’s for that reason that I love when you share where you’re at, where you’re going, and what you think about your journey. This is another one of those posts.
The stories below are shared by 20- and 30-somethings across Canada and the US. Some are new homeowners, some have had a place for years. The answers represent different markets, different incomes, different opportunities, and different values. While some financial decisions are better than others, there’s no one-size-fits-all when it comes to the “rules”, and this is especially true when it comes to home ownership.
How much did you save for a down-payment and how did you save for it?
“We put down 10% ($24,500), which we accumulated through savings and frugality, plus some life insurance money when my father passed.”
“We had been saving for a long time (4 years), knowing that we would want to be in something bigger than what we originally had. We also received a monetary gift from family to top up the rest.”
“We put a 10% down payment but we shortened the amortization period to off-set the CMHC we incurred and we have increased our bi-weekly payments each year since. I didn’t do the math if this equaled out in the end but at the time it was what was best/worked for us. We saved for the down payment the old fashion way: by not spending more then we earned and saving every payday.”
“Our down payment was $48,000 (give or take another hundred, it was a weird uneven number). This was the result of years of savings, combined with some gift money from our wedding, and $15,000 from my RRSP (which I’m currently paying back pronto!)”
“We started with a condo back in 2008, pretty bad timing obviously, and we took a calculated risk going in for 40 years with zero down so that we could get into the market. We had a variable rate and at the time it was prime minus, so when rates tanked we were at something like 1.8%. We put a lot of sweat equity into that condo and ended up selling it for a profit in 2011. We used that profit as a down payment for the house we live in now. We only put 5% down and we bought the house when a 35-year mortgage term was still an option.”
“We currently own 2 homes. We bought our first ‘starter’ home in 2011 with 5% down. I HATED paying the CMHC fees and vowed never to do it again! We just bought a new (to us) house in Oct 2015. We were able to put 20% down on $550,000 mortgage.”
“I put down the minimum amount down that I could to get the best interest rate I could, which happened to be 25% down. I also took out a 15-year mortgage for the primary reason that it would give me a better interest rate. I wound up with an interest rate of 3.00%.
“Our current down payment is at $50,000 with $25,000 coming out of my RRSPs, $10,000 from the bank, and $15,000 from my husbands account. We have also been promised some help from my in-laws… but with no specific number so we are not counting that.”
Has your house appreciated in the the time you’ve owned it?
“It has appreciated well in the last 3 years, if everything goes to plan when I sell, I should walk away with ~$70,000.”
“The house has a rental suite in it and it pays more than half our mortgage. We’ve put a ton of work into this house as well, and after 5 years our living space has been completely updated. Our mortgage is ready for renewal, and because the market is so hot, right now the value of our house has shot up. We’re going to have it appraised and refinance at the appraised value so that we can take out some money for a down payment on a second house. The first house will eventually become a rental property with two suites, one up and one down, and we will be cash positive on it from day one.”
“My house has appreciated 23% over the past 4 years from when I first bought it.”
“So far where we live the houses have not fallen drastically or at all in some areas, so we are hoping to ride that out.”
How does home ownership fit with your lifestyle and overall investment strategy?
“We have other investments and save for retirement in the more traditional way but also see our house as a retirement vehicle.”
“I bought a condo in about 3 years ago. I have a meeting with a realtor today to talk about selling it. It isn’t the amazing financial decision I thought it would be. The more I learn and read about personal finance, the fewer people currently advocate ownership as a positive financial move. The added stress of maintenance and Homeowners Associations isn’t even close to being worth it. I bought where I could afford, not where I actually wanted to live. I’m giving it up to rent in a more central and fun area. Slightly more in rent than my mortgage, but less in every other category and much improved quality of life.”
“To be honest when we bought the home I didn’t see if as an investment, that might be stupid but I just saw it as a home and a place to be a family. I will 100% say that I did buy into the belief that you “should” buy a home rather then rent but now I know that it all depends on a person’s situation.”
“After only 1.5 years of living in our condo, I can see a huge improvement in our lives. We own less, commute is shorter (my husband walks 10 minutes to work) and we have regular access to our building’s gym and swimming pool which we use almost every day. I sold my car and we go out much more than we used to now that the city is literally our front yard. The only (small) downside will be trying to expand our family in our 1-bedroom, but it’s definitely do-able and hopefully won’t be for a couple more years.”
“The reason why buying that townhome was one of the best decisions really goes beyond the financials – it’s because I have absolutely fallen IN LOVE with my home. It’s in a great community, I have great neighbors, I love my growing city. It’s worked out great for me from a financial standpoint, but even better from an emotional standpoint, and I think that is something us finance nerds often overlook.”
“I wonder sometimes about homeownership versus renting. This place felt like a much more modest decision when I bought it for $360k four years ago, compared to renting a one bedroom apartment for $1,600/month. But now I feel uneasy owning a half million dollar condo, even though the mortgage is now less than my annual salary and if we wanted to rent a similar place we’d be paying almost $4,000/month with utilities and parking these days. It feels so undiversified, even though it really is a good diversifier to my stock investments.”
Hope you enjoyed this as much as I did! Thanks again for sharing your stories.
I always love hearing other people’s home buying stories. I was only able to afford 3.5% down on my home in 2009. Unfortunately, this meant paying mortgage insurance for several years. Overall, I’m still very happy I bought when I did. My neighborhood has exploded in popularity and I’ve got about $150K equity in the home.
That’s so good that it worked out!!
“We put a 10% down payment but we shortened the amortization period to off-set the CMHC we incurred.”
I looooove this perspective, and it’s one I hadn’t really considered before, but it makes total sense. We’re going to be putting down somewhere in the neighbourhood of 10% when we end up buying, and although it’s better than 5% (and the lowest amount I would consider!) it still bugs me a bit that we’re losing such a chunk of money to CMHC. This perspective makes me feel like, outside of waiting to save 20%, there’s something within my control that I can do to offset the CMHC payment without waiting an extra 3+ years to buy.
I hadn’t either until I read that! It’s a great idea.
My husband are also in the 10-15% range with our downpayment. I generally find getting to 10% gives you the biggest break on CMHC. You still reduce what you pay as you get your downpayment from say, 10% to 15%, but the payoff is not as big as going from 5% to 10%!
Thanks for sharing these. I still can’t begin to fathom owning a home. And I’m 30! It’s hard to imagine committing to one space for 7 plus years at this point. Plus, SO MUCH WORK, haha.
hahaha true. We’ve been looking at the market for 2 years now but still haven’t bought. I’d like more space but I do not want a yard =p
Wait for the crash, its coming…
real estate is only one asset class, dont’ be fooled the the last 5 years, at some point this real estate bing will come to an end, as it did in the US.
Do not put all your hopes and dreams into one asset class, diversify.
This really wasn’t a post encouraging people to do one or other. If you read the responses, there’s quite a bit of variety — including people who bought and are now selling so they can go back to renting.
Love reading the varied responses – you have the polar opposites in terms of the condo life which is always a hot topic. I have a few friends that live in condos, and for me I love being able to visit them and get jealous of the amenities. However – I also very much like having multiple living spaces and the freedom to change things up. I also have a natural strong reaction when I see the phrase “40 year amortization”. Not to go all millennial – but I literally can’t even.
“Not to go all millennial – but I literally can’t even.” I LOLed so hard. I’ve been rejecting the millennial moniker as I don’t like to be swallowed up with the Justin Biebers of the word and am at the older end of the spectrum, but I’ve been millenialling a lot lately. A younger-than-me financial manager at a bank was trying to sell me bank fees or ridiculously high minimum balances (as $5000) for “better” services and I answered “Dude, you’re a millennial and you ALSO just bought a home. You should know better.”
I am 30 years old and I have been renting my apartment for 3 years. A few years ago I said that I wanted to own a home by the age of 30. Clearly, that has not happened. Yet I don’t feel like I have failed. I feel good about the fact that I am supporting myself and at the same time, having a life. I go out with friends for dinners, movies, concerts, etc etc I never say “no” for financial reasons. At this point I absolutely know that this would NOT be the case if I owned a home. Sure, I could probably get a mortgage for my rent payment or less, but by the time you add in mortgage insurance, home insurance, utillities, internet, maintenance etc etc it would EASILY double. I don’t feel comfortable with that right now and I am not willing to give up having a life to own a home because I don’t want to be house poor. If I had a partner to share the bills with it would be different, but being on my own I don’t think its smart right now.
Totally feel you, Erin! Agree with everything you said. Even if housing makes sense financially, it’s not always the best lifestyle fit, which many people forget. While I will probably become a homeowner in the future, I love the freedom and flexibility of renting!
This post really hit the spot as we just closed on a house that we have been looking for for nearly 2.5 years and take possession next week. I’m still not absolutely convinced about the whole home ownership thing but that’s another issue in itself. However, I must say that being a renter in a downtown apartment, you are definitely at the mercy of your neighbours and other tenants in your building (sketchiness has increased since the economic downturn and our building started accepting anyone and everyone).
It took us over ten years to save for a 55% down payment (no Bank of Mom and Dad here) to bring the monthly mortgage payments down to what we pay for rent at the moment ($950/month). I must say that renting for the past few years has helped us save up for this along with having two side hustles on top of my regular job. We plan to do a lot of lump sum payments over the years and hopefully be rid of the mortgage in 10 years! 🙂
We will see how the home ownership adventure plays out.. to be continued!
That downpayment is so impressive! Great job!! Congrats on becoming a homeowner, you definitely did it the right way =)
I’ll add my own!
First house in 2013 my downpayment was 10% and the second in 2015 was 20%. Both saved just through not spending much of my income.
Unfortunately the first house has decreased in value by about 10%, it’s in a boomtown in Alberta, so with oil being where it is, i suffer on paper. The second house is a duplex income property and has probably appreciated a little. I’ve done some improvements so the value certainly increased but most due to my decrease cash.
Both houses are income properties and I rent my primary residence. Not really what I thought i’d be doing in life a few years ago but it’s worked out very well so far!
You know I’ve been in the market for a house forever! And I’ve probably read too many articles but I love hearing about others’ real life perspective on buying their home. And that’s because I can learn from their mistakes or experiences – like shortening the mortgage term (never thought of that one) and looking for income potential in a home.
I’m still unsure buying in our market now though haha!
Yah! I thought shortening the term to compensate for the CMHC charges was a good strategy!! I definitely hadn’t thought of it either.
I really loved the mix of responses of people who home ownership worked out really well for, those it didn’t, as well as those who differentiated between it being an emotional vs. financial decision.
We were aiming for a 20% downpayment for awhile in areas all over the GTA, but when started looking and really discussing what home ownership (eventually, condo ownership) meant for us as a couple, we decided instead of looking to the burbs or outskirts where we’d been cheaply renting, we wanted to bring it back to the downtown core so we could essentially both walk to work (20 mins for me, 40 for him) or bike to work. And in the last 6 weeks since we moved in, our lifestyle has changed DRAMATICALLY. I’m so much happier since I ditched my commute, I love my new neighbourhood (well, old neighbourhood, I’ve rented in this area when I was younger with roommates!) and literally I feel like I’m finally really feeling the city-living thing I hadn’t felt since my early twenties. And we found a well-sized 2BDR so the possibilities for our future are great.
Payment wise, we ended up doing a 10% downpayment, we COULD have paid 15% but it would’ve left us with less money than I was comfortable with, and as you replied to another person in this thread, the jump from 10-15% cut for CMHC wasn’t as much as that 5-10% cut. That said, we choose accelerated bi-weekly installments so we’ve already shaved some years off the mortgage and I plan on dropping a big chunk of change in a few months and upping our bi-weekly payments by at least 10-15% early next year. We took about half the money from our RRSPs (of which I’ve already started re-paying) and from a large TFSA that I had been saving in for the last few years. We did not get money for the downpayment, we DID however, get money from family for new furniture and moving costs, which was greatly appreciated because we’d been living with ‘found’ or ‘donated’ or ‘passed along’ stuff for our entire relationship, so it was nice to get a new couch and desk and coffee table and what not!
Wow that’s awesome!! A short commute is the key to happiness IMO!
I was looking at my down-payment fund with my husband as well, and we also get nervous at the thought of putting almost all our money towards a downpayment. I think we’ll probably fall between 10% and 15% for our downpayment, and keep the rest just so our RRSPs and TFSAs can have some cushion in them.
I’m in the middle of buying a home with my husband. It was years of thinking about it, savings, and playing the “long game.” We hunkered down and saved about $1300/month in our house fund, and received generous gifts from our families. The market is hot everywhere, but particularly scalding where we live.
The good thing is based on our appraisal and 20% down payment, we should already have some good equity built in. The idea of a mortgage is still deathly scary (and since mortgage is French for death grip, it’s appropriate). However, after lots of thinking, it’s the best move for us.
Let’s see how we feel once we move in and deal with regular maintenance 😉 But for now, I’m really, really excited.
Oh, and our commute will stay short and we’re within walking distance of our favorite restaurants, a movie theatre, and more. Much rather pay more for a smaller commute and better neighborhood.