Downpayment and loan for houses 1.5 M and up

There aren't many people taking out $1.2M loans.  For the segment of buyers looking into $1.5M homes, I would expect most to have a 30-50% down payment.

Or, just roll like an FCB and bring a shiny metal suitcase with $1.5M in untraceable bills.
 
I'm going to guess $1.5 million and up is a move up house and the down payment is higher and therefore the mortgage lower.

Interest rates even for jumbos could be had for less than 4%.

Your insurance calculation looks too high to me for a new home.

Finally I will bet most use a higher DTI ratio than 28%.

 
The way TIers nickel and dime, if you make $375k, you can prob save a decent chunk of change every year.

Edit: oops. Didn't realize you deleted the content. Anyways, this question has been asked before so you're not the only one that's wondering.
 
You should have made it a poll........ maybe what percent downpayment, what DTI, source of downpayment, how many previous houses you have purchased prior to this one.
 
I thought it was a good post. Given that I'm in the market for houses, slightly below that price, I'm always curious at who buys what and I see what the banks say I could qualify for and I think, no way in hell am I going to that point.  I also always wonder who the hell buys these places (when I see people my age who are buying and are driving expensive cars vs. me in my older cars). 

My current residence (3 BR townhome with a nice size backyard...bigger then a lot of new homes), my DTI is single digits and while I have equity in the home, my personal plan is to keep the property as a rental property (would cash flow favorably and depending on where I am in life, could be a great home for our kids to live in 25 years from now (if they end up needing some help after school / starting out) or even be a place my wife and I could move to if we wanted to downsize (say our kids moved to another state and we were retired...downsize and keep that place here and then pick up another place and live in two spots...whatever it might be).  Either way, its a nice property that we like and could rent out fairly easy and would provide some diversification to equity exposures within the 401k. 

In terms of moving, we are looking at homes >$1M (although I'd actually love a new 2500-2800 sq ft new construction on 5K lot for <$1M...it probably isn't happening in Irvine, although Greenwood obviously hits those parameters, I personally need more of a discount to buy and I'm in no urgency as I am of the opinion that we are in / entering a softer market, am patient) and I would be willing to go as high as $1.3M (would have to be an absolute perfect home (perfect in the eye of the beholder) where I thought I was getting a good value). Plan for this house is for this to be the house our family truly grows up in and lives in and intention is for it be a long-term residence (knowing that things could change, however, don't see many scenarios which would have us move long-term out of state / area). And if I bet wrong and the market goes up, well, my current residence serves as a natural hedge (similarly, it would dampen benefits from market going down, however, given plans to sell, it wouldn't necessarily be a realized "dampening"). 

Under any scenario, I'd be putting down 25-30% and under the largest scenario, would only be willing to stretch my DTI to would be slightly less than 25% (assuming 4% rate but slightly different assumptions on property taxes, etc).  I should also point out that I'm in my 30's and the calculations are extremely conservative in regards to treatment of bonus income (far more conservative then a lender would treat it and also far more conservative then any historical actual scenario, including the pits of the recession).  I'll also say that since I haven't seen said 1.3M house that I want, I still ultimately think I probably wouldn't actually pull the trigger at that point.  Also, my back-end ratio would be the exact same as we have no other debt and in general we are frugal people. 

If I buy in 3 years, more money to put down (given current cash flow situation), however, I don't intend on converting that into a larger house (I am looking for a 2500-3000 sq foot place...and can live happily anywhere in between their as long as the floorplan (and lot) is right, although ideal is more in the 2750-3000 sq ft range), hence why I am perfectly fine being patient. 
 
Is that why you're earmarking certain Palo Alto, how about Arcadia?
Same price range in the same neighborhood?  All that's left are the ones away from the giant Portola wall
 
Yep - I like Arcadia but the lots killed me (almost bought one). I like their plan 1/2 a ton. Similarly, I like Palo Alto plan 1.  Palo Alto happens to have some lots that are nice (just later phases).  I also like Baker Ranch...if they had a new school in the community, I'd probably look past the jail and just live in one of the toll brother's tracts (jail be damn). 

Oddly the one I was all gunned up to buy was the Layfayette's (larger lots) but I absolutely hate the floorplans. Tried to convince myself multiple times to buy in phase 1 and my wife and I hated them. They sold like crazy so what do I know (I think the price point / lot size was a big factor) but I absolutely couldn't stand the floorplans.  The family rooms were completely non-functional.  Went back and looked a few times and again reached similar opinions. 

Strada was okay and we were interested but I was too slow in terms of getting on the wait list and now it isn't at a price point that is attractive to me personally (given our own thoughts of the floorplans and current pricing). 
 
the last phase release i believe had the largest arcadia lots on cortland, 30 ft setback, but you'd have to show up early since there were several interested parties, unfortunately no more large lots :(

i haven't been back to palo alto, i liked their floor plans and 10 ft ceilings, would be funny if they can reserve a spot for you prior to release, map shows existing phase releases with available ones and reserved ones, and one reserved one far away from everyone elses
 
Whoa, Bullsback could be writing about my family. We were in a substantially similar position (although we're still carrying a decent amount of student debt fixed at ~3%).

My wife loved Arcadia and could even live with the small backyards, but she was bored by Stonegate. We were on the Strada wait list for six months before they offered something we were willing, and actually excited, to buy (end of cul-de-sac house with a decent backyard).

Large downpayments ($200K+) come from many sources. If you're lucky you have equity from a prior house sale, appreciated company stock, and/or years of saving a good portion of your income.

I'm conservative like Bullsback. I don't consider any non-salary income in DTI calculations (bonuses, new stock comp, vesting stock comp, etc.). I also want the comfort of knowing that if our income were cut in half, voluntarily or involuntarily, that we could make the payments. For us, that meant shopping for the $1.5M+ houses wasn't an option.
 
Ha. There coulda been a TI street in Arcadia. We almost bought there too. I was ok with the tiny lots but not the price. My other half was ok with the price but not the tiny lots.  We were both not ok with the buyer makeup - at least in the early phases.
 
Ready2Downsize said:
You should have made it a poll........ maybe what percent downpayment, what DTI, source of downpayment, how many previous houses you have purchased prior to this one.
Click to expand...
I actually made an offer with a DTI of 0.43 (and that is even without landscaping or shutters) which got accepted but got cold feet and pulled out.  Based on previous replies and now the current ones, it looks like I would have been the only TI member that would have stretched that much if I had actually gone through with the purchase.  But now everyday I wonder am I losing out on appreciation that everyone else is enjoying or will enjoy in the future. 
 
Nah....... you're going to see skewed results if it's only comments with ID's attached to them.

Most people are not going admit to a sky high DTI unless prices are skyrocketing. Might work out but u never know what might happen down the road....... lay off, major illness or sudden death of a wage earner, forced sale due to job transfer or divorce or some other unforeseen life altering event.

Starting with a high DTI works in times of inflation, significantly rising housing costs, stable job environment (or even better... high wage growth which can come with either promotions, job hopping, big bonuses or inflation) so as time passes your DTI drops.
 
Ready2Downsize said:
Nah....... you're going to see skewed results if it's only comments with ID's attached to them.

Most people are not going admit to a sky high DTI unless prices are skyrocketing. Might work out but u never know what might happen down the road....... lay off, major illness or sudden death of a wage earner, forced sale due to job transfer or divorce or some other unforeseen life altering event.

Starting with a high DTI works in times of inflation, significantly rising housing costs, stable job environment (or even better... high wage growth which can come with either promotions, job hopping, big bonuses or inflation) so as time passes your DTI drops.
Click to expand...

Yup
 
Well, at these $1M+ price levels, and the types of households that buy them, the DTI calc is just a snapshot of any given moment in time. They'll have years when they receive large bonuses, or sell a large amount of stock, and their income far exceeds their salaries. They'll have years when one spouse isn't working. Their DTIs could fluctuate greater than ten percentage points over a decade.

A related question you rarely hear, is what is a reasonable percentage of your net worth to put into a downpayment? It's a fair question when you're buying a $1M+ house.
 
Would respond differently depending on age, depending on where your net worth was, ie. business, IRA, ROTH IRA, after tax savings etc.  Stability of income and potential growth of income. 

Generally would say 25%
 
As long as you have good credit, an acceptable DTI, and stable documentable income it's no problem getting a 20-25% down mortgage even on a multi million dollar home purchase.  Given where interest rates are, I would put down 20-25% and keep the rest of the cash around.  Cash is king and I can always generate a return that is greater than the interest rate on the loan. 
 
Perspective said:
Well, at these $1M+ price levels, and the types of households that buy them, the DTI calc is just a snapshot of any given moment in time. They'll have years when they receive large bonuses, or sell a large amount of stock, and their income far exceeds their salaries. They'll have years when one spouse isn't working. Their DTIs could fluctuate greater than ten percentage points over a decade.

A related question you rarely hear, is what is a reasonable percentage of your net worth to put into a downpayment? It's a fair question when you're buying a $1M+ house.
Click to expand...

It also depends on your investment risk tolerance too.  I don't want to be house rich and cash poor.  Rates are so low that you should borrow as much as you can and keep as much liquidity as possible. 
 
bones said:
Ha. There coulda been a TI street in Arcadia. We almost bought there too. I was ok with the tiny lots but not the price. My other half was ok with the price but not the tiny lots.  We were both not ok with the buyer makeup - at least in the early phases.
Click to expand...
That was another concern. 
 
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