I think the bigger issue here is your income. $170K for a 20% down means you're buying an $850K home. Your mortgage is going to be too high.
At $70K/year you should be paying out less than $2K/month on your mortgage (1/3 income), and you're going to have a tough time financing $680K+ (fees + property taxes usually, at least) and stay under that number.
If you want to put down $170K on a $500K home, well… I wouldn't put down that much personally, but you'd be much more likely to qualify because the financed amount is within your means.
The amount you put down is a bad thing for the lender, they don't make interest on that. And it can come from anywhere (e.g. inheritance, lottery win), and doesn't in any way guarantee you will pay the amount they finance and actually make money on. The reason you even bother to put 20% down is because otherwise you have to get PMI (Private Mortgage Insurance) — if you get an FHA loan, you need to get PMI regardless.
Personally, I ended up needing to get an FHA loan because of a foreclosure in my history that happened > 5 years ago but less than 7 (IIRC, might be 3 and 5 years?), so I decided not to put down 20% as it wouldn't avoid PMI, and instead put down 10% and put the rest of my downpayment into home improvements (kitchen in particular) with the goal of earning out the other 10% in equity (between improvements, payments, and the market) within 2 years so I could refinance with a standard loan and remove the PMI. My house is way nicer than it would've been otherwise, effectively doubling my budget for improvements.
dshafik t1_j3oeo07 wrote
Reply to To afraid to ask: would a $170k down payment be able to afford me a house in Western Washington? by PopNo5397
I think the bigger issue here is your income. $170K for a 20% down means you're buying an $850K home. Your mortgage is going to be too high.
At $70K/year you should be paying out less than $2K/month on your mortgage (1/3 income), and you're going to have a tough time financing $680K+ (fees + property taxes usually, at least) and stay under that number.
If you want to put down $170K on a $500K home, well… I wouldn't put down that much personally, but you'd be much more likely to qualify because the financed amount is within your means.
The amount you put down is a bad thing for the lender, they don't make interest on that. And it can come from anywhere (e.g. inheritance, lottery win), and doesn't in any way guarantee you will pay the amount they finance and actually make money on. The reason you even bother to put 20% down is because otherwise you have to get PMI (Private Mortgage Insurance) — if you get an FHA loan, you need to get PMI regardless.
Personally, I ended up needing to get an FHA loan because of a foreclosure in my history that happened > 5 years ago but less than 7 (IIRC, might be 3 and 5 years?), so I decided not to put down 20% as it wouldn't avoid PMI, and instead put down 10% and put the rest of my downpayment into home improvements (kitchen in particular) with the goal of earning out the other 10% in equity (between improvements, payments, and the market) within 2 years so I could refinance with a standard loan and remove the PMI. My house is way nicer than it would've been otherwise, effectively doubling my budget for improvements.