I am looking at building / getting my first home.

I am estimating it will cost about $120,000 - $175,000 to build the house.

I have about 30K in my checking 30k
My car I am trying to sell for about 7K
My Ameritrade account is worth about 40k (depending on how oil & tech swings)
A Edward jones account I about 11k  ( I started when I was 12 before I found internet trading)
And a Raymond James account worth 21k
And maybe afew more grand in cash on hand.

So about $110k.

So my question is, how much should I cash out / use to put down on my house.
And how much should I keep invested.

I am 30_years old,
Never married. Been dating the same girl for 2 1/2 years but we will never marry. 
And for a job, I own my own retail business. So if fokes are not coming in I am not making any money, but I try to pay myself about $2,000 a month AFTER taxes. Some months less, some months more. And about 80% of that gets saved / invested into the market. 


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Depending on our FICO, the bank (or whomever is loaning you the $) will dictate how much you will be required to put down.

Looking randomly online:  20%. is ballpark (thank the democrats for that, BTW).

In before "no one can answer this without knowing your entire financial situation, investment diversification, retirement goals, appetite for risk, long term job aspects, life insurance situation, proclivities to sunburn, dislike for insects, and what your dreams are like, and you need to hhire a professional financial planner before determining this on your own, because you WILL be wrong."


Remember when you sell your equities - that will be a taxable event and you will pay taxes on gains, so pick which equities you wish to sell based on that.


How much you put down is relative to your goals - would you rather pay off your house ASAP or keep as much money invested as possible for the duration of your home loan?

If you have a good track record, I'd focus on putting 20% down and keeping the rest to work for you.  Or, consider paying yourself a lower salary to limit your tax exposure, and paying as much as you can down, if being debt free is part of your strategy.

The magic minimum is 20% down to avoid paying PMI.

This!  

Also consider different loans.  Going from a 30 year fixed to a 20 year fixed will save a lot in interest over the term of the loan.  Make a few amortization charts in excel and find a good balance between monthly payment and term.

But the rate between 20 and 30 years term is the same.  It is better to get the 30 year note and then pay it yourself as a 20 (or 15) or however fast you want..... but be able to fall back to a very reasonable payment if you need to.

SoFi is 10% down for no PMI, that would be a strong contender. Otherwise 20% isn't a bad idea.

I see what you did there.

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Why is 20% the magic number ?
If I can pay more shouldn't I ?

When I can put 50% to 75% down.

Is it better to keep the money working.
Or put as much down, and pay this thing off as fast as possible.
And then restart building / saving money?

I thought debt was bad?


 
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As long as your mortgage rate is less than whatever you think you can invest money at (something like 6-9% perhaps), the answer is minimize the down and, in your case, keep the rest of your $ invested (i.e. only sell enough to reach your down).

Since you can't be sure that the market, in the short term, will yield 9% (like it historically has), somewhere in between is (IMO) the best answer:  you have to do 20%, you have enough for 75%, put down an amount that is in between.

Yep, 20%

20% is the magic number most lenders don't make you pay PMI. PMI payments are usually ~10% of your payment or a little less directly in to the toilet.

The rest a personal decision, but with rates as low as they are and any interest being tax deductible, mortgages are not the worst financial decision... I'd rather have cash on hand, others would disagree.

Debt is not bad when used to your advantage.

Depends on the opportunity cost.

Meet in the middle with 20% to avoid pmi but do a 15 or 20 year to lower the total interest paid but keep your cash on hand.  That way if things go sideways you have room but your not holding everything back.

Do an 80 10 10 loan with a thirty year on the big one. Kill the little one off ASAP. No PMI and the money stays in the market. Set up auto pay for extra principle and you can dial it back in case of job loss or other issue. If you do a fifteen year and shit goes sideways you now have more problems.

IOW.

Do you already own the land?  Land loans and construction loans are different than conventional mortgages, the bank wants you to have more skin in the game.  Once you're in the house you convert over to conventional financing.

Home ownership/real state investing is one way all Americans get a chance to build wealth with leveraged borrowing.  Trump became a billionaire doing similar mostly.  Banks will loan you money based on a 4 to 1 ratio of debt to equity.  The 20% down to avoid PMI is standard for most people, especially on the second home purchase.  

I actually used an FHA loan to get into my first house.  They allowed as little as 5% down but I'm not sure if you could get that financing on the home after you move in.

First, you will need construction financing which is usually short term with different requirements to qualify.

Your $2K/mo. stated income is quite low but so is your predicted construction and long term mortgage amount.  I'm not sure how much banks will loan with such low pay.  It depends on the monthly bills(food, phone, cable, internet, health ins., gas, other loan payments i.e. car and credit card) you have.

When I qualified banks may have required proof of income for six months but I only had to show a pay stub from working for the state and let them verify employment.  After finding out how much you can borrow from a bank you may need to try to squeeze out more income from your business to improve your borrowing power or make up for it with increased down payment.

I never did this but if you paid cash for the land, when you move in the land and what ever you put down for the construction loan should be enough equity or even too much to maximize leveraging to build wealth.

I'd probably put down as little as needed to get a good loan rate to keep cash available for surprises in life and add to tax deferred retirement accounts.

I don't see much tax advantage on this deal since your income is low and the loan will be low.  The standard deduction is $6k.  4% loan on $150K is about $6K plus property taxes? ($2-3K or so?)  The interest deduction and property taxes deduction look like a minor tax benefit until reduced interest paid makes it a wash on their own.  Trump's crew wants to eliminate some of those deductions too.  That's about all the deductions I really ever had but you may find more.

Yes I own the land already, I plain on building on.
I am sorry I should have put that in the OP.




What is a 80_10_10 loan,
I have never heard of that.

All debt paid off, 3-6 months of living expenses

At least 20% down with a fixed 15 year with a monthly payment no more than 1/4 of your monthly take home pay

It was a popular loan before the housing market crash.

They were packaged 80-10-10 or 80-15-5.  

I did 80-15-5 on my first house.

You basically get a primary mortgage for 80% of the home value with a traditional lender (home mortgage loan) which means no PMI.

Then, you get a bank loan for 15% of the home price at a higher interest rate (typically 1 to 3% more) paid to a different entity.

Then, you pay 5% down.

Whatever additional you want to put down, you can remove from the bank loan.

The idea is - to pay off your bank loan faster, throw any extra principal to that.  You end up not paying that much more in interest, and it is way cheaper than PMI.  Regardless of what anyone tells you, getting your PMI dropped can be a BIG pain and isnt always that easy.  With some lenders, YOU have to prove LTV with comps and appraisals..... they have no vested interest in dropping the PMI requirement.

I heard these are being offered again, but for a while they were hard to get post-housing market crash.  I'd certainly pursue that over PMI, but personally I'd only ever put 20% down on any future homes.

Screw paying 20% down on house.

If I had taken my home down payment money and invested it in 2009 I could have paid for my damn house in 10 years.

The home loan was 4.75% interest and my stock returns where much higher than that.

Now interest rates are less than 3.5%.

Keep the money you have working for you.

Nice cherry picking dates to make a point.

Well, I did put 20% down in 2009 instead of investing it. Should have invested the money instead.