Insider logo The word "Insider".

ASK A FINANCIAL PLANNER: 'How much should I put down on a house?'

house front porch 2
Flickr / Glenn J. Mason
Certified financial planner Sophia Bera answers:



Ah, homeownership.

This is challenging one without knowing more about your overall financial situation. I always say that it's more important to address what's going on in your "personal economy" rather than worry about the US economy.

People get so caught up in rising home prices, low interest rates, and other people buying homes that they think "Now is the ONLY time to buy a house!" But we all know that people have bought houses at all different times in history and will continue to do so.

When evaluating whether or not you should buy a home, consider how long you're going to live there. A lot of people end up moving every few years or even switching jobs to a location across town, which could result in a longer commute, so consider how owning a home might limit your job opportunities. By being mobile and renting, you're putting yourself in a position to grow your income faster by being open to a job opportunity in a new city.


If you're planning on living there at least five years and you really want to own, then I would make sure to put yourself in the best financial position possible before you purchase. I wouldn't buy if you have credit card debt or other high interest rate debt (above 5%). Knock out some student loans, get rid of a car payment, and try to lower your monthly payments to free up additional cash flow.


Another thing: I don't think you should think of your home as an investment. You need a roof over your head whether that's an apartment or a house. Over the last 100 years houses have increased an average of about 3% which is roughly the rate of inflation! Compare this to the Dow Jones over 100 years, which has returned 6.8%.

Before you move anywhere, consider how this will affect your lifestyle. If you live in a city and you end up moving to the suburbs then this is a very big lifestyle change. What's the motivation to moving there? Cheaper home prices or is it a better school district? Think about how this will change your commute, your lifestyle, and your community.

One of my best friends recently moved from an apartment close to downtown Austin to a place 15 minutes north of the city (when there's no traffic, and there is traffic a lot!). She had no idea how this would affect the coffee shops she visits, the shows that she attends at night, and the way she plans her day. It was mentally exhausting for her. She's now moving back to her ideal location in Austin because it makes her everyday life much less stressful. She isn't going to spend time stuck in traffic, she'll be within walking distance to her favorite coffee shops, her friends will all be close by, and the amenities in her building (like a gym) will be super convenient.




More: Financial Planner Answers Buying A Home Your Money Home