Emergency funds

By RealtyCrunch IncJune, 14th 2020
Emergency funds

You can easily look up how much money you have in savings, but that isn't the amount that you should put down on a house. No first you need to subtract out an emergency fund. Home buyers should be sure to account for unforeseen circumstances and keep a reserve or an emergency fund. As a good rule of thumb, RealtyCrunch recommends having three to six months of expenses, including your housing payments/other monthly debts, in reserve. This will give you a buffer to cover your mortgage payments in case of an unexpected event.

For example, if your monthly expenses including your anticipated mortgage payment are $3,000, you should keep 3 x $3,000 = $9,000 to around 6 x $3,000 = $18,000. If you have $50,000 saved, you can put down anywhere from $32,000 to $41,000 for down payment plus closing costs.

Of course this doesn't tell you how much you can afford. First you need to determine what kind of loan you qualify for.