Emergency funds

By RealtyCrunch IncJune, 14th 2020
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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.