Buying Primary Residence

[Frank Lo]

Hello BP

Looking to buy our first home as a primary residence.

I see “first-time home buyer incentives” such as low down payment loans.

I am new at real estate, so this seems counterintuitive to me.

I think it is better to pay a higher down payment, which would equate to lower interest paid to the lender?

Lower down payment doesn’t seem like much of an incentive to me if you can afford 20%.

Are there other incentives for first-time home buyers that actually benefit an investors mindset?

[James Carlson]

@Frank Lo

Everyone above has some great points. (Why lock up money when it could be used to buy more investment properties that will have a higher percentage return than the interest rate you'd pay on the loan? We've used leverage to build our small portfolio of rentals in Denver and Colorado Springs to this point.)

That said, everyone has different risk tolerances. And there is risk in being so leveraged on multiple properties. Just because a lot of people do something -- like buy 5 houses in five years moving every time, using a primary residence loan, and house hacking along the way -- does not mean you have to do that. Take the steps you feel you comfortable with. I have a buyer client who moves every few years but only buys when he can put 20% down. It's what feels safe to him. And your anxiety level is not a factor to totally disregard.

Anyway, it's good to know all the strategies, so everyone above has broken the leverage idea down really well. Once you understand your options, then you can decide what works for you. Good luck!