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First time home buyers, newly debt-free. 10% down in a year or 20% down in two years?

Hey all, looking to get some thoughts on our first home/mortgage.

My wife and I are newly debt free (paid off both cars & student loans this summer). We have a take-home income of about $7,700 per month. We both have excellent credit (800+). We have no kids so with our debt paid off, our expenses are minimal (about $3,000 per month for everything including rent, utilities, groceries, cell phones, personal spending, retirement contributions, etc.).

We are looking to buy a home in the $250-300k range in the next 12 months. We are currently saving money for a down payment and should be able to put 10% down plus closing costs (~$38k) next summer. We will have $30k leftover in a HYSA and checking.

My question is about the timing, and the mortgage approach. If we buy sooner with 10%, would an 80-10-10 mortgage make sense for us, vs. a 90-10 conventional loan? The reason I am thinking about the 80-10-10 is that we would likely be able to pay off the second mortgage in about a year, leaving us with only the main mortgage payment. This seems more appealing than taking PMI on a 90-10 conventional loan. Is there anything else I have failed to consider here?

Alternatively is it dumb to not just wait the extra 6 months to be able to put the full 20% down? We will hit the 10% down savings threshold in the summer and the 20% down savings threshold in the winter so that is the main consideration for 10% down (seasonal buying/availability of houses; not being stuck in the small rental we are currently living in until the following summer if we wait for the 20% threshold).

Any input would be much appreciated!

submitted by /u/glia_enthusiast
[link] [comments]

source https://www.reddit.com/r/RealEstate/comments/ikc18n/first_time_home_buyers_newly_debtfree_10_down_in/
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